Social Security is funded, at least in part, through the earnings tax called OASDI on your paystub. OASDI is the acronym for Old Age, Survivors, and Disability Insurance. It is based on 12.4% of the employees gross income. The employer pays half and the employee pays the other 6.2%.
Be sure that you understand this tax deferral is not like the free gift of salvation that God offers to everyone, and each of us make a decision to accept or reject the offer--whether our decision is an active acceptance or rejection, or a passive refusal to make a decision, which is in fact a passive form of rejection.
No, this tax deferral is more like a totally inadequate loan, which you neither want nor asked for, being forced on you. And the repayment is a wage garnishment which occurs when you have the least amount of resources available.
If you, or your employer opt in to this deferral, you will pay it back on federal government terms.
As a federal employee, I am not even allowed to opt out. So it truely is being forced on me. Which means January through March I'll have twice the tax taken out to pay it back. At a time when I personally am traditionally already short on cash. This is not good. This is not a gift.
Oh, a disciplined person will not touch the extra money in their paycheck for the next four months. However, I am not disciplined.
If I were disiplined I would not have 7 alarms set each morning. My checking account would always remain black and my savings would be healthy. I would not have a weight problem. I would always know what time it is, and I would diligently focus on my plans rather than get sidetracked chasing rabbits.
However, I do chase rabbits. I get sucked into the 'net hours at a time. I frequently arrive just-in-the-nick-of-time. I am overweight. I hit the snooze multiple times each morning. My checking account is anemic and my savings account is lean. I am by no stretch of the imagination disciplined.
In fact, every pay period I have an additional $50 taken out to cover federal income taxes. It's how I ensure I always have a small refund due me, and I never have to pay the IRS more in April. If that $50 were still in my paycheck, I would spend it. When I see this tax deferral I will spend it. I know myself too well to know I will do otherwise.
And spending it is what the federal government wants us to do. To bolster the economy. To give the workers breathing room. So they say.
Like many, I have more expenses during the holidays. Like many, I pay for a lot of those expenses on my credit cards. Therefore, because I aim for zero balances, I'm typically paying more on credit card bills the first quarter of the year.
I count on my IRS refund each year to pay down any remaining credit card bills. Or repairs, or tires, or tution or CE courses--you get the idea.
In good years where I've made wise money choices, I use it to take a much needed vacation. Two years ago I combined my vacation with a workshop and study course.
The need is different each year. The refund does not cover the need, but it catches me up and makes the first quarter bareable.
This social security deferral will have to be repaid during that period of the year that I am already cash strapped. So not only will I have my own poor spending to repay, I will also be forced to repay an unwanted, forced on, me deferral/loan.
In order for me to survive this "gift" I will have to be very tight with my spending the rest of the year. My tightness is going to aid in stiffling any business depending on my spending. Therefore, this tax deferral will not provide the relief or economic stimulus that a second stimulus check would provide. In fact, I believe this deferral will serve only to hurt the economy and enslave us.
Yeah, I know: the President says he will forgive the taxes and make the deferral permanent if he's re-elected; however, I don't believe that for a second. That is a campaign promise coming from a politician.
Politicians are not to be trusted or believed and campaign promises are not worth the hot air it takes to voice them.
This deferral will not induce me to spend more. It will not bolster the economy around me. In fact, it will have the opposite effect: I will pull back on my spending now, try to sock away a little bit more than 7% into a hard-to-access savings account, and pray to God it is enough to pay expenses and increased taxes I will incur starting January. Others will spend now with no thought or plan of repayment until they are in a world of hurt next quarter. Many will turn to payday or personal loans to make ends meet.
And spending it is what the federal government wants us to do. To bolster the economy. To give the workers breathing room. So they say.
Like many, I have more expenses during the holidays. Like many, I pay for a lot of those expenses on my credit cards. Therefore, because I aim for zero balances, I'm typically paying more on credit card bills the first quarter of the year.
I count on my IRS refund each year to pay down any remaining credit card bills. Or repairs, or tires, or tution or CE courses--you get the idea.
In good years where I've made wise money choices, I use it to take a much needed vacation. Two years ago I combined my vacation with a workshop and study course.
The need is different each year. The refund does not cover the need, but it catches me up and makes the first quarter bareable.
This social security deferral will have to be repaid during that period of the year that I am already cash strapped. So not only will I have my own poor spending to repay, I will also be forced to repay an unwanted, forced on, me deferral/loan.
In order for me to survive this "gift" I will have to be very tight with my spending the rest of the year. My tightness is going to aid in stiffling any business depending on my spending. Therefore, this tax deferral will not provide the relief or economic stimulus that a second stimulus check would provide. In fact, I believe this deferral will serve only to hurt the economy and enslave us.
Yeah, I know: the President says he will forgive the taxes and make the deferral permanent if he's re-elected; however, I don't believe that for a second. That is a campaign promise coming from a politician.
Politicians are not to be trusted or believed and campaign promises are not worth the hot air it takes to voice them.
This deferral will not induce me to spend more. It will not bolster the economy around me. In fact, it will have the opposite effect: I will pull back on my spending now, try to sock away a little bit more than 7% into a hard-to-access savings account, and pray to God it is enough to pay expenses and increased taxes I will incur starting January. Others will spend now with no thought or plan of repayment until they are in a world of hurt next quarter. Many will turn to payday or personal loans to make ends meet.
Be prepared. This tax deferral is not in your best interest. It is not in the best interest of small business.
Whether this quarter or next quarter this tax deferral is designed to enslave not liberate.
