Member Contribution on Social Security Vote

This is a member contribution regarding the Big Change in Correctional Pension post.

For people who are not self-employed, 12.4% of gross income is contributed to Social Security.  6.2% by the employer and 6.2% by the employee.  So, to place it in perspective, for every $1000.00 a person earns, $62 goes into SS from a person's paycheck and their employer pays in another $62.

Here is my take on the benefits and the drawbacks of opting out of paying into Social Security...

The benefits of continuing to pay into SS:

-6.2% is employer paid.

-employees would keep their full SS benefits (contingent upon how much Congress decides to pay)

-PERA employees would keep a good amount of money that was paid into SS as opposed to only receiving back 3 years worth from the IRS if they opt out.

-Most people aren't responsible enough to save or invest if there were no SS tax.

-Older employees would not see a reduction in benefits even if they joined PERA after 1999.

-SS has been, and can continue to be beneficial as supplemental income for millions of people.

-SS is income insurance for when people stop or no longer can earn an income.

The benefits of Opting out of SS:

-6.2% more money to invest in a pre-tax IRA (deferred comp.)

-money paid into SS prior to joining PERA would still be available.

-You would have more money that would not be controlled by government bureaucrats to squander.

-SS is controlled by congress, bureacrats decide how much you will be paid out per month and when you should get a cost of living adjustment.  Funds in an IRA and personal savings are controlled by the individual, not the government.

-SS payouts are taxable income, (so you would end up paying taxes on a tax, (which seems a little asinine to me) as opposed to post-tax investments such as a Roth IRA.

-The SS fund is currently used to fund retirees, disabled people and the children of disabled people, and, for some reason, to pay back Treasury Bonds, to  fund wars, subsidies, and other government programs.

-By 2033, the SS fund is projected to be depleted.

-SS grows at a rate of approximately 4.4% from bond interest, while the stock market has grown an average of approximately 10% over the last 50 years despite the crash of 2008-09.

-with compounding interest, which equates into higher growth on money you control, taking the money you would have paid into SS and investing it in good growth stock mutual funds that have a long track record of growth would, and should, yield exponentially more money than placing it in the hands of Congress.

-with only an estimated 49% of the U.S. population paying income taxes, how can SS be sustained?

On my last pay stub, the amount that I paid into OASDI\EE amounted to $184.44.  That is $184.44 I could have placed into my deferred compensation accounts, or $138.33 into my post-tax Roth IRA. 

Honestly, does anyone feel comfortable with the government managing their money, placing it into an insolvent fund when there is annual deficits and over $17 trillion in national debt?  I personally do not.  The benefits of opting out, for me, far outweigh the benefits of continuing to pay in. Forget the so-called "three legged stool" of SS, savings, and investments, I would rather stand on my own two legs with savings and more to invest!

 Contributed by Noel Schlitter