Throughout the fiscal cliff debate, all we heard from the pundits on the TV and the tax and spenders in Congress was that we needed to get a deal or the world was going to come to and end...or something like that! That is how they made it seem, and because the people follow their elected officials around like a lost puppy follows a little boy, none of them decided to ask if the payroll tax cut would stay in effect or if it would be allowed to expire. During the whole debate I do not think I heard it spoken about once, and only listed on certain websites of some of the taxes that would be going up if there was no deal done. Yes, even the media made everyone think they would extend the payroll tax cut, and when it came down to it everyone got the short end of the stick.
So why is it that today and for the past few days have we been hearing people just lose it on the social networks because their paychecks are now less? Did they not know this was coming? Did they not pay attention? Of course they did not pay attention. I bet most people did not even know they lowered the tax two years ago, but these people figured out that their pay is now lower. And who do some in the media want to blame for this? THE REPUBLICANS! They want to blame the Republicans in Congress for this not getting renewed, when if the President wanted it renewed he would have got what he wanted since Boehner gives him whatever he wants anyway. This is the fault of the American people for not paying attention and Congress for thinking that the people would not say anything when they got their checks and there was less money in there.
I know some on the Right will be saying that the tax NEEDED to go up because it helps pay for Social Security. Let me explain something to you all on the Right that want me to care about Social Security. I DO NOT CARE! I am 29 years old, so what are the chances I am going to get the money back that I am paying into Social Security? I figure I have about as much chance of ever seeing that money again as I do a strip club closing down, moving into my back yard, and I get free lap dances before bed every night! It is just not going to happen, yet there are those on the Left and on the Right that think I should be paying the full tax!
This is not about some cheap excuse for not wanting to pay my fair share, this is about getting a return. I do not care about paying the tax, but the rate should be lower and I should be able to save that money the way I see fit. Let me give you an example, just in case some of the older readers think I am trying to screw them over and take their money.
Let's say I pay $15 a week more after the tax increase. That does not seem like a lot, and many who say the tax should have gone back up will try and use this as saying it is not much money. When we look at the month, I will pay $60 more a month is taxes. That could be money I am putting in a retirement or even a savings, whichever I decide to put it in and save. Over one year, I could save $720. That could have been money that I put away for my later years. Again, I know there are some that are saying that is not a lot of money and we need it to pay for Social Security.
I am 29 years old, as I have said. If I had that $15 a week to save until I was 40 years old (11 years) I would have saved $7,920 toward my later years. That is not counting any interest I would make off of it by putting into the market or investing it another way. If I were to retire at 60, keeping in mind Social Security will more than likely not be around, I would have saved $22,320 to do with what I wish when I am done working.
This may not seem much to all of you, but it is a good chuck of change considering it is not taking into account what I will make from that money while it is sitting there and gaining for 31 years! At the beginning of 2012, the average payment from Social Security was $1,230. It is hard to tell how long a person will live, how much they will receive in a given year, and how many people will be on the program but taking those statistics into account, and given a life expectancy of 78 years with a retirement age of 67 for full benefits, you can expect to get about $162,000 in your life based on the current life expectancy in America. I said I was going to work until 60, but if I had to work until 67 and not get ANY benefits at all, with the cut I would have saved $27,360 of my OWN money! Given again the life expectancy as it is today, I would have (without any interest gained) $200 a month!
Some of you may be saying that I am making your point for you, but in reality you are so far off you do not want to see the truth! Take that $27,360 that I saved from the 2% cut in the tax. That is $720 a year. If I were to make a MODEST 7% return through a mutual fund a year, that is another $2000 that I have saved. Again, this math is not quiet giving you the full picture because the amount being put back in every year will be higher and the interest will be higher, and my math is terrible so just stick with me on the basics and I will show you that this works.
Let's round it off and say you have saved $225 a month for retirement. That is what you have to spend of what you saved. This is not counting any other money you saved, JUST the original $15 a month! If you are REALLY worried about your retirement and worried SS will not be around for you, you are going to save more like I do! I saved approximately $300 a month, or $3600 a year! After 38 years, saying I will retire at 67, I would have saved nearly $136,000! Without ANY interest at ALL on that money, I would have saved enough to portion out a little over $1,000 a month. Social Security average is $1230 a month! At current market rates, I would have no problem exceeding per month what Social Security is going to give me. Now, those who make more can save more and that number would be much higher. When I was working in my field and making much more money, I saved nearly $1300 a month!
Yes, I am single and those who are parents and have a home and bills would have a problem with that but is that not a good enough reason to start teaching our kids sooner about the value of a dollar and saving and not telling them the government will be there for them even though we know they will not be?
I want to throw in one more piece of knowledge that goes with all the figures I have been throwing around. If I were to save that $720 a year and each month save just the $60 with annual interest at 7%, I would have saved, by the time I am retired at 67, over $132,000! If I save the $225 a month, that is nearly a half million dollars saved at 7% interest annually.
As you can see, the people can save for themselves. Can you imagine if someone my age was allowed to keep not 2% but 3.5% or even 4% of what they would be paying into Social Security? I could opt out of the program TODAY, save my own money, and when it comes time to retire and I save properly, I will not even MISS what Social Security has to offer. But because the government does not trust us with our own money, they will keep printing so all of us have to pay more. This means I will be saving less, which also means I may have to look for the government to come and help when I do get older. They will not be there, I think mabny people from both sides know this, so where do I go?
This leads us into generations of poverty just from this ONE decision. The young people of today have to stand up and take care of themselves, or at least start learning how to. We need to start saving as a nation and as individuals and we can do it if we try. We can give up the entertainment for a night or even the bar for a week. We can give up the $30 a week in coffee and make our own! If we do not start to take care of ourselves then NO ONE will be there to do it for us in our later years.
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