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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75776  
Subject: Re: Future of retirement Date: 9/17/2011 11:28 PM
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Social security is already means tested even though they might not call it that.

One way is that the way the payments are calculated is greatly tilted to favor lower income people.

For example a person making $75K a year through their career will pay triple the social security taxes than someone making $25K a year but when they retire the person making $75K a year will only get about double the social security check each month. A person making $150k a year would only get about 25% more than the person making $75K a year even though they would have paid twice as much.

A quick Google found this simple chart;


To make this stealth means testing even more extreme the lower income people will likely not have to pay any taxes on their social security check but higher income people will likely have to pay taxes on 85% of their social security check so that in the above example the person who was making $150K a year might get a social security check that is 25% larger than someone who made $75K a year, but they will likely have higher retirement income so after they pay taxes on 85% of their social security check they might easily have less after tax social security income than the person who made half as much. For an explanation of how social security is taxed see this link;

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