ObliviousInvestor wrote: ↑Thu May 13, 2021 7:34 am
Morgan Dollar 1921 wrote: ↑Wed May 12, 2021 7:30 pm
ObliviousInvestor wrote: ↑Wed May 12, 2021 7:13 pm
When you pay Social Security tax the funds are contributed to the trust funds, from which distributions are made to pay for current beneficiaries.
https://www.ssa.gov/news/press/factshee ... eTrust.htm
What are the Trust Funds?
The Social Security trust funds are financial accounts in the U.S. Treasury. There are two separate Social Security trust funds, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits, and the Disability Insurance (DI) Trust Fund pays disability benefits.
Social Security taxes and other income are deposited in these accounts, and Social Security benefits are paid from them. The only purposes for which these trust funds can be used are to pay benefits and program administrative costs.
The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.
I know where they go, but choosing to call it a tax, is not in my point of view. I view my earnings record and the contributions as mine, if I survive to withdraw.
You explicitly requested my input, so here it is:
You are of course welcome to view it however you please and make whatever decisions you feel suit you, but from a factual point of view the Social Security tax is definitely a tax, and there definitely is not an account of dollars anywhere with your name on it. What you are describing here is choosing to believe something that is not true while also focusing on a sunk cost. These are not exactly the underpinnings of good financial planning decisions.
Thank you for responding, I see your point of view that it is a tax. I will expand on the opinion many have, we have that number, the SS number, so misleading for many, sorta like a bank/brokerate account number, or the very fact it is gone, expires upon death, is the reason once we survive to the point of eligibility, many want to file and start receiving those funds, ASAP.
The changes that impacts many currently of later FRA, of course are uncontrollable by those impacted. I fortunately was in the last birth year of FRA at 66. That also landed me in the last year of 25% reduction at 62, and with no spouse, swayed my personal opinion. The spouse reduction gets hit even harder, for those married couples making the decision. The very fact it is a "sunk" cost is even the greater reason, I believe, those with poorer health and perceived greater risk of mortality, jump early.
Reviewing three inputs, A. the mortality rate of my parents and their 17 siblings, my current personal health risks, combined with 25+ years of smoking, B, the COLA increases for both SSA & FERS payments, and C, my personal lack of concern for any spouse to receive a survivorship on FERS or SSA, combined to make the decisions that suited me best. I will add, my FERS is a QDRO from my ex-wife. I agree with your evaluation for many/most, but recognize the risk of completing the sunk cost final event, death, thus why I said in another post, "At some point we all jump off that roulette wheel, by starting to withdraw, or dying." I also am in the frame of mind, our best retirement years are the ones prior to the rocking chair years, that point when mobility ends. That can happen years before our death.
With the benefit of hindsight, watching obituaries closely due to the virus the last 14 months locally, I am even happier with my personal decision. A majority impacted were in my age group and older. I have been also pleased with my personal allocation decision of increased equity percentage, due to the fixed income nature of both FERS and SSA. I own your book, "Social Security Made Simple: Social Security Retirement Benefits" reviewed your website, Open Social Security, and value the info on your blog and have read your thoughts on decisions for the unmarried . I am also sliding under the taxation of social security benefits and got lucky with my opportunity to choose an F plan as my Medicare supplement.
I found value in the book by Brandon Christy, "Navigating your Federal Retirement" even though I had little choice with a QDRO.
Thanks for taking the time to read and respond earlier. I know you are here to help, as am I. I am happy I have survived to receive benefits.