IIRC both employee A and B will also get the same payout from Social Security, assuming both of their salaries were at that level (at the cap or higher) for most of their careers.
Just looking at social security tax will never give you the full picture though, it’s just a small fraction of overall income taxes. And it misses the fact that wealthy people increase their wealth through other means, like long term capital gains. Someone making $100M per year through investments probably won’t work a day job and will therefore pay $0 social security tax.
But social security isn’t supposed to be a retirement plan. There’snot supposed to be a “return” on individualinvestment. It’s meant to be a social safety net. Therefore it’s fine for rich people to get less out of it.
It’s also why the retirement age when it was instituted was 2 years above the average American lifespan. It was only meant to cover retirees who had lived longer than expected that they didn’t want dying in the street.
But our lifespans got longer, so the number of people collecting social security as a retirement plan skyrocketed.
And the solution for the time being is simple: remove the $184,000 cap.
As long as the withdraw rate is based on contribution rate it doesn’t really matter what the cap is, because you’d be increasing withdrawal along with contributions. Social security income for someone who was making $185k/yr will be far more than enough to keep them out of poverty, which is the goal of social security. It’s not meant to be people’s only retirement account, it’s a safety net.
Having rich people pay into a system and then die is just beneficial. Even if their withdrawal rates are based on contributions. They will leave money behind or they with be neutral.
Someone making $36k a year pays $4,464 dollars for SS.
12.4% is a good retirement fund.
So government takes what could be your good retirement fund so you can save another 12.4%?
If someone really could save 24.8% they would have a great retirement. Yet the retirement for someone making $36K a year is looking grim.
IIRC both employee A and B will also get the same payout from Social Security, assuming both of their salaries were at that level (at the cap or higher) for most of their careers.
Just looking at social security tax will never give you the full picture though, it’s just a small fraction of overall income taxes. And it misses the fact that wealthy people increase their wealth through other means, like long term capital gains. Someone making $100M per year through investments probably won’t work a day job and will therefore pay $0 social security tax.
But social security isn’t supposed to be a retirement plan. There’snot supposed to be a “return” on individualinvestment. It’s meant to be a social safety net. Therefore it’s fine for rich people to get less out of it.
It’s also why the retirement age when it was instituted was 2 years above the average American lifespan. It was only meant to cover retirees who had lived longer than expected that they didn’t want dying in the street.
But our lifespans got longer, so the number of people collecting social security as a retirement plan skyrocketed.
And the solution for the time being is simple: remove the $184,000 cap.
As long as the withdraw rate is based on contribution rate it doesn’t really matter what the cap is, because you’d be increasing withdrawal along with contributions. Social security income for someone who was making $185k/yr will be far more than enough to keep them out of poverty, which is the goal of social security. It’s not meant to be people’s only retirement account, it’s a safety net.
Having rich people pay into a system and then die is just beneficial. Even if their withdrawal rates are based on contributions. They will leave money behind or they with be neutral.
Someone making $36k a year pays $4,464 dollars for SS.
12.4% is a good retirement fund.
So government takes what could be your good retirement fund so you can save another 12.4%?
If someone really could save 24.8% they would have a great retirement. Yet the retirement for someone making $36K a year is looking grim.