No. of Recommendations: 0
For Social Security, it's $72,600. You pay 6.2% of your earned income on that. For Medicare, there is no limit. You pay 1.45% of your earned income on that. If you do not work for wages, and get your money from dividends, interest, capital gains, and what not, you pay zero, zip, zilch, nada. If you work for yourself (my favorite example is a self-employed hairdresser in Roxbury, Massachusetts) you pay double what an employee does, or 15.3%.

In all cases, that's off the top. So, if you contribute 6% before taxes to your 401(k), that "before taxes" refers only to your 1040 income. That 6% will be taxed as far as Social Security is concerned.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.