The Hello Bar is a simple notification bar that engages users and communicates a call to action.

Social Security & My Life-Time Earnings!

by J. Money on Monday, October 4, 2010

social security statement header
I love getting these Social Security Statements in the mail! They always show how much you’re worth when you’re old and wrinkly ;) Haha… actually, I like to see how much my income fluctuates between the years. These statements track alllll your (reported) earnings since you’ve started working. Or at least mine does since I’m only 30.

Wanna see my total combined income in the history of ME? This is the first time I’m calculating this so you’re in for a treat! (and I’m probably going to cry afterward realizing how much money has been SPENT over the years, haha…)

Years you worked Your Taxed SS
Earnings
Your Taxed Medicare Earnings
1996 $400 $400
1997 $4,000 $4,000
1998 $5,000 $5,000
1999 $3,000 $3,000
2000 $4,000 $4,000
2001 $8,000 $8,000
2002 $20,000 $20,000
2003 $25,000 $25,000
2004 $45,000 $45,000
2005 $50,000 $50,000
2006 $75,000 $75,000
2007 $90,000 $90,000
2008 $85,000 $85,000
2009 $75,000 $75,000
————-
TOTAL:
————-
$489,400
————-
$489,400
     

How insane is that? I’ve earned almost HALF a MILLION dollars over my lifetime! And spent over $300,000 of it! (Based on my recent net worth #’s, minus the cars and negative house net worth). But of course life is expensive and you have to spend money no matter how you slice it. Plus, you can always attribute lots and lots of financial mistakes due to your younger years ;) So by no means am I complaining here – I’m proud of what I’ve collected through it all! And prouder as the years go by, which I know you guys are working on too. So yay for us!!

If I continue working under these same earnings rates…

  • And retire at 67, I’d get about $2,200/mo.
  • If I work until 70, it would raise to $2,700/mo!
  • And if I quit at 62, I’d be looking at a major decrease down to $1,500.

I also couldn’t help but notice all the financial tips and tidbits they put in their little ol’ newsletters. This is the first time I’m actually reading it! haha…

A few nuggets of Social Security info I picked up:

  • Social Security will be depleted by 2037 (based on current law)
  • This year more than 50 million Americans will collect nearly $614 BILLION in S.S. benefits.
  • Currently, 9 out of 10 individuals age 65 and over receive benefits.
  • And for 2/3 the elderly, Social Security represents at least HALF of their income. (Wow)
  • For an average worker, S.S. replaces about 40 percent of annual pre-retirement earnings.
  • Social Security protects you if you become disabled. “Studies show that a 20-year-old worker has a 3-in-10 chance of qualifying for disability benefits before reaching retirement age. (Did not know!)
  • Social Security protects your family in the event of death. More than 2 million children and surviving spouses caring for children now receive survivor benefits from a deceased worker (Sad :( But also good to know!)

Will Social Security be around when I retire?

This is probably the most interesting part of the whole newsletter because it answers you but also scares you at the same time ;) And it’s also the most bolded part of the statement! Haha… guess they get a lot of questions on this. Here’s what they say, copied & pasted:

“Yes. The Social Security taxes you now pay go into the Social Security Trust Funds and are used to pay benefits to current beneficiaries. The Social Security Board of Trustees now estimates that based on current law, in 2037, the Trust Funds will be depleted. Because people are living longer and the birth rate is low, the ratio of workers to beneficiaries is falling. Therefore, the taxes that are paid by workers will not be enough to pay the full benefit amounts scheduled.

However, this does not mean that Social Security benefit payments would disappear. Even if modifications to the program are not made, there would still be enough funds in 2037 from taxes paid by workers to pay about $760 for every $1,000 in benefits scheduled.”

So, YES it will be around if you retire by 2037, and you’ll get a portion of it thereafter for a few years, but then? Well, there is no then. I guess we’ll have to wait for a few more statements to hit us before we see that picture.

Included were also some saving tips:

Very very basic, but still good to remind ourselves of:

  • The sooner you start, the more time you have to save for retirement.
  • Even setting aside a small portion of each paycheck will pay off in big dollars later: just $25 a week invested at 5% interest for 40 years will grow to about $165,000.
  • Any amount you can save, even as little as $5 a week, will add up over time.
  • The easiest way to save is through your job. Ask your employer if you can participate in a retirement savings plan at work. Your employer might even match your contributions to the plan.
  • If your employer does not offer a savings plan, check with a bank or other financial institution for ways to save and invest on your own.

And lastly, a few websites they recommend (although sadly no blogs):

Who knew Social Security could be so fun ;) Did you learn anything today? Does this make you want to retire anytime soon? Or did I officially just become the most boring blog around? Haha…


We recommend:

{ 28 comments… read them below or add one }

1 Kevin @ Thousandaire.com October 4, 2010 at 8:36 am

I’d like to take the “Will Social Security Be Around When I Retire?” section and paste it into the definition of “Ponzi Scheme” in Wikipedia.

I do, however, love getting this statement. I got my first one last year and I don’t remember the details but it was awesome to see how much I worked my butt off when I was in high school. It reminds me how much I learned from working at a young age, so if I ever get crazy enough to have kids, I hope to remember to pass along the lesson.

Reply

2 too funny October 4, 2010 at 8:53 am

Nowadays people contribute approximately 13.4% of their income (with employers), up to ~106,800 per year or $14,312.. That really stinks for someone who’s 31 like me.

Earlier generations–the one’s now retired–contributed far less and collect a disproportionate amount.

From 1937 to 1950 the tax rate was 1% (both employer and employee) with a $3000 cap or a $30 max yearly contribution.

From 1950-1954 the tax rate was 1.5 with a $3600 income cap of a $54 yearly contribution.

When you see statistics like this and assume that $1 in 1945 was worth $12 now, a quick calculation shows that a max contribution of $360 in today’s dollars to current contribution levels shows that today’s younger generations are taxed at nearly 40 times the rate of earlier generations.

If you’re 50 or even 40, the contribution thresholds and tax rates have been so dramatically increased in the last 10 years that you’re lucky.

http://www.ssa.gov/OACT/ProgData/taxRates.html
http://www.ssa.gov/OACT/COLA/cbb.html

It’s pretty easy to do a calculation of the total that someone born in 1930 who contributed the absolute max into the system and retired at age 65. A quick glance shows that contributed a total of approximately $24,000 over their lifetime yet they collect approximately $22,000 per year. That means if they live until 85 they’ll collect approximately 20 times what they paid in, and probably 1000 times what they paid in for Medicare.

Reply

3 MoneyMan @ FinancialOdyssey October 4, 2010 at 9:11 am

Wow that’s crazy, 2037. I’m certainly not going to count on it being around when I’m eligible in 2051 lol. It just shows you how important it is to take matters into your own hands when it comes to retirement. I gotta say though it does tick me off that I gotta pay in but I wont get to receive anything.

Reply

4 Leslie October 4, 2010 at 9:19 am

I also like getting these in the mail – it is interesting to see how much I made in high school. I also like seeing the cumulative. However, it is a little annoying to know that it will be depleted by 2037 when I don’t qualify (at 67) until 2052. I am not counting on getting anything, I just wish I didn’t have to pay in as much! I am sure they will change the law before then, and increase our national debt with some other equally unsustainable benefits tax.

Reply

5 Jeff @ Sustainable Life Blog October 4, 2010 at 9:23 am

I’m glad that they mention saving, even in small amounts. Once people leave it alone for a year and see how much it is, they could be more inclined to start saving more. On the other hand, retirement is a long time and 150k won’t get you very far. I’m glad I live in an income tax free state.

Reply

6 DD October 4, 2010 at 12:46 pm

I love getting these in the mail. I’ll qualify right around the time the fund will likely be depleted which makes the need to get my savings in order more urgent. I’m not counting on getting anything, but I’m going to keep doing things like maxing my 401k and working towards cash savings more and more.

Reply

7 Techbud October 4, 2010 at 1:53 pm

That’s the key with SS, don’t count on it, but if it is there in any amount when you retire you will have just earned yourself a bonus.

Reply

8 Michele October 4, 2010 at 2:59 pm

It really itches my bitchbone when people insist that Social Security “won’t be around” when they retire, because it is patently FALSE. The only circumstance under which that could possibly happen is if Congress repeals it altogether, which is never, ever going to happen, partially because the program is so incredibly popular and the American public would never go for it, and partially because the feds NEED people to continue to pay into it in order to pay promised benefits.

Even if no change is made to the law at all (which is unlikely), people will continue to pay in and people will continue to collect. More specifically, after 2037, people will essentially collect .76 cents on the dollar of their promised benefits. J. Money, this means that if you wait until you’re 70 to collect, you’ll receive about $2050 per month rather than $2700, and that would continue into perpetuity. There would never be anything in the SS trust fund again, but you’d still receive benefits – just not the benefits you’re currently “promised.”

We’ve all been led to believe that Social Security is on the brink of failure and obsolescence, but the truth is that some relatively minor tweaks would remedy it’s current and future problems and keep the program solvent for all time. Specifically: Index the minimum age at which one can collect benefits to the Average Life Expectancy in America, minus 10. The ALE in the US is currently 78, which means the minimum age age which one can collect (retirement) benefits should be 68, and should increase as the ALE increases (which it is certain to do). Next, institute some MINOR changes to the payroll tax (both in terms of rate and the cap), and you’ve essentially solved the problem and enabled SS to pay all future benefits into perpetuity.

Reply

9 Brandon October 4, 2010 at 3:14 pm

It’s always kind of sad to see how much money I’ve blown in my life. lol

Reply

10 Molly On Money October 4, 2010 at 3:58 pm

This summer I read ‘Your Money or Your Life’ and one of the steps is to see how much you earned and compare it to your net worth. It was a bit of a wake up call, or just depressing!

Reply

11 Sandy @ yesiamcheap October 4, 2010 at 4:41 pm

Yes, I learned something. I learned that I have 27 more years to get my sh*t straight because they’ll be screwing me out of the money that I put into the system by then. Social Security eats up the largest chunk of my paycheck followed a close second by Federal taxes. If I had a portion of that back right now I’d be out of debt.

Reply

12 Nicole of Raspberry Stethoscope October 4, 2010 at 7:52 pm

Sooooo, since I will only be 52 at that time, does that mean I’m screwed and won’t get any of the money that I’ve put in?

Reply

13 Pretty Unfamous October 4, 2010 at 8:54 pm

I really think that’s some bull shit (excuse the language). I have 40 years before I retire, and I’ve been paying into SS for almost 10 now. The money that has been taken out of every one of my paychecks, and will continue to be taken out, isn’t even going to help me when I retire. Utter crap. Although I KNOW social security will always be around (because the government can’t just stop it without some MAJOR push-back by the public), so I don’t REALLY have to worry…

Reply

14 StackingCash October 4, 2010 at 11:16 pm

Well-Heeled had a similar post before in regards to social security being around in the future.

http://www.wellheeledblog.com/2010/04/28/social-security-retire-2/

I still have the same feelings today as I had when I commented on her blog. I also think that apparently there are no consequences when the government prints more money, so when they print out my Social Security check in the future I will get what I’m owed. Then again, inflation might arise from all this fiat money and what I get will be woefully worthless. Sigh. Bloody revolution anyone?

Reply

15 J. Money October 5, 2010 at 1:38 pm

I knew I’d get some juicy thoughts on Social Security ;) It’s too bad I don’t have any real knowledge about it to help debate one side or another! Only what I read sporadically, which is not enough.

I will say, however, that I am not counting on any money coming my way at all when I retire – only what I save up and invest in 100% myself. Who knows what will happen in 5 years, none the less 50 (or 27 or whatever). The only person you can count on w/out a doubt is YOURSELF. So keep saving up those pennies!

@Kevin @ Thousandaire.com – That’s a good lesson to pass along! I agree with starting work young. Great for experience and networking.
@too funny – That’s insane. I really should learn more about this stuff, but then again I’ll probably get pissed ;)
@MoneyMan @ FinancialOdyssey – Yes, save save save!!! Gotta line up that money for yourself down the road.
@Leslie – I know! I totally forgot about high school $ – and it seemed Soooooo much more back then than it does now! haha… of course we have lots more responsibilities and all, but still.
@Jeff @ Sustainable Life Blog – I’ve thought about moving to an income-tax free state before, but don’t know anyone in any of them :( Plus I’m not sure how much of a difference it would really make because you have higher taxes in other departments, yes? Or is that just me wishfully thinking? ;)
@DD – Yes, keep it up!!!
@Techbud – I like that idea – Social Security as a “bonus”.
@Michele – Woahhhh look at that passion fly! I love it! :) Thanks for sharing that with us my friend, helps add some more perspective to things. And again, I have no facts or nuggets of info to debate one way or the other, haha…
@Brandon – Yup. Now turn that anger into saving MORE and more so that it beats out over the expenditures!
@Molly On Money – Ooooh good book, from what I hear at least. It’s still on my list to check out but I keep forgetting.
@Sandy @ yesiamcheap – We do give a lot away, that’s for sure. But then again we get a lot of goodness back for living here in America! But that’s a whole other ballgame ;)
@Nicole of Raspberry Stethoscope – You’re asking the wrong person…. But as far as what Michele mentioned, it means you will! Even if just 70% or whatever. If there was a way to lock it in i’d do it, haha… even at 50% to be honest!
@Pretty Unfamous – I think that’s how a lot of others think too. Pretty pissed off at the idea of losing it all, but also know the Gov’t isn’t going to just end it for everyone… but really anything is technically possible.
@StackingCash – Only if it’s a bloody revolution of love :) Although I really have no idea what you’re talking about regarding fiat money, as lame as that makes me.

Reply

16 Sallie's Niece October 7, 2010 at 11:10 am

I always thought you had a much higher salary. Now I feel like a chump when I look at your networth compared to mine. Or….I’m motivated? Yes let’s stick to that answer. :-)

Reply

17 J. Money October 7, 2010 at 11:31 pm

Haha… I actually thought I made way more than that too! :) Oops.

Reply

18 Dividend Monk October 8, 2010 at 8:05 pm

I loved the Ponzi scheme comment.

I don’t plan on relying on social security in the slightest. I plan to have a boatload of passive income from dividends when I retire.

Reply

19 Tommy Douglas October 10, 2010 at 11:49 pm

If I could go back and spent that money again it would be spent better.

Reply

20 J. Money October 11, 2010 at 2:18 pm

Passive income is AWESOME. Although most times it’s not 100% passive, but still even just 5% work to maintain it is incredibly better than working your a$$ off for the same results. I’m over working for “the man” ;)

Reply

21 Jan October 15, 2010 at 9:41 am

I wouldn’t mind you all stop paying IF I could get back all of the money I have put in the last 35 years- with the interest that I would have made during that time. Basically, my money doubles every 5-7 years. That is loads of money if I could get it back! I do much better in investing than the federal government (who used the surplus of the 70′s and 80′s to pay for current social problems like desegregation and schools)

Reply

22 J. Money October 16, 2010 at 10:14 pm

Oh man, that *would* be pretty cool if we could invest it ourselves or at least get the interest from over all those years! haha…. I like the way you think :)

Reply

23 rss April 22, 2011 at 9:04 pm

“Your Social Security Statement” (Form SSA-7005-SM-SI) contains a record of all your taxed social security earnings for your entire work history. In addition it gives an estimate of your Social security monthly benefit at retirement age.

Before the suspension, SSA automatically mailed all working individuals their statement 3 months prior to their birthdate.
What the SSA didn’t think about before suspending the statement is that many employer pension plans require that an employee planning to retire must submit a copy of the SS statement because many company pension benefits are adjusted (offset) by the amount of the Social Security benefit.

This is exactly what has happened to me. I’ve called the SSA and was told they will NOT send me my statement even though my employer requires that I submit it in order for them to process my retirement pension paperwork. I’m sure there are thousands of people in the same boat as I am. What are we supposed to do??? This is just another example of how dysfunctional our government is.

Reply

24 J. Money April 23, 2011 at 11:19 am

Interesting…. I don’t know anything about it myself, but appreciate you sharing this :) Maybe it’ll help others or they’ll know more?

Reply

25 Y. Rodezno January 23, 2012 at 5:03 pm

Does anyone know the form number to see you life history earnings?

Reply

26 J. Money January 23, 2012 at 7:25 pm

Hmm.. I don’t. Maybe anyone else reading this? Or hit up Google?

Reply

27 sarah February 6, 2012 at 8:07 pm

I haven’t worked much over my lifetime. I had cancer at17 and things have been rough for me over the years with a few short lived jobs over the years lasting a few months at a time and I’m wondering if I have any social security benifits at all. As I am again faced with a life threatening illness and am homeless for a lack of means of support

Reply

28 J. Money February 9, 2012 at 11:33 am

Oh no! I’m so sorry to hear, Sarah, that is horrible :( I don’t know what the answer to that is unfortunately, but could you Google it? Or call them directly and find out? I’m sure they’d be able to answer all of your questions :) I’m sending positive thoughts your way!

Reply

Leave a Comment

Previous post:

Next post: