# Why can some employers opt out of Social Security? **URL:** \ **Category:** Factual Questions\ **Created:** [November 28, 2013, 10:25pm UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033 "2013-11-28T22:25:53Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [November 28, 2013, 10:25pm UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/1 "2013-11-28T22:25:53Z")
I’ve seen the occasional reference on these boards to employers in the US opting out of Social Security. Why is this? Why do some employers opt out, and what effect does it have on their employees? ---
**Author:** ![svd678](https://avatars.discourse-cdn.com/v4/letter/s/53a042/32.png) [@svd678](https://boards.straightdope.com/u/svd678)\ **Post date:** [November 28, 2013, 10:55pm UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/2 "2013-11-28T22:55:39Z")
While we wait for someone who knows: Only Railroads and government agencies (schools) can opt out, if they have equally good retirement systems. Of employees, as far as I know only clergy can opt out. It’s not a good idea. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [November 28, 2013, 11:22pm UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/3 "2013-11-28T23:22:25Z")
State and local governments can opt out. And the Illinois retirement system was totally unfunded and is now paying the price. When I left I lost everything except my own contributions (without interest, I think). ---
**Author:** ![computergeek](https://avatars.discourse-cdn.com/v4/letter/c/e56c9b/32.png) [@computergeek](https://boards.straightdope.com/u/computergeek)\ **Post date:** [November 29, 2013, 1:49am UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/4 "2013-11-29T01:49:12Z")
The Amish are allowed to opt out, but they take care of their own. ---
**Author:** ![guizot](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/guizot/32/3636_2.png) [@guizot](https://boards.straightdope.com/u/guizot)\ **Post date:** [November 29, 2013, 2:29am UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/5 "2013-11-29T02:29:17Z")
> [@svd678](#): > > . . . Only Railroads and government agencies (schools) can opt out, if they have equally good retirement systems. . . … Probably better, in the case of California’s STRS (State Teachers’ Retirement System). ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [November 29, 2013, 2:35am UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/6 "2013-11-29T02:35:58Z")
Don’t know if it still works this way, but my mother’s school district where she worked as a teacher for 20 years opted out of the SS system in favor of their own pension plan. Which meant that she really got screwed as Social Security was improved greatly over 20 years and when she retired, she got less than half of what SS would have provided. Theoretically, her pension could have been better than SS, I guess, but I never heard of that happening. The teacher’s pension fund had to rely upon private investments, but the US government was not so limited. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [November 29, 2013, 3:32am UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/7 "2013-11-29T03:32:08Z")
> [@Musicat](#): > > Don’t know if it still works this way, but my mother’s school district where she worked as a teacher for 20 years opted out of the SS system in favor of their own pension plan. Which meant that she really got screwed as Social Security was improved greatly over 20 years and when she retired, she got less than half of what SS would have provided. > > Theoretically, her pension could have been better than SS, I guess, but I never heard of that happening. The teacher’s pension fund had to rely upon private investments, but the US government was not so limited. And this is the OTHER reason why teachers moonlight - so they can get 38 quarters and thereby be fully vested in Social Security. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [November 29, 2013, 3:50am UTC](https://boards.straightdope.com/t/why-can-some-employers-opt-out-of-social-security/675033/8 "2013-11-29T03:50:58Z")
> [@nearwildheaven](#): > > And this is the OTHER reason why teachers moonlight - so they can get 38 quarters and thereby be fully vested in Social Security. That hasn’t been true for [years](http://www.ssa.gov/pubs/EN-05-10045.pdf). Social security you might be owed because you did work in private industry–or as the spouse of someone who worked in private industry–is reduced in proportion to any state pension you receive. Teacher pensions can be significantly more generous than social security, but it’s heavily dependent on how long you teach (at least in TX). The formula is average salary (best 5 years) \* 2.3% \* years of service. So people that come to teaching as a second career struggle, but if you start early (like 25), you can retire at 65 at close to full salary. We do pay medicare taxes.