The Solution To Social Security Problems: Die Young And Stay Single

Presidio Golf Course In RetirementImagine working for 40 years, each year paying Social Security taxes and dying at the age of 62 with no spouse to bequeath. The Government is going to secretly laugh at you because they now get to keep the hundreds of thousands of dollars you paid into the system for free, baby!

Meanwhile, if you get married the Government will make sure to tax you at a higher rate (marriage penalty tax) to ensure they get more of your money and perhaps even deter you from getting married so they can pay out less in Social Security benefits. Makes you think, doesn't it?

Why else do you think the income threshold for a 39.8% income tax rate stays at $400,000 and jumps to only $450,000 for a married couple instead of $800,000? Not sticking to the $200,000/$250,000 income threshold for tax increases helps thousands of people living in expensive areas survive.

Ironically, the $200,000/$250,000 income threshold was more fair since $50,000 divided by $200,000 = 25%. Now, $50,000 divided by $400,000 is just 12.5%. The Government is sexist and wants one spouse to just stay at home or make less money if they get married. Absurd!

The maximum taxable earnings amount for Social Security (OASDI) taxes is roughly $118,500 for 2016. There is no limitation on taxable earnings for Medicare's Hospital Insurance (HI) taxes.

  • Employee-portion: 6.2% of wage earnings, up to the maximum wage base of $118,500;
  • Employer-portion: 6.2% of wage earnings, up to the maximum wage base of $118,500;
  • Self-employed persons: 12.4% of net self-employment income, up to $118,500.

For 2011-2012, the employee-portion of the Social Security tax was reduced from 6.2% to 4.2%. Self-employed persons also received the same reduction from 12.4% to 10.4%.

States That Don't Tax Social Security Benefits


Now that you know the government wants you to die by age 62 (the current earliest age you can start receiving Social Security) and stay single, what are you going to do about it? There are only about two workers supporting one Social Security beneficiary now vs close to five workers for every one beneficiary back in the 1950s. By the year 2033, the Social Security fund will only have enough to pay out 75% of what the program promised. Clearly, all of us will pay more into the system than we will receive.

Solution #1:Go Galt and work less, so you can pay less taxes. Even better if you can stop making W2 income altogether and just have passive income. We know the Government is incredibly inefficient with handling our money. The people who are getting short changed the most are the ones who make around $114,000 a year in regular wages but not much more. They are the ones who are getting taxed on their entire income, while likely getting the least benefits vis a vis what they put in.

The people who are getting the most benefit are the ones who make less than $50,000 a year or make much more than $113,700 a year. Mathematically, you get the biggest bang for your Social Security contribution buck if you earn around $50,000 or less. Meanwhile, if you make so much more than $113,700 a year, Social Security tax as a percentage of your overall income drops to minute levels. The wealthy don't really care about Social Security. Any money that does come during retirement is just a bonus.

Solution #2: Live a long, beautiful life. Most actuarial calculations use a lifespan of 85 for women and 83 for men to calculate Social Security funding nowadays. Each year we live beyond 85/83 is one more year where we can benefit extra from Social Security. If the average payment is $1,000 a month, then each year we live is an extra $12,000 back from the government.

Living a long life means eating better, exercising, not smoking, being less stressed, and not risking your life doing too many crazy things. Given the majority of us aren't very healthy, we aren't doing ourselves any financial favors. From the Government's perspective, an unhealthy America is a good thing for Social Security, since more people will die young from heart disease and so forth. The problem is the burden an unhealthy America puts on our health care system.

Solution #3: Flee the country or renounce your citizenship like Edward Saverin of Facebook, who is worth $6B+. It's great to see people doing something about their finances by moving from highly taxed states to lower tax states. States such as Washington, Oregon, Florida, Nevada, Wyoming, Texas, Alaska and Florida are all on the list for mobile folks.

On the international front, Hong Kong has a 15% flat tax and Singapore is not bad at around 20%. Even mother Russia has a flat tax of around 15%. The list goes on and on. Unfortunately, the US government still gets you with an “exit tax” and future taxes over the next seven years or so. Custom officials might give you stink-eye if you try to return as well.


Be aware that Social Security payouts is calculated using 35 years of average earnings after you've obtained 40 credits over 10 years. Given I worked for only 13 years after college, my calculation will look something like this:

$100,000 X 13 years = $1.3 million divided by 35 = $37,142 in average income for 35 years.

* The $100,000 comes from me earning the maximum income, and therefore maximum payment to Social Security for 13 years.

* 13 years is the number of years I worked.

* 35 is the number of years Social Security uses to calculate my average income for that time period, to then figure out the payout.

Based on the above calculation, if I decide never to work again, I will receive a Social Security payout benefit equivalent to someone who has made roughly $37,142 for 35 years. As a result, I should be able to collect about $1,000 a month in Social Security after the age of 62. Try doing the calculation yourself and checking out the SSA calculator.


There will be Social Security for us all because the middle class will revolt if Social Security disappears.  We can count on the middle class looking out for ourselves to keep our politicians in check. After all, politicians need the middle class vote to keep themselves in power.

Despite knowing the government wants us to die young and/or stay single so they don't have to pay out hundreds of thousands of dollars in Social Security benefits, I'm sure many will still vote for bigger government. The future is the future and does not concern many of us. If it did, we'd balance the budget already and not leave the burden to our children. What concerns us is what we can get from the government now.

Some might call taking hundreds of thousands of dollars from people stealing. The reality is most people don't mind, otherwise, we'd vote down big government. From Mayor Bloomberg's decision to regulate how much soda we can drink to allowing politicians to dictate who we can marry, the people enjoy being told what to do. Once we have to make a decision, oh no!

Harness the benefit of not paying social security taxes to motivate you towards early retirement. After you get your 40 credits, you're pretty much set. Let's take back our money for the good of our nation!


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39 thoughts on “The Solution To Social Security Problems: Die Young And Stay Single”

  1. larry in reno

    You young people have no clue who will live to retirement age. So what if you don’t smoke. Other factors just may get you. Some people smoke and live to be 100 some people die in their sleep at 33. Surprise! Don’t mess with what you don’t know.

  2. I personally feel a little lucky… I’m contributing to Railroad Retirement instead of Social Security. It’s not suffering from any funding issues due to higher RRR taxes and higher average wages. The downside I’m just coming close to the limit on taxable income…

  3. Not sure if that is actually correct – smokers and drinkers can cost a lot in medical care.

    BTW – medical care NOT SS is the real problem. However, the solutions regarding medical care costs – much more difficult and much less palatable. Thus, people keep talking about SS like it is the REAL problem – it is NOT!

    1. I have some possible ideas – BUT – I know they would NEVER happen and are very polarizing – thus I will not write them. Lets me just say they are similar to what is in Brave New World and leave it at that.

  4. Erm…effective tax rate in singapore is much much less than 20%. My effective tax rate is around 6% for an income of 120k. But then we have no social security, disability, or unemployment, SNAP or much of any form of welfare here. What there is, is highly regulated and difficult to qualify for, unless you are really poorer than poor. You don’t Work, you don’t eat.

  5. So perhaps the strategy is to make a ton of money for a short period of time and have an AGI from normal wages below 18k?

    Do you know what the 18k represents? Is that the level where u collect X amount of SS and not have to pay SS taxes?

    1. There is a formula for calculating ss retirement benefits. You calculate the average monthly income. Then you take certain $ value and multiply by 90%, the next number of $ is multiplied by 34% and $ above this are multiplied by15 percent. (This may not be 100% accurate but it gives you an idea.). That is lower income earners get back more of what they put in than high income earners.

  6. Sam, hook us up with pretty graphs, you’re already doing the in depth research! I want to see how it falls off after 113k and how bad it gets after 50k (I heart numbers).

    I think you would be crazy if you relied on the government for pretty much anything. Every year we get to see how efficient they are at chop-shopping our country. That said, I’m looking forward to my social security check as I’m going to make it my booze budget. At $1k a month I’ll have quite the parties ;)

  7. For my retirement I am not even planning on SS. I don’t think it will be around by the time I retire. So I am trying to depend on my own savings and that’s it. I figured it will be a nice surprise to still get something back after all these years of contributing but if it doesn’t happen, at least I have a plan A. Not even B. :)

  8. I view my Social Security payments as my own contribution to help the elderly and disabled survive day-to-day in our country. I don’t really expect to receive any benefit back from it, and I am (now) saving with that in mind — but then again, I’ve been told since I was a child not to expect Social Security to be there for me when I retire. As far as I’m concerned, I donate 6.2% of my annual income to a charity that, for the most part, helps the elderly and disabled.

    P.S. I’m also in the income bracket “getting short-changed the most,” if that’s useful data for anyone.

  9. In 1940, about 58% of the population survived from age 21 to age 65. (53.9% for males, 60.6% for females.) Once they reached age 65, they lived for about 14 years in retirement. (12.7 M / 14.7 F)

    In 1990, about 78% of the population survived from age 21 to age 65. (72.3% males, 83.6% females.) Once they reached age 65, they lived for about 17 years in retirement. (15.3 M / 19.6 F)

    Unfortunately 1990 is the latest info on the SSA website.

    So, for those turning 65 in 1940, they had 42% of the workers that most likely paid something into SS but never received any benefits. They might have died at age 25 and paid very little into the system, or they might have lived until 60 and paid a lot into the system and never saw a dime. That money would then go to a spouse, dependent, or to another retiree. In 1990, over 3/4 of the population that reached age 21 also reached age 65. Now only 22% of the workers paid something into SS but never received any benefits. Also, they are going to get additional benefits for an average 2.6 years for men and 4.9 years for women.

    We have a 34+% greater chance of living to retirement age now. We are also likely to live at least 4 years longer in retirement. (Adding on an extra year or so since the stats only went to 1990 and the life expectancy has been rising the last 23 years.) How do we make up for this gap? Raise the retirement age? Tax at a higher rate during our working years? Reduce benefits during our retirement years? It’ll be interesting to see what our elected officials decide to do in the coming years.


    1. So far the elected officials have done NOTHING!

      I hope they do ANYTHING sooner rather than later!!!!

  10. I live in Oregon and don’t believe it is in the same class as the other ‘low tax’ states. Income tax is ~9%. There is no sales tax – a bigger benefit for large consumers (not typical of retirees).

  11. Kim@Eyesonthedollar

    I’m sure the age to withdraw will keep going up, and the amount you can withdraw if you have other assets will go down. I’ll have to live a long time to see any benefit at all. I wish I could opt out.

    1. We can hope. Social security used to match the average lifespan much more closely. If we’re not fit to work a bit longer with our longer lifespans these days, it it really worth living the extra time? Raise the age!

      1. You make a GREAT point – we keep extending the NUMBER years that people leave. However, the quality of those years for many people is not good IMHO.

        1. It is a difficult problem. Raise the age enough and then older workers may just end up on disability to fill social security gaps. Leaving us maybe worse off on the whole.

  12. If my good genes keep me alive to 100 years old, I will certainly take out more than I put in and then some. The bad news is I will taxed on most of it. I will try to do something about that.

    Regarding the $400/450,000 threshold, I think the legislators think people who earn $400K have stay at home spouses. Hence the small increment!

      1. People in their thirties should live longer than the average is today, but everything depends on how they live between now and the future. The people who live a long life generally have good genes, have a healthy lifestyle and live a stress free life. I suppose this is even more of a reason to increase the retirement age for Social Security.

  13. My replies are being eaten :(. Would those of you against the marriage penalty support making it 225k for singles (450k for couples)?

    married couples, due to greater financial stability and whatever, tend to pay a LOT of taxes. the govt isn’t going to give that up.

    but hey, equality is equality, right?

    (subject to the marriage penalty with DH at over 200k together – those lousy singles should pay too!)

    1. I think we need a truly equal tax system by removing all personal credits and deductions. A married person with two kids who earns $100,000 a year while paying on a $300,000 mortgage should pay the same exact amount in federal income taxes as a single person with no kids who earns $100,000 a year while renting an apartment. Marital status, number of children, homeownership, charitable givings — none of these things should matter when it comes to federal taxes. There can still be a tiered rate structure based on income level, but no more social manipulation through our tax code. Everyone could fill out a one-page tax return since figuring taxes would be so simple.

      1. As another poster mentioned, too many people have kids or spouses for true equality. The majority can be rather tyrannical. That’s why removing the singles,tax benefit aka marriage penalty will go over much better – lots of voters are married. Equality has always come one step at a time.

  14. Sam, reading this column, it is almost like you are making a case for staying single. Hope your sweetie is not holding a (metaphorical) gun to your head, that has been
    happening a lot this week to guys named Dogen. Marriage is a great deal when the right people come together, but whatever turns your life takes I’m sure you will be happy and make it a success.

    Trying to make sense of taxes paid, compared to value received, is only going to end in frustration. Especially for a high-earning and high-networth individual like yourself. I no longer bother; the real ‘tipping point’ for Social Security came a few years back when the percentage of Americans under 30 was greater for belief in UFOs, than a future S.S. benefit. At that point, S.S. hired public relations and marketing consultants (as did the USPS), and started sending out bi-annual benefit summaries. Fighting to justify relevance is a big red flag. For myself, counting on the U.S. government for anything seems like a high-risk strategy.

    btw, there is a Solution #4, for those highly mobile and highly motivated. Also good for those who want to stay single.:-)

    I like your recent emphasis on “building that nut!” You have figured a way out of the rat race, and are lighting the way for me. Continued success to you.

  15. Darwin's Money

    I plan on living to a ripe old age and getting my money’s worth!
    However, responsible Americans, like you and I, will likely be “means-tested” right out of social security and we’ll see a negative return on our investment. That is, unless Americans start procreating again or we start importing a heck of a lot more tax-paying immigrants. Our population growth is nowhere near sufficient to fund Social Security at the current pace when we’re 70 or 80.

  16. Getting married no longer means one person will automatically stop working even after having kids. So many couples are both working now and it’s nonsense that the government still hasn’t changed the way they treat married filers vs single.

    I certainly hope I live past 62 and I’ve also considered moving abroad after I retire too, but I haven’t figured out where or when yet. It’s unfortunate the payroll taxes jumped back up, but life goes on. I’m just being more cautious about saving for retirement, limiting spending, and staying in control of my finances.

    1. Yes but the govt would lose a lot of revenue if they got rid of the marriage penalty – married couples pay a lot of taxes. Would you be so enthusiastic for equality in the other direction? (ie top tax rate hits at 225 for singles and 450 for married?)
      It’s equality.

      1. There’s never an all around win for everyone. And as you said, married couples certainly do pay a lot in taxes and the term marriage penalty is what it is.

  17. I have no qualms about not getting any benefits if I die before 62 – however, I HOPE that I live to 100+ and get back MUCH more than I paid in.

    To me it is like an insurance policy – if I die and don’t get anything back so be it. Think about house insurance, if you pay in for 40 years and nothing happens to your house – you have paid a lot in but got nothing out – to me it same same.

    Its all about actuarial computations – there are winners and losers! Become a winner – live long!!!!!

    1. The problem with the house insurance analogy is that house insurance costs less than 0.001% of the value of my house at least every year. I’ll take those odds, not so much SS.

      1. I think you have an extra 0 in your calculation!

        The point is its insurance – if you die – you did not need the money.

        I realize most people will not agree with me – however, I think they should do away with the social security tax and just increase the federal income tax. Do high earners get back the value of what they pay in taxes – I think most high earners would say no – however they want to get back the value of what they put into social security.

        Additionally, what most people do not understand/do not want to calculate into this debate is disability and death insurance. If you work 5 years and become disabled, you collect SSDI – if this occurs – you are going to get out MUCH more than you paid in. Also, if a husband dies at a young age and has children, – his wife and children will get survivors benefits that will be much higher than what he paid in.

        Sam – make them pay – live to 120 years old!!!!!

  18. As for Solution #3, if you go internationally, you’ll have to pay taxes on the way out, which would likely be pretty significant. Savarin’s tax bill as he was leaving was said to be HUGE. But, as I’ve stated before, living in a low tax state results in some pretty big long term savings.

    As for social security, if I were a benevolent monarch in our fine union, I’d take the next 20-30 years to slowly increase the retirement age at which benefits are “guaranteed”, and make a secondary threshold below that age where benefits would be smaller and means tested. I’m envisioning a two-tiered system where if you’re super poor, you could get a small welfare like check at 65 or 67 if you’re unable to work, and then if you live to 90 or 95 you start collecting the equivalent of your full retirement benefit.
    To me, this would solve the problem of helping people who are poor in their old age, and allow other individuals to plan to fund their own retirement for 25-30 years first, then get a significant amount of help if they live well beyond the statistical norm. But I’m not an economist, so maybe there are major flaws in this plan that I don’t realize, too….
    Either way, any structural changes would need to be gradually worked in to give people time to plan accordingly, so the sooner those start, the better.

  19. Best solutions is #3 relocate to a lower tax state. It is amazing how many people and companies are relocating to one of the states you mentioned.

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