#5 High-income earners get more perks, a downside for low-income people
Unfortunately, there are more downsides for people who have not had a high income during their working years than for those who did. This is because Social Security benefits are calculated based on the average income you have reported over your time in the workforce. What’s more, after you have reached the 40 credits needed to qualify, the additional ones you may earn have no weight when it comes to calculating how much you will get in benefits.
The equation to calculate the benefits is pretty complicated, but the easiest way to try to predict your benefit from your monthly average wages is 90% of the first $896 you earn; 32% of the amount between $897 and $5,399; and then add them all with 15% of anything above $5,399. The sad reality is that the majority of Americans will not get to the 15% calculation because they do not earn enough for that.
Yet, the calculation means that if you had an average of $4,000 a month, your benefit would be less than $1,800. If you had less, you can imagine how easily that number would keep dropping. The more you were paid while working, the higher the benefit you will receive. Likewise, if you had an average income, your benefit will end up being smaller than expected.
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18 Responses
Every retirement program has it’s ups and it’s downs. Quite frankly, I love the fact that my social security retirement funds are not managed by a private investment fund. Twice in my life, I put significant funds into a 401k plan, only to have it almost disappear during a recession. Somehow, those greedy fund managers always find a way to get paid in spite of badly managing your funds.
I’ve been collecting social security for twelve years now, and if I’m careful, it covers my basic expenses. I love, absolutely love, Medicare and have been able to address assorted health issues without the hassle of negative profit-oriented insurance companies. My health is reasonably good and I expect to live for another 10-15 years and I don’t have to worry about getting medical care. I would be the first person to stand up and shout that we should have Medicare For All.
I would like to read the very interesting and useful information about Social Security since I depend on it for most of my expenses.
Its not enough !
As a 75 year old on S S i have seen the Feds supposedly borrow lots of money from SS to cover government wars as well as support other givaways to other countries. The thieves in Washington should have to payback everything they took + interest 😡
I feel pretty good as NONE of the 7 were news to me. I was aware if them all. I had my husband retire at 62 and work part time. I will be retiring at 66 and 8 months and also working part time.
It would be fully funded if congress would stop spending it.
One thing the government in all its glorious incompetence and unethical practices completely ignores in these articles is the criminal abuse of the system currently in practice. Politicians who arbitrarily make decisions that should cause them imprisonment ignore laws, rules and ethics. Giving SSI benefits to illegal aliens (no, they’re NOT immigrants) who have contributed absolutely nothing to the system is obscene! Giving billions of dollars away to foreign governments ( in most cases our enemies) is criminal, unethical and devisive. Spending untold billions on free medical procedures for perverts who honestly believe their sexual preference over-rides their natural assignment at birth. Claiming men can become pregnant, and destroying the lives of an untold number of children who are much too young to be accountable. Pure frivolous nonsense created by unstable minds. The list could go on and on ad nauseum! We are inundated by lying politicians who constantly warn there is no money for continuing SSI, as they steal it to fund their local works projects or just stuff it in their pockets! Everyone of these incumbent losers needs to have their fat butts shown the door. Our SSI situation is dire because scumbags run our once great nation.
Had the government not screwed it up starting with the Reagan administration, it would all be fine.,
Another downside: I have Kaiser Medicare Advantage health care. The quality Regular Kaiser costs about $300 a month, taken out of my SS check. However, there is a Medicare income adjustment factor applied when one upgrades to the Medicare Advantage program – the additional cost is nearly $500 per month!
What are the “Downsides?”
Thankful for something I paid into for 50 years and politicians continually stole from. How bout u give me all the money I paid in plus 5% compound you act like we should be thankful for them miss handling our money
Unless you have significant health problems, most advisors suggest taking SS benefits at age 70 to maximize your payout. Yes, your “break even” date will be later, but you need to look at SS as an insurance policy rather than an investment. Will you live long enough to break even? Unfortunately, no one has a crystal ball.
we barely make it to the end of the month some times we have to ask our 2 sons to pitch in so we can put gas in our car to get to all the doctors appointments we have each month I think tose in cetaint states and county needs to help to be able to put food on the table and get out conty to help the ederly with food assistance such as food stamps I only get 23$ and some change our count only tries to give us medicaid but it’s for family planing I am 70 years old I have raised our family and help raise our grand children we need help
I paid over $480 thousand dollars into social security over 45 years
If that money was properly invested it should be easily worth 900 thousand
That would pay my SS for 30 years
I don’t understand why there is a problem
Your negatives are all BS. Failures of the system are the result of the Congress Politicizing the program. The program was set up to benefit WORKERS in their old age, not Welfare beneficiaries. Minimum income to share benefits is a reasonable requirement, as is more benefits for those who pay more in. Benefits were supposed to be tax free. Thanks to Democrats like Biden we are taxed on our already taxed money. LBJ dumped the SS Fund into the general fund to hide his Vietnam excesses. The program was well-conceived – Washington screwed it up and continues to do so to milk the last bit of value from our savings. Damn them all!
I read all of these and really see no downside to any, except that SS is not fully funded. You forgot to mention a big reason it is not: that high-income individuals are also exempt from paying the tax on any earnings over the $160,200 threshold in 2023 ($168,600 in 2024). In this day and age, $160,200 is not that high. I don’t believe there should be a threshold. All people, regardless of income, pay in. Period.
This is. Not a benefit.I PAID MY PART EACH PAYDAY FROM THE AGE 16 TILL WHEN I RETIRED. YA”LL TOOK MONEY AND USED IT FOR Other things and did not pay it back and now it is running out You are the blame for it.
I and others who are struggling to find housing (apartments) with low income. I’m disabled and I can’t afford a place of my own. And these 55+ places is nothing but a con to get desperate elders like myself to give them our info to take our savings . So how do we know you are on the up and up?????