Should US Workers Pay More into Social Security for a Larger Retirement Check?
The question of whether workers should be allowed to pay more into Social Security in exchange for a larger retirement check has been hotly debated. While some argue that augmented contributions could result in a more comfortable retirement, it's important to consider the myriad of options available and the underlying issues surrounding Social Security.
Government Incentives for Retirement Savings
Fortunately, the government offers several incentives for individuals to save their own money to supplement Social Security. The most popular option is the 401k plan, which allows workers to set aside a portion of their pre-tax income for retirement. Additionally, Individual Retirement Accounts (IRAs) are available, providing both tax-deferred and tax-free savings options.
For workers, the details of these options can be summarized as follows:
A single worker under 50 can contribute up to $18,000 per year to a 401k and up to $5,500 per year to an IRA, totaling $23,500. Workers over 50 can increase these limits to $24,000 for a 401k and $6,500 for an IRA, bringing the total to $30,500. In cases where a worker is the sole income earner in a household, their spouse can also contribute to their IRA.For dual-income households, the potential savings are even greater, with a combined annual contribution of $61,000 into retirement accounts.
Other Priorities for Retirement Savings
Long-term care insurance is another critical investment to consider. This insurance can protect against the high costs of prolonged care, which can deplete savings. It's imperative to consider this expense before contemplating other retirement options.
For those seeking a fixed monthly income during retirement, annuities may be a viable option. Annuities are contractual agreements that provide a fixed benefit over the individual’s lifetime. However, due to the high costs associated with annuities, it is recommended that individuals first maximize their 401k and IRA contributions before considering this route.
The Question of Corruption and Social Security
It is a common misconception to equate corruption with Social Security. The Social Security Administration (SSA) is recognized as one of the least corrupt agencies within the government, and its employees take their responsibilities very seriously. The real issue lies with Congress and politicians who seek to cut benefits that workers have earned over their lifetimes. These politicians often spread misinformation, painting Social Security as a drain on the federal budget and a means to prop up millionaire campaign contributors.
When you pay into Social Security, your contributions, including those of your employer, go directly into your Social Security account. These funds accumulation until you are ready to retire, and it is your money that determines the amount of your retirement income.
Understanding 'Entitlement'
Social Security is often referred to as an entitlement, but in the truest sense, it is an entitlement. It is your money and you are the one entitled to it. When you pay FICA (Federal Insurance Contributions Act) taxes, a portion of that money is dedicated to your Social Security account, ensuring a measure of financial security in your later years.