Skip to main content

View Diary: Anyone That May Receive Social Security Must Read This (192 comments)

Comment Preferences

  •  No reason to cap benefits. (7+ / 0-)
    It's true that the tax is not progressive -- those earning $100k pay the same percentage as those earning $20k, while and those earning, say, $213,600 (twice the cap) pay half the rate on their total income.   But the benefits reaped constitute strongly diminishing returns as one's income increases.  Benefits are based on a taxpayer's  average indexed monthly earnings (AIME) up to the taxable cap. Of those earnings, averaged over 35 years, those who retire at age 66 currently get the following in SS benefits:

    * 90% of the first $761 of AIME

    * 32% of the AIME between $761 and $4,586

    * 15% for the AIME above $4,586 (up to $8900, beyond which there's no tax or benefits).

    At present, if your work life is completed and your AIME is $8900, your monthly takeaway is $2,556, or 28.7% of your AIME.  At an AIME of $4586 (roughly $55k/year), you'd get $1909, or 41.6%.  If you earned just $3k/month over your working life, your monthly SS payment would be $1401, or 46.7% of your AIME.  For an income of $2k per month, the payout would be $1081, or 54% of income.

    http://www.theatlantic.com/...

    So remove the cap on earnings subject to the tax; AND remove the cap on benefits; but high earnings would accrue benefits at the 15% of AIME rate. This would still be a huge boost to the solvency of the system.

    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Sat Dec 08, 2012 at 08:26:53 PM PST

    [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site