No. of Recommendations: 12
Goofyhoofy: "...and you have just turned Social Security into a welfare program."

Social Security has always been a welfare program.

It is a wealth transfer from thsoe with earned income to those who qualify to receive the benefits.

From inception until rouhgly 1983, SS was largely pay as you go, and many early retirees collected way more than then paid into the system and more than any actuarially sound pension could have paid.

"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]

http://cbs.marketwatch.com/news/story.asp?siteid=mktw&di...

"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."

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

Since roughly 1983, "[s]ome people have to pay federal income taxes on their Social Security benefits."

http://www.ssa.gov/planners/taxes.htm

Taxing SS benefits of some recipients and not other recipients is also a forms of means testing.

The current tax system also creates a very large marginal tax for some recipitents of social security - 46.25% - higher than any normal tax bracket under current US system.

E.g., http://www.bogleheads.org/wiki/Taxation_of_Social_Security_b...


"No, "means testing" is the first step to destroying the program, that is unless you think "welfare" is suddenly going to take on a shiny patina that it doesn't seem to have at the moment."

You rant made for an interesting read, but you are least 25+ years behind reality on this one (and more like 70+ years).

Regards, JAFO
Print the post  

Announcements

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!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.