Retirement Targets

[BCClone]

Agreed. I don't think it is right that someone can pay in for many years and pass before collecting a dime. Should get some sort of minimum payout to spouse or estate.

Hate that you can have two elderly folk living on the two SS checks and then one passes and the income suddenly drops as the survivor will not still be getting both payments.

My parents turned out okay due to their circumstances. I look at the age of my parents (they were 40 when I was born). They would have been 93 this year, that group was typically the one income family so only one spouse paid into SS for the most part. The depression scared that group so many only used savings accounts and CDs. So investments were very remedial. When typically the husband died, the wife struggled if she didn’t have a kid to help since generally handling money was the man’s responsibility.

 

[Stormin]

My parents turned out okay due to their circumstances. I look at the age of my parents (they were 40 when I was born). They would have been 93 this year, that group was typically the one income family so only one spouse paid into SS for the most part. The depression scared that group so many only used savings accounts and CDs. So investments were very remedial. When typically the husband died, the wife struggled if she didn’t have a kid to help since generally handling money was the man’s responsibility.

Mother collected her husband’s SS benefit at his death? My mother collected her spousal benefits and then received my father’s benefit. My mother never worked outside the home. My mother paid in zero dollars to SS.

 

[CascadeClone]

Wrong. Completely. You want to destroy and completely eliminate SS.

Explain to me how a CEO is now an independent contractor.

Small private biz, you don't pay yourself a salary, just take distributions on profits. I could do that now and not pay a dime in FICA.
Big biz, just take stock options and no salary at all. Some of them already do that.

Also, I would point out his list of to-dos are ideas to save SSI, not destroy it. Although I don't think they need to "drastically" reduce payments, maybe 20% reductions would get it done. That's not drastic if you means test it or raise the retirement age more.

 

[TitanClone]

Is there an epidemic of people doing this today? I'm sure somewhere somebody is but why isn't it already rampant among people making more than say $100K? If you raised the cap to $1,000,000 and half of the people making that did what you say it would still generate a lot more money. It would have to be close to 90% doing it before it makes it worse wouldn't it?

I have a couple buddies who are partners at smaller companies, their salaries are low to mid 6 figures and distributions usually close to 200k. Both have the distributions go to an LLC for tax purposes. But yeah that's definitely not common enough to be a real issue IMO.

Edit: they're probably S Corps not LLCs

 

[Stormin]

Small private biz, you don't pay yourself a salary, just take distributions on profits. I could do that now and not pay a dime in FICA.
Big biz, just take stock options and no salary at all. Some of them already do that.

Also, I would point out his list of to-dos are ideas to save SSI, not destroy it. Although I don't think they need to "drastically" reduce payments, maybe 20% reductions would get it done. That's not drastic if you means test it or raise the retirement age more.

Lowering the benefit across the board will happen automatically when the SS surplus is gone if nothing is done. Outlays can not exceed revenues. So do nothing.

My understanding is that the owner of the LLC must pay themselves a reasonable salary subject to payroll taxes. The profits above the salary are retained by LLC. Those profits not subject to SS taxes.

 

[clonechemist]

I might be OK with some sort of means testing but the $100K level in your example is way too low. The simple example is somebody who makes $150K and wants to maintain that in retirement. They save enough for $100K and then expect $50K in social security. This person never hit the cap and now you propose we tell them sorry buddy suck it up? The same argument can be made for a person making $200K which is over the cap. In my opinion any sort of means testing discussion can't even start until the maximum social security benefit becomes a fairly small percentage of the annual income.

In principle I think something like a wealth tax could make a lot of sense in this scenario… say anyone with assets outside primary residence of 10 or 20 million or more pays 1% annually

No idea if the logistics of collecting that would be realistic though

 

[TitanClone]

Oracle had a damn good bump yesterday. The old lion roared.

Fun story, a former co-worker left 3 or 4 years ago for a startup. He's an Oracle engineer now, Ellison stopped funding said startup and hired most of their employees. So instead of 100% personal capital in it he only carries a portion now

 

[1SEIACLONE]

It would be much less distorting, and easier politically I think, to means test SSI benefits. e.g. if you have $100k in income in retirement (from RMDs, passive income, whatever) or net assets over say, $5 million, then you don't get SSI. Just phase it out over $X, like lots of other benefits.

SSI was only meant to help the destitute elderly, widows, and oprhans. It was never meant to be a public pension. And when the retirement age was set at 65, that was the avg life expectancy - half the people were never going to collect. So I think means-testing it is a good thing to do, even though it means I will never get a dime.

Social Security originally was for people to retire at age 65 and not have to live in poverty. The average life expectancy at the time was 61 for males and 65 for females. So most never reached the 65 limit to start drawing or died shortly after. Today the program has been expanded greatly with SSA to include people with handicaps like being deaf and blind, people that have injuries from car wrecks, strokes, heart attacks and a variety of other physical and mental problems. Then all children of a bread winner that has passed away under 18 can also collect a check.

Its a huge system, with the largest segment of the population retired or starting to retire, there just are no enough workers still in the system to keep it from going negative in the next ten years or so if nothing is done.

 

[Stormin]

Social Security originally was for people to retire at age 65 and not have to live in poverty. The average life expectancy at the time was 61 for males and 65 for females. So most never reached the 65 limit to start drawing or died shortly after. Today the program has been expanded greatly with SSA to include people with handicaps like being deaf and blind, people that have injuries from car wrecks, strokes, heart attacks and a variety of other physical and mental problems. Then all children of a bread winner that has passed away under 18 can also collect a check.

Its a huge system, with the largest segment of the population retired or starting to retire, there just are no enough workers still in the system to keep it from going negative in the next ten years or so if nothing is done.

Actually just taxing all earned income for SS pretty much solves the problem. Eliminate the SS earnings cap.

 

[RLD4ISU]

The history of SS is

Social Security originally was for people to retire at age 65 and not have to live in poverty. The average life expectancy at the time was 61 for males and 65 for females. So most never reached the 65 limit to start drawing or died shortly after. Today the program has been expanded greatly with SSA to include people with handicaps like being deaf and blind, people that have injuries from car wrecks, strokes, heart attacks and a variety of other physical and mental problems. Then all children of a bread winner that has passed away under 18 can also collect a check.

Its a huge system, with the largest segment of the population retired or starting to retire, there just are no enough workers still in the system to keep it from going negative in the next ten years or so if nothing is done.

The history of SS is somewhat interesting to read.

A couple paragraphs from Wikipedia:

The first reported Social Security payment was to Ernest Ackerman, a Cleveland motorman who retired only one day after Social Security began.[31]Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security.[31][32]

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont.[33] In 1937, 1938, and 1939, she paid a total of $24.75 into the Social Security System. Her first check was for $22.54.[33] After her second check, Fuller already had received more than she contributed over the three-year period. She ultimately reached her 100th birthday, dying in 1975,[33] and she collected a total of $22,888.92.[34]

 

[1SEIACLONE]

The history of SS is

The history of SS is somewhat interesting to read.

A couple paragraphs from Wikipedia:

The first reported Social Security payment was to Ernest Ackerman, a Cleveland motorman who retired only one day after Social Security began.[31]Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security.[31][32]

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont.[33] In 1937, 1938, and 1939, she paid a total of $24.75 into the Social Security System. Her first check was for $22.54.[33] After her second check, Fuller already had received more than she contributed over the three-year period. She ultimately reached her 100th birthday, dying in 1975,[33] and she collected a total of $22,888.92.[34]

SS does have an interesting history, but too much is made of people receiving way more than they ever paid into the system. For everyone of those that got extra there are plenty of people like my brother that paid into the system 45 years, and passed away without ever collecting a dime. I think his two adult age daughters got something like a $1000 dollars death benefit between the two of them.

Missing out after paying in was one of the reasons I retired at 61 and started drawing at 62, I think I will have to live to be 75 or 77 I figured before I would get less money than if I had waited. I would rather have the money now then before inflation cuts into what I would receive down the road.

 

[Stormin]

SS does have an interesting history, but too much is made of people receiving way more than they ever paid into the system. For everyone of those that got extra there are plenty of people like my brother that paid into the system 45 years, and passed away without ever collecting a dime. I think his two adult age daughters got something like a $1000 dollars death benefit between the two of them.

Missing out after paying in was one of the reasons I retired at 61 and started drawing at 62, I think I will have to live to be 75 or 77 I figured before I would get less money than if I had waited. I would rather have the money now then before inflation cuts into what I would receive down the road.

SS is insurance. Some people pay in for a short time and have children and then a parent will die. Those children never ever paid in a dime. But those children will get a monthly benefit till they are no longer minors. Disabled children can collect on a parent’s contribution. And IMO that is okay.

Yes. Some people die early and do not collect. It is survivors insurance. Old Age, Survivors, and Disability Insurance.

OASDI. Known as Social Security.

 

[cyfan21]

I keep $1k to $2k in liquid stable and balance in index funds. It takes a day or two to cash out some in a fund if cash needed to pay a bill. So far (knock on wood), 99% of our medical stuff has been stuff we scheduled ahead and no real unknown emergencies. Have been in a HDHP with HSA for about 9 years.

I'm on my 4th year. Wish I had started earlier. I'd recommend fidelity to anyone that's looking for an easy to use brokerage account.

 

[JP4CY]

Staying busy in retirement is the key.
My folks volunteer, travel, go out to eat, golf, etc.

They really like going to shows at Hoyt Sherman, which I never would have expected but I think that's great.

 

[benman82]

Wrong. Completely. You want to destroy and completely eliminate SS.

Explain to me how a CEO is now an independent contractor.

A.) Yes I'd love to eliminate SS:

• Give me Australian superannuation (mandatory defined contribution plan) where I get out what I paid in because it's an individualized plan and not a giant ponzi scheme
• Why would I want to pay into a system that's obviously not sustainable? Even if the program stays the same I'll end up 6-7 figures down compared to investing that money myself.
• Lastly, in general having robust social programs that people count on to make ends meet will cause more people to count on said programs. In general, it is better to incentivize people to take care of themselves.

Sure, you got me on a standard CEO who actually runs things day to day and has zero ownership in the company. However, let's get a little creative since huge money on the line, and the two parties have zero benefit to giving money to the government for SS.

• Maybe you don't pay the CEO with cash, maybe (like Elon) the CEO takes pay entirely in stock options and has zero salary
• Maybe your company / C suite workers doesn't need to be "full time" and can work as a "fractional CTO/CFO/CMO/etc" for one or more companies
• Maybe these highly paid individuals make an S corp and take on the same work, but call themselves "consultants" instead of calling themselves employees or independent contractors, and payment isofficially corp to corp

What is a fractional C-suite role and why do startups need them?

Getting an unbiased fresh perspective and cutting costs on steep salaries are major factors driving these hires.

sifted.eu

What is the Difference Between 1099 vs W2 vs Corp-to-Corp Workers?

Understanding the difference between W2, 1099, and C2C workers when tapping into the US workforce will help you avoid misclassification.

pgcgroup.com

 

[benman82]

Is there an epidemic of people doing this today? I'm sure somewhere somebody is but why isn't it already rampant among people making more than say $100K? If you raised the cap to $1,000,000 and half of the people making that did what you say it would still generate a lot more money. It would have to be close to 90% doing it before it makes it worse wouldn't it?

It's a small pain in the ass to set up since you have to set up bank accounts and direct deposit yourself a regular wage like every regular w2 worker and then have to do extra work with filing your taxes. Setting it up costs money because you should hire a tax lawyer / CPA and will probably pay for accounting software / pay for a business account that can send direct deposit. IMO it's just not worth the hassle until you're saving more than $5,000/yr.

 

[Stormin]

A.) Yes I'd love to eliminate SS:

• Give me Australian superannuation (mandatory defined contribution plan) where I get out what I paid in because it's an individualized plan and not a giant ponzi scheme
• Why would I want to pay into a system that's obviously not sustainable? Even if the program stays the same I'll end up 6-7 figures down compared to investing that money myself.
• Lastly, in general having robust social programs that people count on to make ends meet will cause more people to count on said programs. In general, it is better to incentivize people to take care of themselves.

Sure, you got me on a standard CEO who actually runs things day to day and has zero ownership in the company. However, let's get a little creative since huge money on the line, and the two parties have zero benefit to giving money to the government for SS.

• Maybe you don't pay the CEO with cash, maybe (like Elon) the CEO takes pay entirely in stock options and has zero salary
• Maybe your company / C suite workers doesn't need to be "full time" and can work as a "fractional CTO/CFO/CMO/etc" for one or more companies
• Maybe these highly paid individuals make an S corp and take on the same work, but call themselves "consultants" instead of calling themselves employees or independent contractors, and payment isofficially corp to corp

What is a fractional C-suite role and why do startups need them?

Getting an unbiased fresh perspective and cutting costs on steep salaries are major factors driving these hires.

sifted.eu

What is the Difference Between 1099 vs W2 vs Corp-to-Corp Workers?

Understanding the difference between W2, 1099, and C2C workers when tapping into the US workforce will help you avoid misclassification.

pgcgroup.com

Employers in Australia are required to pay 11% of employees wages into the fund. Soon to be 12%. Do you think US employers will go for that? Wish we had national health insurance for all. Australia does.

Guide To Super Contributions In Australia

Australia’s superannuation system provides most Australians with a decent income in retirement. Employers are required to pay a set percentage of your pay packet into your fund each pay cycle—called the superannuation guarantee—but there are also a number of other different kinds of contributions th

www.forbes.com

 

[1SEIACLONE]

A.) Yes I'd love to eliminate SS:

• Give me Australian superannuation (mandatory defined contribution plan) where I get out what I paid in because it's an individualized plan and not a giant ponzi scheme
• Why would I want to pay into a system that's obviously not sustainable? Even if the program stays the same I'll end up 6-7 figures down compared to investing that money myself.
• Lastly, in general having robust social programs that people count on to make ends meet will cause more people to count on said programs. In general, it is better to incentivize people to take care of themselves.

Sure, you got me on a standard CEO who actually runs things day to day and has zero ownership in the company. However, let's get a little creative since huge money on the line, and the two parties have zero benefit to giving money to the government for SS.

• Maybe you don't pay the CEO with cash, maybe (like Elon) the CEO takes pay entirely in stock options and has zero salary
• Maybe your company / C suite workers doesn't need to be "full time" and can work as a "fractional CTO/CFO/CMO/etc" for one or more companies
• Maybe these highly paid individuals make an S corp and take on the same work, but call themselves "consultants" instead of calling themselves employees or independent contractors, and payment isofficially corp to corp

What is a fractional C-suite role and why do startups need them?

Getting an unbiased fresh perspective and cutting costs on steep salaries are major factors driving these hires.

sifted.eu

What is the Difference Between 1099 vs W2 vs Corp-to-Corp Workers?

Understanding the difference between W2, 1099, and C2C workers when tapping into the US workforce will help you avoid misclassification.

pgcgroup.com

Really hate when people compare SS to a Ponzi Scheme, and say that they are the same because you can lose money. In a Ponzi Scheme one person or small group is using funds to enrich themselves at the expense of the investors.
SS is an insurance program, not an investment tool designed to enrich those that pay into the system. Its entire goal when put into place by FDR was to ensure that the elderly and later people that are disabled not live in poverty or on the street, but have some money to take care of them.

Like I stated earlier, everyone that pays into the system if they reach the age of getting the benefit or become disabled will get something back out of it. The program is too popular, and too many depend on it for the government to abandon the system or do away with it. When its all said and done, the program will be fixed to ensure that it will continue as long as the US is still around. The debate today is what the fix is going to be, the right wants to raise the age of retirement, the left wants to bring into more funds by taking the cap off the top and making wealthier people pay more into the system. Things like means testing, or raising the cap on the amount one may receive will be hashed out, but the program will never end. I would guess that some combination of the two will be hammered out to save the program.

 

[Stormin]

Retirement age should NOT be raised. It is 67 now. Asking people to give up 36 monthly SS checks because the wealthiest amongst us refuse to pay SS tax on ALL their wages like the rest of us do is unacceptable. What kind of people are that freaking selfish?

 

[1SEIACLONE]

Retirement age should NOT be raised. It is 67 now. Asking people to give up 36 monthly SS checks because the wealthiest amongst us refuse to pay SS tax on ALL their wages like the rest of us do is unacceptable. What kind of people are that freaking selfish?

Unfortunately there are lots of people with money that are that selfish and worse. They are only out for themselves and their own and could care less about others down and out or struggling to get and keep a good job. Since the 80's we have followed the economic code of "Greed is good", its become ingrained in the way of thinking for many at the top and will continue to be so until the rest of us stop fighting over silly issues and start taking serious the war between the wealthy and the rest of us.

Now getting off my soap box, it is very easy to see them raising the age from 62 up to 64 before you can start drawing SS and then increase the age from a full SS retirement. For people born in the 60's that rate is already age 67. They are going to push it out further to say age 68/69. Do not like the idea, but its going to have to be done along with raising or eliminating the cap to keep the money coming in.