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Subject:  Re: Means Testing SS Date:  1/13/2011  4:24 PM
Author:  JAFO31 Number:  68234 of 78168


JAFO: <<<IOW, benefits are (and have been tipped) in favor of low wage earners.>>>

GH: {{{The "tip" is quite modest,}}}

"just curious ...and numbers on how much of a 'tip'?"

Almost 3:1 in favor of bottom from top to bottom and 2:1 in favor of bottom from middle to bottom and 1.5:1 in favor of middle from top to middle, all based upon percentage of income replaced.

From my earlier post:

"Social Security is expected to replace about 40 percent of pre-retirement earnings of average earners; 80 percent for the lowest earners; and 27 percent for those at the maximum taxable wage base of $80,400, [this from some years ago] according to the Social Security Administration." [but relative percentages have not changed since then]

"The benefit formula is a three step formula based on AIME (Average Indexed Monthly Earnings). The annual earnings on which this average earnings figure is based have the same caps as were used on the tax side. The formula for the benefit is then 90% of the first $x of AIME plus 32% of the next $y of AIME plus 15% of the balance of AIME. x and y are indexed yearly." [Looks like 2010 numbers to me]

"Step 5:

Multiply the first $761 in Step 4 by 90%. . $__________________

Multiply the amount in Step 4 over $761 and less than or equal to $4,586 by 32%. . . . . . . . . . . . . . . .$__________________

Multiply the amount in S