I don’t understand this ‘directly correlates’ comment - can you please explain?
My reading of the SSA.GOV site shows that ‘what you get out’ (the PIA, Primary Insurance Amount calculation) is progressive - it has a maximum benefit of less than $2500/month. Benefits do not increase directly with what you earn and pay in taxes - they are capped.
[QUOTE=SSA.GOV]
For example, a person who had maximum-taxable earnings in each year since age 22, and who retires at age 62 in 2012, would have an AIME equal to $8,199. Based on this AIME amount and the bend points $767 and $4,624, the PIA would equal $2,460.70. This person would receive a reduced benefit based on the $2,460.70 PIA. The first COLA this individual could receive is the one effective for December 2012. See the monthly benefit amount for this example and other examples with maximum-taxable earnings.
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I also do not believe that ‘rich people pay in many times more than they get out’. Do you have a cite for that?
This example * shows that a theoretical ‘rich guy’ might have contributed $115,000 over 30 years. At $2460/month, it takes only 47 months for benefits to exceed contributions. Add in the employer contributions of $115,000 and you get another 47 months.
So, after a bit less than 8 years, the ‘rich guy’ will collect more in benefits than taxes.
- My cite also goes on to discuss the alternative investment return of SS taxes, but that is another debate entirely and should be ignored in the context of this discussion.