I enjoyed an eye-opening conversation with an old friend of mine recently. He alleged that Social Security is a “poor man’s tax.” How so, says me.
Well, look at it this way. Social Security tax is collected on the first $60,000 or so of salary income. Since that is more than most of us earn, we probably haven’t given the subject much thought. But look at it this way. With the new NBA salary cap agreement, pro basketball players are going to have to learn to “get by” on not more than a measly $14 million per year. Of that amount, about $60,000 will be subject to Social Security and the remaining $13,940,000 will not. Assuming a 6% Social Security rate, that is a savings of roughly $830,000 per year.
Let’s see what happens at retirement.