The middle of the month has just passed and with it my bi-monthly cursing of getting taxed, specifically for social security. This is a tax that I’m supposed to be paid back sometime starting thirty years from now in my sixties, but I highly doubt that. According to a study by the Urban Institute, a person who turned 65 in 1980 received $2.12 for every dollar paid in social security taxes, while somebody who turns 65 in 2030 (born in 1965) will receive $.84. I’m sure for somebody like myself, who will turn 65 in 2046, that figure will be closer to 50 cents if anything at all!
One reason I’m pessimistic about receiving any benefits is that the social security system is currently way too broad, as almost 20% of the population is receiving some form of the benefits. In addition, according to ssa.gov, the social security trust funds started to take in less money through payroll tax revenues than it paid out in benefits starting in 2010. And in 2033 the trust fund is anticipated to be down to 0. This social security trust fund is the accumulation of all the social security taxes ever collected less benefits that have been paid. This money is invested in the form of government bonds and the government has used this money to fund other programs. So there really isn’t a trust fund, as we all know that the government has been running deficits for years and will have to come up with this trust fund money to pay benefits somehow. Or to save money social security benefits will be cut (penalizing some hard workers who put money into the system and saved for retirement responsibly), the qualifying age will be increased, or social security taxes will have to be raised by either increasing the tax rate or the ceiling on wages that are subject to social security taxes.
At least I can take solace that I don’t live in Germany where social security payments are 20%, in Italy where they are in excess of 25%, and definitely not in France where they are closer to 40%!