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social security check
Posted by: johnnydogg, July 26, 2009 10:16AM
Are social security benefits capped ? If social security is based on how much you make, can the wealthy get checks in the millions of dollars possibly?

Re: social security check
Posted by: edh, July 26, 2009 10:36AM
johnnydogg Wrote:
-------------------------------------------------------
> Are social security benefits capped ?

Yes.

>If social
> security is based on how much you make, can the
> wealthy get checks in the millions of dollars
> possibly?

No.

"The maximum benefit depends on the age at which a worker chooses to retire. The amount for 2009 for a person retiring at full retirement age (66) is $2,323. This is based on earnings at the maximum taxable amount for every year after age 21."
That is the per month amount.

from: [ssa-custhelp.ssa.gov]



Re: social security check
Posted by: Alan S., July 28, 2009 12:12AM
Agree. The maximum amount of earned income that FICA taxes are applied to is currently 106,800. That is also the limit that is used to determine SS retirement benefit for this particular year. Previous years have lower caps and are inflation adjusted.

Medicare taxes are due without a dollar limit, but this does not affect SS retirement benefits.

Currently, due to the increasing wealth of higher income taxpayers, no SS deductions are being taken on a higher percentage of earnings than ever before, ie the total amounts of earnings that exceed 106,800. This means that incomes are rising faster for higher income people than the limit is rising, so that fewer dollars are going into the SS retirement fund.

Re: social security check
Posted by: retaffaa, July 28, 2009 02:10PM
"Currently, due to the increasing wealth of higher income taxpayers, no SS deductions are being taken on a higher percentage of earnings than ever before, ie the total amounts of earnings that exceed 106,800. This means that incomes are rising faster for higher income people than the limit is rising, so that fewer dollars are going into the SS retirement fund."

Alan, I don't get your reasoning for the last sentence. It seems to me that nothing really changes for the higher income person as far as what he/she is paying into SS. Unless you're implying that his/her increased earnings are leaving less income for lower earnings people and they're not paying into the system.

Care to elaborate?

jw

Re: social security check
Posted by: Alan S., July 30, 2009 01:39AM
jw,
Here is my source article:
[retirementincomejournal.com]

This means that a lower percentage of all earnings are being paid into the system from which to pay benefits. Since the SS payout formula with it's bend points is highly progressive, any reduction in taxes paid in to the system is likely to hurt lower income taxpayers more if this results in a future forfeiture of benefits.

If the wage base were increased enough to offset the declining percentage of subject wages and move it back up toward 90%, some amount of benefits would have to be paid to the higher income levels paying taxes as a result. But since the system is so progressive, the higher benefits that the higher incomes would receive would not come close to offsetting their taxes. So they are better off as things stand, and the lower/middle incomes are worse off.

It's a matter of gross income re distribution's affect on SS benefits in particular.

Re: social security check
Posted by: Boutwell, August 10, 2009 05:27AM
It has been several years since I saw an example of someone collecting more than $30,000 a year --- $2,500 a month -- in benefits. He had started working as a teen-ager and continued working, with good earnings, into his 70s.

Re: social security check
Posted by: Drewremedy, September 9, 2009 02:23AM
Actually the system is heavily leveraged the other way around and if you factor in the totals paid to SS and the fact that higher income folks have SS benefits taxed then for say the husband in a low income family to earn $1000 more each quarter over 140 counted quarters vs a husband in a decent two earner middle income household earning $1000 more over same 140 quarters the net after tax SS to the family at lower end would be about 20 yes 20 times MORE than for the middle income couple!



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