Paying More into Social Security

Being incorporated for my real estate business, I receive IRS publications quarterly that update me to recent changes for filing taxes, paying taxes, etc. Saturday I opened my mail to find the most recent issue for the close-out of 2007. One thing I have learned with government publications is to read the short articles. They can easily be overlooked because they sit in obscure places.

For those of you that don’t know yet, probably because no one is reporting on the issue, is that the wage base for Social Security is going up yet again this year. This year it is set at $102,000. What this means is that any wage earner will have to pay into Social Security until their income exceeds $102.000. If you would like to see the calculation for this figure you can see it on the SSA website.

One thing the public forgets about when they discuss real estate agents and the money they earn is that real estate agents are self-employed individuals. While those employed by corporations only have to pay 6.2% of their paycheck into the SSA fund (because their employer matches the other 6.2%), real estate agents have to pay the entire 12.4%. So if an agent makes $100,000 in a year, and trust me, most agents don’t even come near that, they would have to pay over $12,000 to Social Security. That’s a huge part of an individuals paycheck if you ask me.

My main problem is that the wage base MUST increase each year because it is law. So here we have the middle class paying into a system that will never have enough money for us all when it is our time to retire. For those of us in the Gen X and Gen Y age groups, we don’t hold out much hope for seeing a single cent of the money we have contributed to social security. Also, household income has not increased very much when compared with increases to the cost of living and cost of owning a home. So the middle class is left holding the ball to keep social security going, every year, seeing the gap between what they make and what the wage base becomes grow further and further apart. With half the population nearing retirement, social security is going to be sucked dry soon.

So my New Year’s prediction :Social security is going the way of the dinosaurs, extinction.
(ok, so it really is a lifetime prediction)

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