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k3nt comments on Optimal Employment - Less Wrong
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"-7.65% of your income into Social Security good luck getting that back"
The "Social Security will be eliminated before you collect any benefits" line is one of the great myths of USA politics. It's being intentionally propagated by one political party (hint: the one that voted against SS and has been fighting against it ever since.) SS's finances are in fine shape and the program can continue with minimal or no modification for many years to come.
Your link goes to a very brief piece arguing that most people don't think they will get Social Security benefits. Which is true! People have been told this so often they are starting to believei it! But that is a very different question from whether folks will actually get Social Security benefits.
Anyway I know this is only orthogonal to your main point, but I had to object. Spreading misinformation doesn't belong on a rationality blog.
Could you link to an explanation of why I should expect to see my Social Security payments again?
http://www.cepr.net/documents/publications/shelby-ss-2011-02.pdf
Sorry so late on the reply.
I also don't understand why the social security is counted as a negative percentage, and the retirement is counted as positive. If you subtract social security, you're counting your salary without that retirement contribution. If you add superannuation, you're counting your salary plus a retirement contribution. You can do one or the other, but not both.
There's also the simple fact that if a 9% contribution is mandatory, your stated wage will be 8% less to cover it. Just like your stated wage with social security is 7% less to cover the employer's contribution.
The amount the employer is willing to pay includes the employer's contribution to your mandatory retirement account, yes, but in Australia the amount they're claiming to pay you does not include the 9%, whereas in the US it traditionally does include the 7%,
To clarify - in the US, FICA (Social Security + Medicare) charged a %7.65 "employer contribution" that was not counted in your stated wage, as well as a %7.65 "employee contribution" that was counted in your stated wage.
See also: wikipedia
If you earn money as "self-employed", which I did for a few years, then you get to pay both.
Right-o. This can make it very confusing to compare wages between countries.
The actual cost to the employer, assuming they are providing no benefits, is your stated wage plus 7.65% for most income levels. The amount the employee gets is the employer cost, minus 7.65% (down to the stated wage), minus another 7.65% (the employee contribution), minus any local, state, and federal income taxes.
The tax band you are in is based on your adjusted gross income, but everyone gets to knock at least $5800 off for the standard deduction so it's not even your stated wage.