Quote Originally Posted by nynco View Post
You don't stop paying into it once you hit the cap? Does a person who makes 1 million pay anymore into Soc Sec than one who makes 250K. No because the CAP is the point where they stop paying into it. So person who pays the full burden at 250K is paying a higher percentage than the person making 1 million.


SS tax is capped on an annual basis and resets Jan 1. Benefit payments are also capped. Regardless of what you make, when you hit the cap, the SS tax deduction stops (Medicare does not.) You have paid in the maximum amount required for "guaranteed" benefits that are CAPPED. Where does this $250k number come from? SS employee tax for 2013 caps at $110,100. It's a 6.2% rate (6.2% SS, 1.45% Medicare) on the first $110,100 whether you make $110,100 or $110,100,100. I'll say that again, 6.2% of $110,100 (2012).

When you withdraw (if you get too), you withdraw based on the amount you paid in over your working lifetime. If you made more than the other guy and maxed every year for say 30 years, you get more benefits, but never more than the max allowed, currently $2,384 for a single wage earner. Whether you made $1Mil every year for 30 years, or just hit the cap each year, you get the same benefit payment. So now does the person that made less, but paid in the same amount benefit more? What part of this don't you understand? Do you read your annual SS statement?