If you count refundable tax credits, the bottom 40% actually paid -9%, and the top 40% paid 106%.
If you count tax credits, you also have to count deduction. It gets too complicated. If the wealthy are already taxed enough, how do we close the income/wealth gap?
I find it amusing that people are always very careful to point to âincome taxesâ paid, avoiding any reference to âpayroll taxes,â the most regressive tax we have in the US. Then thereâs the sales tax, gasoline tax, etc., which are also felt much more by lower income people.
A couple of years old, but : http://www.ctj.org/pdf/taxday2012.pdf
Weâre somewhere around the top 1%. I donât have my tax returns handy (theyâre in the safe deposit box), but my recollection is that we pay around 50% of our gross in taxes of one flavor or another.
Clearly weâre doing something wrong 
I wish the money would be put to better use, but I donât mind paying my fair share.
So you are advocating for completely blowing up the illusion that the benefit received for SS has some relationship to what each person paid into it?
The 1% may pay (much) less percentage-wise of their income than the bottom 25%, but the benefit ultimately received will be miniscule as well.
If you remove the earnings cap on FICA, are you going to remove the benefit cap as well?
Most people conceptualize SS as a pension, and I personally have no problem requiring people to pay for their own retirement. Itâs essentially forced savings.
Then thereâs this blurb from that pdf:
Sorry, I call BS on this one. If income is added for the employer share, that is taxed at 100%, which grossly distorts the bottom of the scale. And in reality there is no way that if the employer share suddenly went to zero, this money will suddenly be given to the employee in a minimum wage job.
Assigning corporate profit as income seems pretty bogus as well. I canât spend my allocated share of corporate profits on anything, and until I sell the stock there is no income. This distorts the scale at the upper end as well.
Sure. Illusions are made to be blown up. In a more reasonable world, I wouldnât get any SS benefit. That said, I will deposit the check (figuratively).
I follow this thread off and on, but sorry if this has already been asked/answered. Do you think thereâs a formula thatâs pretty accurate for figuring out how much you need to maintain a similar lifestyle in retirement? For example, 8 times your salary, or at least x amount per 10K you make, or something like that. Do you think it matters if you have long term care insurance? if it matters, letâs assume housing is paid off before retirement.
What we did to figure it out was to actually calculate what we were spending our money on by tracking it. Calculate what expenses will go away after you retire and what expenses will change and increase after you retire. Then, you have to figure out where you will get funds to live onâSS, any pension, IRA or other funds and what withdrawal rate you are planning to use. 4% seems like the rate many have recommended, but some caution that a 3% rate is safer so you donât eat into principal during low earning years and accounting for any inflation/COLA.
Of course, having long term care insurance will lessen the funds you will need to your care at the end of your life. Having all housing paid will reduce your need for mortgage or rental, but you will still need homeownerâs insurance and maintenance costs, as well as any homeowner fees.
Have read there are the âgo-goâ years where there is a lot of travel and hobby activity that can cost more than when you were working full time, followed by âslow-goâ years, when there is less travel but perhaps more take out and casual dining, followed by âno-go,â which is more medical bills and sometimes various assistive costs like aides, etc. Each of these phases can cost differing amounts.
Bogleheads.org has some interesting threads on retiring on less than $1 million and other topics. So much depends on what youâre used to living on as to how much it will take to continue living at the same level.
Thanks Himom. We still have several years to work, but as it gets closer I canât help but worry that we havenât saved enough. We are going to see a financial planner next week, and Iâm looking forward to hearing his projections.
Itâs a good idea to work with a financial planner. There are rules of thumb on savings, but every situation is different. For example, workers who still have a traditional pension with guaranteed lifetime benefits will have more monthly income from SS+pension. So they would not need as much savings as a worker w/o pension.
Try this article below for a start. By the way, is your financial planner a FEE ONLY one who does NOT get a commission from your investments? Iâd strongly advise you to be sure you see a FEE ONLY one. We saw one (paid for as a benefit from my employer). We also got a FREE consultation from Schwab every year, one from Fidelity and one from Vanguard. There is NO obligation to implement any of the recommendations.
We have surprisingly been thrust into a higher tax bracket in retirement than we were when H was working full time because we now are required to make Required Minimum Distributions, since H is > 70.5 years old.
http://www.bogleheads.org/wiki/Models_of_spending_as_retirement_progresses
Ask the planner for recommendations about asset allocation, LOW EXPENSE RATIO, NO LOAD index funds and ETFs that are 20 basis points or less (meaning less than 20 cents per $100 invested. Be sure you understand how the planner is being compensated. Steer clear of variabale annuities and whole life insurance and other VERY EXPENSIVE, high commission products.
Do NOT make any changes, promises or commitments when you meet with the financial planner. Take your time, think it over for days, weeks, however long it takes. Consider posting your situation at Bogleheads.org, for other eyes and views about your situation. There are a lot of nice people who have had a lot of experience helping others with their finances and try to avoid costly errors.
Yea, my suggestion to work with a Financial Planner was meant for planning purposes. But do be careful about investing with them. Weâd prefer to use a FEE agent, but at the moment we are working with a commision one we met at a local retirement class. We may not invest with him, and weâve been clear with him about that. But it has been a useful exercise for us.
Before you invest with ANYONE, you need to educate yourself to avoid losing literally hundreds of thousands of dollars and a lot of time and money that canât be recovered. We did that for a very long timeâLOST significant money during a great BULL market by working with a commissioned broker who sold us managed funds with a 1% management fee, front load, back load, and fees for having the account with them! It was a very costly mistake!
Depending on what amount of total investable assets you have, you may qualify at many brokerages for a free consultation and financial plan with a broker that can address your issues with NO obligation and no cost. Itâs far better to do nothing and âhurt the nice guyâs feelings,â than buy an expensive product that drains your assets. Fidelity, Schwab and Vanguard all offer this and are happy to help clients with low cost, index funds and ETFs.
Today, when I visited Schwab for may free consultation with a financial advisor, I got a free book, âThe Charles Schwab Guide to Finances after 50,â by Carrie Schwab-Pomerantz. I havenât read it yet & it doesnât have a lot of depth, but it is a place to start.
We just went to our âState of the Marketsâ presentation by our financial group - 17 page booklet that was of the overheads. Towards the end, of the presentation, they went into some of the 12 âno single solutionâ fund strategies (new private wealth managers/funds), and talked about several of the performances since 2008 - so you could see the volatility and market contractions. H and I have an appt next Monday with our financial guy Don. That way we can review the options that best fit what we want to achieve and review more closely with Don.
The key thing we look for is âincome designâ - so we do not have anxiety with market volatility. During years of retirement, cannot sustain losses. Different strategies deal with different scenarios be it market rallies or recessions. A shotgun approach does not work with various asset classes.
The S & P composite index pattern has interest - there have been growth periods then stagnant periods. 2000 to present is the 4th stagnant period, flat for 13.5 years. Is bull market beginning? Will inflation strip away this? Fed reserve prjections with fed funds rate at end of year growing, slowly build in inflation.
Analysts missed S & P 500 target projection in 2013 and 2014; 2015 has range from 2100 to 2325 for âtopâ 13 analysts with group average of 2212, 7.45% projected growth.
Strategy more important within comfort threshold; never exceed risk tolerance.
So that is my recap of presentation.
On a side note, I have two good job prospects - having a 2nd household income will improve our financial position 
We have control on the outgoing. Having more incoming will assist in building up emergency fund and have us start on some cosmetic home improvements.
Just met with our financial advisor Don, and we discussed F Squared in light of several financial articles (Including Fortune January 2015 article). Article said SEC and company were close to settling.
Don gave us his view on what happened with the company being under SEC investigation. F Squared is the name of their proprietary computer model - which was innovative, and others have mimicked. He thinks someone there POâd the SEC. Also they did not have verification on their information being acted on, so the modeling and actual returnsâŠthey have made changes. Still attracting a lot of investors.
5 of 8 sectors F Squared is invested in is anticipated to be down, so âthey are not in a binary period at this timeâ. So we have moved money into other moderate risk options.
I was reading about models to include all models, and models that include F Squared. Those that manage their own investments may want to feel comfortable with the various modeling used by their financial instruments.
Also reviewed our investment direction on 401k which we direct until Hâs retirement. Don liked that we have money in stable bonds; also that we are in large and mid cap Value accounts - he said those should do well under current market conditions. Last month I moved money out of international stock blend (both international funds had a noticeable loss for 2014 and no good outlook for 2015) - that had pulled our annual return down. Had almost 12% of our 401k in international. So now I have 25% bond, 35% value, and 40% growth (5 funds, 2 of value and 2 of growth). I think the diversification will help capture up while minimize down.
The main financial stabilizer is H is in solid job, hope it continues solid for next 7 years.
Is posting this being political? After seeing how the already progressive tax rates do little to narrow the gap between the poor and the rich, I am agreeing with this.
He says the government shouldnât license lawyers and doctors which excludes people entering those professions and thereby drives up their wages? Really. Unlicensed doctors are called quacks. Non-lawyers practicing law? Is he kidding? He also says scientists and engineers make too much money?
Sorry, who is âHeâ in the above post? Sounds like crazy talk to have no regulations and no certification or testing to meet minimum standards before folks can hold themselves out as experts and making decisions that can affect many people and lives, including building structurs that can collapse, and much more.
Scientists and engineers are making too much money because of artificial immigration restrictions on high-skill foreigners (the H1-B program)?
But this logic extends to every job, from high-skill down to unskilled. Unlimited immigration would put severe downward wage pressure on every occupation, until our wages match that of the 3rd world country the immigrants are coming from. Maybe this would be some sort of libertarian utopia, but no thanks.
I donât think this guy really understands what an H1-B is either, or how they are abused.
I think we should avoid politics here, but I do want to say one thing. Whether we agree with President Obama or not, we should refer to him with some respect. I promise you that I thought no more highly of President GW Bush than you think of President Obama, but it doesnât seem respectful to refer to either of them as âthis guy.â
âThis guyâ refers to the author of the article linked to in #4534, not the President.
The author lectures at Harvard and has written books on libertarianism.
Iâm pretty sure Iâve never said on here my feelings about either President Bush or President Obama, so you might be jumping to conclusions. I could be wrong, I donât remember everything Iâve written, but I try to avoid anything partisan.