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Originally Posted by OrangeBlossomBaby
100% agree. It's insane that you only have to contribute social security on the first $160,200 in the year.
I'd be in favor of raising the maximum monthly benefit to accommodate people earning between $160,201 and $250,000 - AND raising the max cap on deductions to $400,000 per person per year.
$160,200 doesn't really go very far, if you have a couple of kids and live in a "reasonably" decent neighborhood of the burbs in many states. So sure - let folks who are earning more, get more when it's retirement time. But make sure even more than that are paying a full share in.
I think the max monthly payout is $4,555. That's a huge heap of money for most people. But for folks who are in the higher (not highest) income levels, it might not even cover yearly expenses including property tax, HOAs, long-term insurance premiums, all those other things that really wealthy people (or people who were fortunate to be able to invest early and often) don't need social security to rely on.
I'd kick the max monthly up to $6000, reserve that for people who averaged $250,000/year or higher for 18 years (or whatever the criteria is for that), and require the same deductions for paychecks totaling up to $400k/year.
It'll mean an extra $100/month out of the salary of someone earning $400k/year. To compare - someone finding a dollar on the sidewalk, will only be able to buy 99.99 cents worth of stuff with it.
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You probably need to do more research and math on your proposal.
You want to collect $100/month from those making $400,000 but then increase their benefits by $1,500/month while they are retired. Since most of us won't be working 15 times as long as we are retired, that is a losing proposition.
Oh, it looks like your $100/month is a bit off too. Since the employee's portion of FICA withholding is 6.2%, the additional withholding for someone making $400,000 would be $14,880/year or $1,240/month.
Okay, at $1,240 extra/month while working, the additional payment about balances out the $1,500 in benefits but at best this is a net zero since all his payments would come back to him in retirement with nothing left over for anyone else.