I’ll try to make this short. A friend was over a few nights ago and a political ad came on, don’t recall who (whom?) because they all run together to me.
She’s on SSD from a bad surgery and it’s worried about benefit cuts. NOTE : this isn’t an invite for political debate.
Anyway, during this I got upset about the whole system and brought up all the money my parents paid in who died in their 50’s and never collected yet my friend is worried the money will dry up. I brought up I’ve already been told by 2 specialists that my liver is shot and might have 10 years. (hemachromatosis) So it’s almost a certainty I will never see a penny.
She then told me I can opt out of payroll tax for SS, but if I do live to whatever age is set by then, I don’t get any benefits. Of course I thought she was full of shit.
But being the curious type I searched and found a few cites and articles on it. I found there are certain exemptions for the obvious. People on temporary visas who won’t be here when they hit the set age, etc. Other sites mentioned being able to opt out but though they weren’t glaring nut jobs I don’t know how reliable they are. Hence, here is where I’m looking for answers.
I said I’d keep this short, full apologies for not doing so and taking up so much time. Just trying to set the mood for why I want to know.
So the question is, being fully convinced I won’t live to see a dime, can I tell HR on Monday to stop deductions?
And thanks for hanging in there to actually get through this entire post.
" But there are groups of “non-covered” employees. These include:
Some state, county and municipal employees, who are covered by state-funded pension plans rather than Social Security.
Employees of the U.S. government who were hired before 1984, the year federal agencies came under the Social Security umbrella. These longtime federal employees get pensions under the old Civil Service Retirement System.
Railroad employees, who are covered by a separate pension system that came into being in the 1930s, around the same time as Social Security.
Foreign nationals who work in the United States for their home governments or for some international organizations, such as the United Nations. (U.S. citizens who work in the United States for foreign governments — say, an American employed by the French Embassy in Washington — do pay Social Security taxes and are covered.)"
Although just recently Trump came up with this idea that people (employers actually) could opt out of paying the last 4 months this year (before the election), then pay double the first 4 months of next year (after the election).
Not too many people saw the wisdom in that. But it may have launched a few hundred conspiracies.
In general, just like there are folks who maintain the income tax is voluntary (hint: it isn’t) there’s a perennial underground of folks who maintain, on no real evidence, that there’s some secret form you can fill out to opt out of SS. Hint: you can’t.
If it makes you feel any better, remember your parents weren’t paying in for themselves. They were never going to see a penny of their own money no matter how long they lived. They were paying for the people of their parents’ generation. You’ve been paying for their generation.
And the Gen Xers will be paying for me & you. Any of us who die early are just offering a discount to the whippersnappers.
(TL;dr - there’s more to Social Security than just retirement benefits.)
First, as eschereal noted, Social Security is like* insurance so it may help to think of it that way rather than as a personal retirement investment.
Secondly, a person who doesn’t live long enough to collect SS retirement benefits (let’s hope that that’s not you!) could still benefit from SS disability payments especially if they are already in poor health.
SSDI/SSI can make a big difference to someone under retirement age who can’t make money working because of disability. Even better, you also get Medicare.
*I believe it actually is insurance but this is GQ so I want to be safe
I don’t see how she figures into this at all. You mentioned her briefly but your question was about whether you would ever get a payout from SS. I was talking about ways that you might still get money from them. If I read your OP correctly, She’s beside the point.
Members of certain religious groups may be exempt from Social Security taxes. To become exempt, they must waive their rights to benefits, including hospital insurance benefits. They must also be a member of a religious sect that provides food, shelter and medical care for its members, and is conscientiously opposed to receiving private death and retirement benefits.2
Most foreign students, scholars, teachers and researchers are exempt if they are non-immigrant and non-resident aliens.3 Foreign citizens working in the U.S. for a foreign government (for example, as diplomat or consular official), also do not need to pay.4 State and local government employees who are covered under a public retirement plan do not need to pay twice by paying into Social Security.5
Self-employed workers who make less than $400 annually do not need to worry about paying Social Security taxes.
Before about 1968 or 1969 American citizens employed by the UN had to pay self employment tax, since the UN did not pay the employer share, being international territory. I know the date because my father fought them for years about this, finally winning around then. There was a UN program to reimburse taxes, and his argument was that Social Security was indeed a tax.
Sorry, no cites and he isn’t around to ask any more.
The idea that “*I have paid all this National Insurance and never made a claim” is one that persists in the UK as well. NI is a tax (12%) paid by anyone between 16 and state retirement age who earns more than£183 a week.
Despite it being called “Insurance” it’s no such thing, as current contributions are simply added to the general pool of taxation and all state benefits are paid from that. Many people will pay £thousands over their working lives and collect very little in return, but equally, many will pay in very little and collect a considerable amount in state benefits
That’s exactly what insurance is. Over my lifetime I’ve paid thousands in life insurance, fire insurance, and car insurance. I (or my beneficiaries) have collected nothing on the first two and much less than I paid in on car insurance. On the other hand, I have cancer and have collected more than I’ve paid in and likely will collect more than I and my employers have paid in. All of the premiums I pay go into a general insurance company pool. They don’t sit in my own separate pool waiting to pay me off.
Some life ‘insurance’ includes contributions to an accumulating fund. As you say, for most insurance, your premiums are used to pay off other peoples claims (and dividends to the shareholders) until you make one of your own.
None the less, Many people are under the illusion that the tax they have paid all their working lives is somehow sitting in a bank, waiting for them to draw on it.