Re: Stimulus checks
Posted: Wed Apr 15, 2020 1:48 pm
KC5AV wrote: Wed Apr 15, 2020 12:19 pmThe argument is that the check is to stimulate the economy, so even those who aren’t making an income get the check so they can help stimulate said economy.PriestTheRunner wrote: Wed Apr 15, 2020 11:05 am I don't want to be mean guys, but if someone is on Social Security, and has no job- Why do they need a stimulus check? The SS income is exactly the same as it was before and you haven't lost income from lost work?
Somebody break it down for me, because all I can smell is a redistribution of wealth from future generations.
And if you do the math, most of us will have significantly more paid into Social Security during our lifetimes than we'll withdraw in retirement benefits. Current withholding is 6.2% from you plus 6.2% from your employer up to $137,700 (plus a 1.45% tax on all your earnings goes to Medicare, but we won't count that). To keep the math simple, let's call it 11% total for an average of $80,000 a year in salary/income, and let's say you put in a 47-year career, retire at 68, and start taking retirement benefits. That means $413,600 was paid into Social Security for retirement during the course of your career. Not future money, past money. And Social Security has been steadily dissincenting earlier retirement. In 1961 it became possible to begin claiming benefits at age 62...but the amount was significantly reduced proportionately to the earlier age, and then remained unchanged for your lifetime. In 1983 a law raised the full retirement age from 65 to 67 for people born 1960 or later, and to 66 for people born before 1960. If you want maximum retirement benefits--"full" retirement numbers plus a little more--you now have to wait until you're 70.Social Security checks start to themselves become taxable if your adjusted gross income (to include both taxable and nontaxable interest plus any part-time side gigs you might have in retirement) plus half your Social Security payments total over $25,000 a year gross. If that total is over $34,000, 85% of your Social Security payments are taxable income. So you're still payin' back into the system, baby.
The average monthly retirement payment for a male right now is $1,503. But you had a good career so let's assume you're pulling in $2,083 a month, or right at $25,000 a year. The average life expectancy of a male in the U.S. is about 78.5 years. So you'll get 10.5 years of payments, or 126 months at $2,083 a month. That's $262,458 of the $413,600 already paid into the system. Of course, if your spouse survives you, she's entitled to a payment, but she's already probably 78 herself. Let's subtract another $50,000 to make up for that. So about $262,500 + $50,000 = $312,500 paid out of $413,600 paid in. There should be an extra 100 grand in the system, net-net.
And I don't know about anyone else, but I have a feeling that if I were given that $413,600 up front, with some really conservative investing I could have probably grown the nest egg over the intervening 47 years. At a measly 0.5% average annual interest compounded yearly for 47 years, the total would be $522,860. The federal government probably didn't make a dime on those paid-in funds, probably lost money. But that isn't the worker's fault.
So if the system worked the way it was originally intended, I'd say that on average each retiree would kick the bucket with more money paid into the fund than were paid out in retirement benefits. In other words, previous generations helping to insure the viability of Social Security for future generations, not the other way around. We ain't ending up with those kinds of surpluses, but that isn't the fault of the business and the retiree who each paid significant amounts into the fund with every paycheck. It's the fault of federal management. That's why I've always had a personal issue with Social Security retirement benefits being lumped in under the term "entitlements" with Welfare and Medicaid. Welfare and Medicaid aren't the result of what you've already paid in. Other than some valid disability issues, they've become a gift that incentivizes those on the dole to not only stay on the dole but to keep having kids so that can get even more dole money. If they start actually working for a living, the dole money dries up.
By 2015 data, the average employed U.S. adult works 1,811.16 hours per year. That seems a very low number from personal experience, but over a 47-year career even that comes to 85,125 hours. With every single one of those hours--plus taxable investments--retirees paid into the Social Security fund. To me, that retirement benefit is vastly different than a hand-out.
You are alright by me.