Social Security Part 2 - Comparison To The Market

This is Part 2 of a 2-part series on Social Security.  In Part 1, we took a look at how the harder you work, the less you get on a percentage basis from Social Security.  In Part 2, we will take a look how your "return" on your Social Security "investment" compares with what you could get in the market.

Social Security Part 1 - Work Less, Get More!

Let's say you are a very hard worker and you manage to earn $106,800 this year (which happens to be the limit for Social Security) you pay 6.2% of your income in Social Security tax ($6,621.60).  On the other hand, someone else works part time (leaving them with plenty of free, enjoyable time) and only earns $9,132 for the year.  They also pay Social Security tax of 6.2% on their income which is $566.18.  Let's assume that both individuals work at the same amount, adjusted for inflation, during the 35 years of their working lives.  Did you know that when it comes time for retirement, the lesser-working person will receive Social Security payments of around $8,218.8/year - about 14.5 times the amount they paid each year in tax - and the harder-working person will receive payments of about $30,672/year - only about 4.6 times the amount that they paid each year in tax?  To put it another way, the lesser-working person gets more than three times the amount of benefit from each dollar of Social Security taxes they pay than the harder working person does!

This is Part 1 of a 2-part series on Social Security.  In Part 1, we will take a look at how the harder you work, the less you get from Social Security.  In Part 2, we will take a look how your "return" on your Social Security "investment" compares with what you could get in the market.

Three Social Security Benefits That Senior Counsel Could Be Using

Here are some relatively unknown (but potentially nice) benefits that Senior Counsel (65-66 years old) can use.  Why should you care if you are younger than 65?  Well, maybe if you bring it to the attention of someone over 65 and they use it to put money in their pocket, maybe they will be grateful.  Maybe you can get a dinner or a referral out of it - at least some good will!  After all, you could be putting several thousand dollars in the pocket of a senior counsel.

As described more thoroughly in this article, senior counsel over full retirment age (65-66) can take advantage of a few unusual strategies to put money in their pocket right now from Social Security.  I actually brought this to the attention of a couple of senior counsel and they are taking advantage of it right now.  We will discuss some of the specific suggestions below.