What are you cutting in your budget to absorb the Payroll Tax increase?

[BoardWalkBelle]

I just received a miniscule pay raise (about 40.00 per month big deal!), while at the same time my health insurance premium taken from my paycheck has increased, and add this extra 2 percent payroll tax, and i may as well not have received a raise lol.. I have cut back on alnost everything i can..I cut 60.00 a minth from my cable bill, now i have just the very basic cable tv channels, and lite cable internet(49.00 a month now), I didnt renew my few magazine subscriptions that i had, and i didnt renew my annual pass to universal. Thats about all i can cut..and, of course i am going to cut my grocery bill and eating out bill..And I use a pay as you go cell phone plan just 35.00 per month.

 

[vacationer1954]

Trusting Americans to save for their own retirements isn't going to work.
A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs

 

[preschoolmom]

Trusting Americans to save for their own retirements isn't going to work.
A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs

Trusting the government isn't working, either. My DH and I have been paying in to SS since we were 15. We will never collect SS, because I'm sure in 20 years it will be means tested. Those of us that lived beneath our means and saved for our retirements will be screwed.

 

[mrspaha]

Trusting the government isn't working, either. My DH and I have been paying in to SS since we were 15. We will never collect SS, because I'm sure in 20 years it will be means tested. Those of us that lived beneath our means and saved for our retirements will be screwed.

I agree. Those of us that have scrimped and saved over the years, and that do have some retirement savings built up, are going to have to pay higher taxes as we take distributions, to help pay for entitlements to the people that lived above their means and never saved anything.

 

[vacationer1954]

Trusting the government isn't working, either. My DH and I have been paying in to SS since we were 15. We will never collect SS, because I'm sure in 20 years it will be means tested. Those of us that lived beneath our means and saved for our retirements will be screwed.

That doesn't sound fair but I don't understand why you say that it means it isn't working. If SS is for ensuring that people can afford to live after they can't work anymore and you can either because you have enough retirement savings left or because you don't and get SS then it sounds like it would be working. Anyway I hope you're wrong. I think my spouse and I will have enough without SS but with SS would be better.

 

[eliza61]

I agree. Those of us that have scrimped and saved over the years, and that do have some retirement savings built up, are going to have to pay higher taxes as we take distributions, to help pay for entitlements to the people that lived above their means and never saved anything.

stereotype much?

 

[ilovemk76]

That doesn't sound fair but I don't understand why you say that it means it isn't working. If SS is for ensuring that people can afford to live after they can't work anymore and you can either because you have enough retirement savings left or because you don't and get SS then it sounds like it would be working. Anyway I hope you're wrong. I think my spouse and I will have enough without SS but with SS would be better.

The system is not working. The system rewards the non-saver and punishes the saver.

 

[vacationer1954]

I don't understand. I see how that makes the system unfair but I don't see how that hurts the ability for people to afford to live after they can't work anymore. I don't like it but that seems to help not hurt.

 

[eliza61]

Trusting the government isn't working, either. My DH and I have been paying in to SS since we were 15. We will never collect SS, because I'm sure in 20 years it will be means tested. Those of us that lived beneath our means and saved for our retirements will be screwed.

I'll take that bet. I assume that when you say means tested, you mean that social security will be determined by whether or not you already have some savings?
Is that what you mean?

Or are you referring to medicare. There are some parts of medicare that are calculated on assets and income but social security is not one of them.

Now there are quite a few economist that social security will have to evolved from how it is funded today in order to meet it's obligations later but social security is not going to "disappear" unless Congress actually passes a law to change it. (it is actually a law voted on and signed by congress and President Roosevelt,or was it truman).

Exactly how are you defining "screwed"? Will the money you are saving going to disappear? social security was never designed to be your primary retirement goal. One of the reasons it's having issues was even as late as the 70's most americans worked then received a pension. Now less than 20% do so. there are other issues of course such as age population growing, life expentancy also getting longer. If you retire and begin using your 401k or ira money it will not be taxed on ss, the money that goes into social security is actually paying for the retirees of today.

So I'm not following how if you are saving for retirement you will be "screwed"?

 

[eliza61]

The system is not working. The system rewards the non-saver and punishes the saver.

How?

the money I save, how is that going to be punished? In fact most retirement vehicles grow tax free until you actually use it and now with a ROTH you can save at todays tax rate and when you withdraw you will pay nothing (check me on that one).

So how are you as a saver being penalized?

 

[vacationer1954]

So I'm not following how if you are saving for retirement you will be "screwed"?

I don't know how much money we've put into SS over the years but if it becomes means tested then it will be more likely we will get back less than we put in but for sure we will get back less than we put in plus what we could have made in interest if we invested all that money all those years. That's already true I suppose and the way it has always been. Didn't SS just start one year? So the people who put in money that year were paying money and that that money went directly to old people who couldn't afford things that year. So it started unfair but for a good cause. I guess we can say that people have always been getting "screwed" but at least it is for something good, helping old people live a life closer to what we would consider livable.

 

[eliza61]

I don't know how much money we've put into SS over the years but if it becomes means tested then it will be more likely we will get back less than we put in but for sure we will get back less than we put in plus what we could have made in interest if we invested all that money all those years. That's already true I suppose and the way it has always been. Didn't SS just start one year? So the people who put in money that year were paying money and that that money went directly to old people who couldn't afford things that year. So it started unfair but for a good cause. I guess we can say that people have always been getting "screwed" but at least it is for something good, helping old people live a life closer to what we would consider livable.

sorta kinda. Taxes for social security started in 1937. there was a few lump sum payments made the same month but the monthly system that sort of resembles what we have today did not kick in until 4 years later. Also the first social security taxes where used very broadly. It covered unemployment and destitute care (what we would now call welfare).

Now generally the money you pay for social security is going to pay for benefits of people who are retired now and the young workers when you retire will pay for our benefits. So once again, the notion of being screwed is not correct. Social security is funded on WORKERS, not on whether or not you saved. Basically if you have a job most likely you are paying into the system so the question is will you be able to collect those benefits when you get old enough to retire. You get those benefits whether or not you saved. If you are saving money you will actually be in a better posititon because SS is no way near what people need to survive.

Now the question becomes how is SS funded. The notion that you are funding the program for people who some how did not put into it is for the most part untrue (notice I said in general, I'm sure someone will say they have a relative who is collecting 10K a month in ss) but it's a favorite stereotype to throw around right up there with the "everyone on welfare are lazy baby producing, going to wdw on my dime, single moms". it's simply easier to believe Unless you get disability payments, you have ot accrue you ss payments

Saving is always the best option.

We do have other programs, SSI that help disabled people but those are not funded by SS taxes.

 

[preschoolmom]

I'll take that bet. I assume that when you say means tested, you mean that social security will be determined by whether or not you already have some savings?
Is that what you mean?

Or are you referring to medicare. There are some parts of medicare that are calculated on assets and income but social security is not one of them.

Now there are quite a few economist that social security will have to evolved from how it is funded today in order to meet it's obligations later but social security is not going to "disappear" unless Congress actually passes a law to change it. (it is actually a law voted on and signed by congress and President Roosevelt,or was it truman).

Exactly how are you defining "screwed"? Will the money you are saving going to disappear? social security was never designed to be your primary retirement goal. One of the reasons it's having issues was even as late as the 70's most americans worked then received a pension. Now less than 20% do so. there are other issues of course such as age population growing, life expentancy also getting longer. If you retire and begin using your 401k or ira money it will not be taxed on ss, the money that goes into social security is actually paying for the retirees of today.

So I'm not following how if you are saving for retirement you will be "screwed"?

I believe that Social Security will change, and those of us that have built a healthy retirement in 401Ks and IRAs will not qualify for Social Security. That's what I mean by means tested.

I hope you're right. I hope that it is still there (my husband and I have been paying in all our working lives) - but I'm not counting on it.

 

[vacationer1954]

That makes sense Eliza. Thanks.

 

[Marionnette]

I don't know how much money we've put into SS over the years but if it becomes means tested then it will be more likely we will get back less than we put in but for sure we will get back less than we put in plus what we could have made in interest if we invested all that money all those years. That's already true I suppose and the way it has always been. Didn't SS just start one year? So the people who put in money that year were paying money and that that money went directly to old people who couldn't afford things that year. So it started unfair but for a good cause. I guess we can say that people have always been getting "screwed" but at least it is for something good, helping old people live a life closer to what we would consider livable.

Taxes for SS were first collected in Jan 1937 but benefits did not begin paying out until 1940. As long as more people were paying into the system than there were people taking out of it, the trust fund remained solvent. It was a Ponzi scheme from the inception. We're on the verge of having more people taking from SS than we have people paying into it. It's unsustainable, but no one wants to face the facts.

 

[eliza61]

I believe that Social Security will change, and those of us that have built a healthy retirement in 401Ks and IRAs will not qualify for Social Security. That's what I mean by means tested.

I hope you're right. I hope that it is still there (my husband and I have been paying in all our working lives) - but I'm not counting on it.

Which is an excellent way to go about it because the system was never meant to be anyone's source of living and comfort.

Myself and many other economist (I'm not an economist, I just read non stop because I'm entering into aarpville so any thing washington does concerning social security, medicare or elder care I follow like a stalker) don't think ss will go away, like I said it's funded by workers so unless every one just simply stops working some thing will be in the pool BUT you are right due to various reasons it will be underfunded if some thing doesn't change.
Remember social security is a bill, a law so even if you make a gazillion dollars, the formulation (as it stands today) will generate you a check. Warren Buffett is eligible and would receive a check and he's rich as all get out. I have heard he has not applied. Bill Gates will be eligible, Oprah, Beyounce will all get a check.

I think though in order to change the formulation, let's say make it need base we would need a congressional act. I'm not 100% sure on how they make changes, I gotta research that. I'm a little more optimistic about it not happening simply because look how hard it was for them to even move the eligibility age.
and late word is even with a debt ceiling meltdown, rumor has it that social security will not undergo a cut.

I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).


Truthfully I think they should have a reality show, sort of like scared straight. Show people how seniors living solely on ss really live. If that didn't scare some one into savings nothing would. It ain't pretty.
Just my ramblings.

 

[preschoolmom]

Which is an excellent way to go about it because the system was never meant to be anyone's source of living and comfort.

Myself and many other economist (I'm not an economist, I just read non stop because I'm entering into aarpville so any thing washington does concerning social security, medicare or elder care I follow like a stalker) don't think ss will go away, like I said it's funded by workers so unless every one just simply stops working some thing will be in the pool BUT you are right due to various reasons it will be underfunded if some thing doesn't change.
Remember social security is a bill, a law so even if you make a gazillion dollars, the formulation (as it stands today) will generate you a check. Warren Buffett is eligible and would receive a check and he's rich as all get out. I have heard he has not applied. Bill Gates will be eligible, Oprah, Beyounce will all get a check.

I think though in order to change the formulation, let's say make it need base we would need a congressional act. I'm not 100% sure on how they make changes, I gotta research that. I'm a little more optimistic about it not happening simply because look how hard it was for them to even move the eligibility age.
and late word is even with a debt ceiling meltdown, rumor has it that social security will not undergo a cut.

I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).


Truthfully I think they should have a reality show, sort of like scared straight. Show people how seniors living solely on ss really live. If that didn't scare some one into savings nothing would. It ain't pretty.
Just my ramblings.

I'd watch that show.

 

[crisi]

When they've talked about means testing SS, they have talked about making a trade. One that gets talked about is not taxing your 401k/IRA disbursements up to the Social Security amount. It will screw Roth users, some provision will have to be made there, and its just moving money from pocket to pocket (forgoing income tax to avoid paying out social security)

Remember, savers, our government doesn't like to screw over the wealthy. Saving will work to your benefit given the bias of our Congress.

 

[KennesawNemo]

I believe that Social Security will change, and those of us that have built a healthy retirement in 401Ks and IRAs will not qualify for Social Security. That's what I mean by means tested.

I hope you're right. I hope that it is still there (my husband and I have been paying in all our working lives) - but I'm not counting on it.

I do believe SS will be there, but the dollar amount will be a joke. I am not counting on it either. It'll be my "fun" money when I retire. LoL

 

[leahjade]

I don't understand why you say that it means it isn't working

It's not working because people are living much longer, so many people are receiving benefits for 30 years past retirement, thus receiving more in benefits than they ever paid in. How can a system like that work in the long run?
Also, there are many people receiving benefits who have never worked at all. I have a friend who was in a car accident at age 18 and has received benefits for 40 years and has never worked. Similar thing for an aunt who is very overweight and hasn't worked since age 40 and has been receiving benefits for 30 years and will receive for her entire life.