Interesting video on the distribution of Social Security benefits. Most high net worth, mass affluents have checks in the $3,000 to $4000/month range.
Surprisingly, I’m above the 90th percentile even though I quit working at age 38 and paid very little FICA during the next 31 years before I started to collect benefits last year at age 69.
How is this possible? Everyone told me I’d get very little from Social Security.
Not necessarily. I only maxed out my SS tax for 8 years. If I claimed right now, I’d be in the 82nd percentile. If I wait only a couple more years, I’ll be in the 90th percentile. If I wait until 70 to claim, I’ll probably be in the 98th percentile, although since the chart in the video skips some incomes, it’s not completely clear.
And as @intercst said, he quit work at 38, so even if he maxed out every year after high school, he had, at most, 20 years of maxing out. Take out 4 years for college and that would indicate he had 16 years of maxing out. That means he had 15 - 19 years of low, or possibly no, earnings that were counted.
So as long as you have a reasonably good paying job (both @intercst and I were engineers), you don’t have to actually max your SS tax to be in the 90th percentile.
Where are you ‘hearing of’ of these ‘many’? I haven’t heard of a significant number who are claiming with only 40 quarters.
But if you look at the percentile chart in the video, the 10.64th percentile is between $900 and $999 a month. That means that ~90% of SS recipients get at least $900/month. So the data doesn’t seem to support that there are a significant number of recipients claiming with only 40 quarters of really low paying jobs.
Edited to add:
I will also point out that self-employed persons often neglect to report all of their cash income, which ends up resulting in lower SS income when they claim. So they may save some in taxes while they’re working, but it ends up decreasing their SS income, often for 30 years or more.
80th percentile if I start this year at 62+ (staving this off). 90th if I wait to 64. Decision now influenced by Crazy War on portfolio value and amount of part-time w*rk (becoming increasingly disinterested in going back.) -FC
We hear that if all our SS contribution had been invested in an annuity we would be much better off. That is because much of our contribution is diverted to support benefits for those making less.
The implication is those making less are far more numerous.
And then there are those who say SS benefits should be means tested. Already taxed at 85%. Another way to divert benefits from those who pay the bills.
Not exactly. Your SS tax was used to pay those who were collecting SS while you were working. Yes, those with lower wages collect more compared to their wages than those with higher wages. That’s because SS was designed to keep retirees out of poverty, not to make them affluent.
Yeah, that’s because the income distribution in the US is significantly skewed to the bottom.
Well, you can thank Reagan for the tax, because that’s how he ‘saved’ SS.
And where is your evidence that ‘many are claiming after only 40 quarters’? You keep ranting about things that you never provide any evidence for.
Edited to add:
And if you do provide evidence of how many are claiming after only 40 quarters, my next question will be: How many of those were stay at home Moms who only worked before they had kids, and after their kids were grown?
Sorry, that’s just wrong. It’s actually that for years, ‘double-dipping’ was severely limited. Between 1983 and 2024, WEP (Windfall Elimination Provision) limited the amount of SS that could be collected by workers, based on the amount of the pension they were receiving from a job that didn’t pay SS taxes. Similarly, between 1977 and 2024 GPO (Government Pension Offset) limited the amount of SS that could be collected by spouses, based on the pension received from a job that didn’t pay SS taxes. So while there might have been some people receiving both SS and a pension based on a job that was not subject to SS taxes, the amount of SS that was received was significantly lower than it otherwise would have been.
In 2024, the SS Fairness Act eliminated WEP and GPO, allowing people to collect their pension and full SS benefits.
Maybe. For many, it’s more likely that they are now collecting spousal benefits, rather than benefits from a job they held for only 10 years.
But again, I’m asking you for actual data, not incorrect suppositions.
Military service members pay FICA today, so the fact that they get a militray pension and SS is reasonable.
Some 60,000 are “triple dipping” in that they are getting a military pension, SS, plus VA disability benefits. A few years ago the FAA found that there were commercial airline pilots collecting 100% VA disability.
Yes, military pay has been subject to FICA since FICA started in 1937. Housing allowance is not subject to FICA, but combat pay and bonuses are still subject to FICA - even though they may be excluded from Federal income tax.
So if a military member stays in for their 20 in order to get a full pension, they would not be collecting SS based on just 40 quarters - they would have at least 80 quarters. They would not have been subject to WEP or GPO since their pay is subject to FICA.
And, if you make more than $24K in wages once you’re on SS, your benefits are cut 50% for every dollar over $24K you make. (but of course, paid back once you are past FRA and not working).
