Saving Little for Retirement Under Proposed Tax Plan

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First of all, let’s discuss Social Security for a second. My personal thoughts are that I will never see my benefits in any way, shape or form. For about three decades, since I was 16 years old, I’ve been paying into a system that I always knew was going to go bankrupt.

How did it get this way? Well, there are several factors. Social Security was part of the New Deal that President Franklin Roosevelt gave to Americans during the Great Depression. The intent of Social Security was to stimulate the economy at the time by giving money to those who could use it, while setting up a system where future generations would not have to worry about retirement.

Here is where Social Security went wrong. The taxes that were paid in the 1940’s, when the system was rolled out, were used to pay the seniors from that generation, who didn’t pay into the system.

The Greatest Generation, who were paying into the system at the time, would have their benefits paid by the next generation. The Baby Boomers had five payers into Social Security for every one person that was receiving benefits. In theory we should have a surplus in the system today, but we don’t.

When I look back at it, Social Security was taught to me by an idealistic 11th grade history teacher, who told the class that our Social Security number was the key to some sort of mystical bank account that would miraculously support us when we retired.

However, what did the US government do with that surplus of Social Security money?

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About Craig W. Smalley, EA

Craig Smalley

Craig W. Smalley, MST, EA, has been in practice for almost 23 years. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.

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