crewsor

I was wondering if anyone could show or tell me in black and white if its possible for someone other than State or Federal employees to not participate in the Social Security program.

I have a relative who swears there is no law saying you must pay Social Security taxes. As for as I know it is mandatory and automatically comes out of your pay, and self employed people are responsible for their own.

I know there are fringe groups out there who claim you don't have to pay taxes at all and they are legally volontary, but I know if you get caught trying to avoid taxes, typically, you go to jail.

This sounds like someone has been feeding him the same line, but I really don't know for sure, and I haven't had ant success finding a sure answer online, so I figured I would turn to the T.F.P. experts.

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Bamrak

Pastors and Ministers can opt out of it because of the sepratation of Church and State. Other than that, I know of no other way to opt out.

eribrav

You're just stuck with it. Don't even think of it any differently from your other federal taxes.

Assuming you are under 40, don't plan on ever seeing any of it again. Social Security is a giant Ponzi scheme, and those on the bottom now are not going to see any of their hard earned dollars again. I'm in my mid 30's and when I do my retirement planning I assume ZERO will be coming to me from SS.

gar1976

Some quasi-government agencies have their own program (amtrak, IIRC) that you contribute to.

Other than that, you're stuck.

BonesCPA

Generally, you are required to contribute to Social Secuirity and Medicare on your "earned income" (work type activities). There are certain employers that provide a different retirement "plan" that exempts them from Social Security (some federal, state and local jobs along with railroad employees.) Everyone else is generally required to contribute to SS. The few exceptions generally are connected to religous beliefs - the non-acceptance of social welfare assistance (the Amish among others are an example). If an individual can establish that they do not believe in receiving goverment social assistance due to their faith, they are not required to contribute to SS, and will be ineligible to receive funds later in life.

It's good to plan that way so that you won't have to rely on Social Security to provide your sole source of funds. However I disagree that you will never see anything from SS. Sure we (under 40) will most likely not receive the rate of return that those who came before us have, but it will still be there. Eventually there will be some method of continuing the assured funding of SS enacted - whether it is extended retirement ages (in place already, but more expanded), increased contributions (either rates or thresholds), and/or decreased benefits. It will be there, but how and how much is the question.

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crewsor

Thanks for the info. Much appreciated.

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Stompy

People have been saying that for years, and there would be a HUGE public outcry if they suddenly stopped it.

Besides, how would they go about doing that? You can't give SS to a certain age group then out of the blue say "Ok, those born after 1960 no longer have the option of receiving SS"

The govt did get themselves in a pickle w/ SS, but I highly doubt they'll ditch it.

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crewsor

I don't see it going away, but I can see the qualifying age increasing and the cost of living adjustments decreasing more and more.

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clog

From a financial planning standpoint - municipal, railroad, ministry, and other agencies may have thier own govt. mandated retirement systems (such as school districts). You do not have to take social security, or plan to take it either. Social security tends to work from a pay in now - take out now standpoint. Meaning that the taxes you pay in today, my grandmother gets today. The concept of a "defecit" comes in to play when less money is coming in than flowing out.

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william

Attn: Clog - all citizens of this country pay their SS taxes. There are no separate mandated systems. Your pay-in now, take-out now system is a bit confused. The SS system was derived to help those that have worked for so long to subsitise themselves at the end of their run.
SS works by me (us) paying (in part) for our parents retirement (to a point - and if you look at the $, we don't do much of that). We pay theirs, our youth pay ours. Another reason to think about the level of education children have today.
Originally this plan started under the "father works, mother stays home to raise the children" program, when dad could earn enough to take of family needs. Those days are gone.
The days of SS are on a short road as well. This program is facing a multi-Trillion deficit from the reign of George the Great, and he's not worried about changing it.
You can't stop paying into SS any more than paying the IRS. They are both necessary evils.

scout

Social Security has been in financial troubles and facing deficits since the 70's, it has little to do with "the reign of George the Great". Democrats and Republicans alike have used the money from S.S. to fund other things for many, many years.

clog

Attn William: You are correct - anyone not currently working for an exempt school district, railroad, or ministry does have to pay into social security - it's not as though you can decide not to.

What I was trying to communicate is that a person is not forced to recieve a benefit - which is a strategy that comes into consideration with some medicaid and liquidation of asset issues.

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rubicon

I knew of a guy that found a loophole out of paying taxes. It sounded questionable but a group of people were doing it - not sure if they wound up in jail. I only wish I could recall the details.

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Yakk

SS really has to be a revolving door.

Think about what money is. It isn't valueable, it just signifies value.

If half of the money in the USA was tied up in social security, the same amount of goods would still be produced and consumed.

When you tried to take the money out, you'd end up with way more money and no more goods. The price of goods would inflate massively.

We don't stockpile food, cars or anything else for 20 years. You can't stockpile large piles of money for 20 years and expect it to 'work' well.

Society will be paying for the lifestyle of the non-productive elderly in 20 years whether or not SS is balanced right now. The question is, will productivety rise fast enough that we can generate the wealth required to support them, and will the youth be happy with supporting them at the standards they will be happy with?

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

Ella

What a bizzare system! As an Australian, I pay a compulsary figure of between 2% and 10% of my fortnightly gross wage to superannuation, a scheme that holds our funds until our retirement and pays us around 8% annual interest. My employer also contributes a compulsary fortnightly figure that roughly matches my contribution. I receive annual statements showing my contributions and the interest I have earned for that financial year.

Our superannuation is designed for us not be reliant on the government in our retirement, and be forced to claim the age pension. The age pension is available to Australians of a specific age, roughly 65, and is income and assets tested. But, as tax payers, we do not directly contribute to this pension, at least not directly, as US citizens do. It is simply another benefit available to be claimed as part of our Social Security system.

I've worked for our Social Security body for around 7 years, and have done a bit of research into how the system works overseas, and am astounded at how some schemes are run. A friend of mine from the US described this system of taxing for your own retirement, and I could not believe how you are forced to pay into a fund and have no idea of where this money is, or how much you have contributed. There seems to be no accountability at all. No wonder it pisses people off!

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smooth

How do you mean that your contributions are not directly taxed like ours are? Your scheme sounds more similar than dissimilar from what you described. Our social security is funded through payroll contributions, not federal taxes.

You may have been given an unfair portrayal of our system. This is possibly due to the uncertainty of the fund's solvency and our cultural reticence of government forced savings and redistribution. Nonetheless, we receive a yearly statement that documents our current and YTD contribution. It also projects our payout according to the year we might choose to retire (65 years versus 70 years old, for example).


Out of curiousity, does 8% APR keep up with inflation in Australia? It doesn't seem like your savings would even be beneficial in the long-run without funding from other external sources.

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Ella

Our superannuation contributions are totally separate from our potential social security payments upon retirement. We have our superannuation that is paid out on permanent retirement from the workforce (for me, that would be at the age of 55). We can either opt for a lump sum, or an indexed pension, administrated by our superannuation fund.

In addition to this, we can claim the age pension through our social security provider, Centrelink. This pension is income and assets tested, however the income and assets test is quite generous, and many retirees are granted a part pension to supplement their indexed superannuation pension.

In terms of my interest figure, it could possibly be higher, although I have not received my annual superannuation statement for the 03/04 income year. We pretty much have zero inflation at the moment, so whatever interest I receive is good interest.

And you do get annual statements? That's reassuring. What seems to be concerning is the instability of your funds, subject to government needs and wants.

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smooth

After going to the Australian Sucurities and Investment commission website, it looks like your superannuation scheme is a similar to our 401(k) plans--only that the government mandates private employers to contribute a certain amount (looked like 9% currently).

We have that, as well. But the government does not mandate that corporations pay into it, although many larger corporations used to match employee contribution. I think that trend is waning, however, and many 401's are no longer matched, even though employees can still contribute to them--maybe tax reasons would be the incentive.


So we have 401(k)'s and then, seperately, social security. In addition to those, we have tax deferred Individual Retirement Accounts (IRA's). So we actually have a wide array of retirement options. Although they hinge upon the strength of the stock market, which should not surprise anyone given our cultural emphasis on free market investment being a panacea.

Our social security is supposed to be secure from tampering and/or looting. However, I have read some shifty ways politicians have dipped into it. But it mainly seems to be political posturing to create an insolvent system to facilitate public approval of dismantling it--not something that is inherent within the social security system itself.


But you will likely see posts in here and comments when you canvas US citizens that speak to the inherent instability in reference to worker to consumer ratios, rather than how the system is being managed.

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"The theory of a free press is that truth will emerge from free discussion, not that it will be presented perfectly and instantly in any one account." -- Walter Lippmann

"You measure democracy by the freedom it gives its dissidents, not the freedom it gives its assimilated conformists." -- Abbie Hoffman

SecretMethod70

Social Security is the biggest afront to financial freedom I know of in the US. Tax me for government services, fine, but don't tax me because YOU (the gov't) think you know what's best for me to do with my money to save for retirement.

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funkeodor

just become a minister (or a pope) http://www.ulc.org and you won't have to worry about it. Ahh, the beauty of the internet.