S S I is normally considered for the least fortunate, no 401k’s, no IRA’s, and no Corp retirement fund and you still get something.
But, its fixed for the rich, by being capped at $133,000.
The Norm
If your share of S S I, Costs you 7% and you make $80k a year, you paid in $5,600. a year. You work 40 years and retire at 65, you paid in $224,000.. Your employer matched that amount so together you paid in $448,000.. At 65 you get around $1,800 a month X 12 months = $21,000. a year and if you live 20 years of retirement, you get $420,000.
Reality
You make $30,000. a year, paid in $84,000 after 40 years, plus employer’s share=$168,000. and receive $1,050 a month at 65. You live 15 years for a total of $189,000.
Your Rich
You make $400,000. a year, paid in 7% of $134,000. (your Max) or $9,300. a year, plus employer= $18,600 X 40 years= $744,000. and receive $2,090 a month at 65. You live 30 years for a total of $752,000.
It all appears fair because each of the above scenarios takes into account that the more money you have the better health care you can afford and therefor live longer. If we look at the numbers assuming 30 years for each category. With Health Care now available to all workers, we see the S S I system is eschewed to favor the Rich, dollar in for dollar out. It also shows that we are paying out about $400,000. more than received for the Norm and Reality samples.
Norm: Paid in $448k, Received $630,000.
Reality: Paid in $168k, Received $378,000.
Rich: Paid in $744k, Received $752,000.
If we want the S S I system to work, who should bare the costs of making up these deficits? The lowest wage earners, The Reality group, who can’t afford Health care?
The Norm group, who can squeak by and cover their Health care?
The Rich Group, Who are capped at $134,000. of earnings and are getting all their money back from S S I and have IRAs, 401Ks and corporate retirement plans?
By removing the Rich Group cap, S S I would be solvent and no other changes would be required, problem solved. In fact they could lower the 7% to 5% for everyone!