Is Social Security a "good deal"?
Posted: Sat Oct 30, 2010 6:26 pm
The question comes up because we have an option to get a 100% refund of my wife's SS taxes which were withheld for 4 years while she was a Resident at Kaiser Permanente (plus some interest). If she files for the refund the Hospital will also get their total payments back for those years and thus her SS earnings might ultimately be effected by an amount proportional to 2x her refund.
On the other hand she has been and will be over the SS max for many of her working years so that it might not be reduced at all. I think I can hand-calculate the difference by pulling up her actual SS records on line and using the retirement calculator to figure out the difference.
This is offset by the fact that we can take the refund (which is tax-free) and invest it from now to retirement and use that amount to generate income.
Without doing the calculations I would guess that the answer could be broken into 3 categories.
Low-earner: Final 10 years near or below the national median of $50,000/yr.
Mid: Final 10 years near or below the SS Max but above $50,000/yr ($106,000 /yr for 2010).
High: Final 10 years significantly above the SS Max.
Low and Mid you're probably better off leaving it in because SS is significantly redistributive in benefits; the lowest earners get the highest benefit relative to payments.
But for the highest group? Is it a wash?
If I get some time later on today and manage to find the documents I'll hand enter the data and see, but then I have to pull together stuff for a mortgage re-fi this weekend so I may succumb to sloth instead.
yrs,
rubato
On the other hand she has been and will be over the SS max for many of her working years so that it might not be reduced at all. I think I can hand-calculate the difference by pulling up her actual SS records on line and using the retirement calculator to figure out the difference.
This is offset by the fact that we can take the refund (which is tax-free) and invest it from now to retirement and use that amount to generate income.
Without doing the calculations I would guess that the answer could be broken into 3 categories.
Low-earner: Final 10 years near or below the national median of $50,000/yr.
Mid: Final 10 years near or below the SS Max but above $50,000/yr ($106,000 /yr for 2010).
High: Final 10 years significantly above the SS Max.
Low and Mid you're probably better off leaving it in because SS is significantly redistributive in benefits; the lowest earners get the highest benefit relative to payments.
But for the highest group? Is it a wash?
If I get some time later on today and manage to find the documents I'll hand enter the data and see, but then I have to pull together stuff for a mortgage re-fi this weekend so I may succumb to sloth instead.
yrs,
rubato
