Given my emails, I don't think I explained my first point in this post on Social Security very well:
If you are below 50 and in the top 40% of earners, do NOT expect to get
any Social Security benefits. Live with it. Up until now, wealthy
people have received SS retirement benefits as an expensive PR campaign
to convince everyone that SS is an insurance program, not a welfare
program. Well, I have run the numbers, and it is at least 83% welfare.
The only alternative to defending these benefits will be to suffer
through substantial tax increases which will be disproportionately paid
for by the same richest 40% who would lose their benefits. Given the negative rates of return that SS pays
on your payroll taxes, each extra dollar that taxes are raised will
only yield well under a dollar (present value) in benefits. So give up
on the benefits, campaign to keep taxes down, and start saving on your
Let me try again. When the crunch comes in a decade or so, the first thing that is going to happen is that the wealthiest people are going to lose their benefits. Yeah, I know, not fair, but does it surprise you? For years, Social Security advocates have desperately clung to the argument that Social Security is not welfare, it's insurance. That is why benefits for the wealthy still exist at all. But when crunch time comes, the wealthy, as usual, are going to get thrown overboard first.
If you are in the wealthiest 40% or so, here is what it will take to save your Social Security benefits: New taxes. These taxes will either be additional payroll taxes or additional income taxes. If they are payroll taxes, my guess is that the main tax increase will be eliminating the top cap on earnings subject to the tax; in other words, most of the new payroll taxes will be on the highest earners. If the new taxes are income taxes, then rest assured that they will be on the top 40% of earners, since it is the top 40% who pay virtually all of the income taxes in this country today.
So, to save your benefits, you are going to have your taxes increased. And since Social Security, like every government program, is leaky, and since it pays a negative rate of return, you are going to have to pay present value of more than a dollar of taxes to save present value of a dollar of benefits. That is a bad investment. If you are still in your productive years, be ready to see your benefits go bye-bye and fight like hell to keep taxes down. And save, save, save.