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Social Security & The Home Business Owner…What Should We Do?

by Mary Emma Allen on January 12th, 2008


   Odd Couple Project

Bob Turek, at ProjectManagement411, is partnering with me in a b5media Business Channel Odd Couple project. Our assignment is to consider:  At current rates, Social Security payouts will exceed payments made into the system within the next ten years. What should we do about Social Security?

He mentions possible solutions as he considers two extremes advocated by political candidates Barack Obama and Mike Huckabee in his post, Counting on Social Security? Your Next Project Better Be Your Retirement Plan.

Social Security and the Home Business Owner

My object is to consider this topic from the viewpoint of the home business owner or self-employed person.

Social Security breaks into the news as political candidates present their policies. Social Security also is on the mind of recipients as a new year begins and they find cost of living increases may be obliterated by increases in Medicare premiums and deductibles. Those who have Social Security taken out of their pay checks are aware that this affects their pocketbooks, too.

Home business owners soon realize they pay more into the Social Security fund than do employees. If home business owners have employees, they’re also paying (”contributing” makes it sound voluntary) a portion of the employees’ Social Security. Then we hear that all the contributions by employees and business owners won’t be enough in future years to keep the Social Security system going, at least as it is.

What’s the home business owner or self-employed person to do?

As you, the Home Business Owner, considers your future and that of Social Security, you have some decisions to make. No, you can’t decide you won’t contribute for yourself or your employees. But you’ll have to think of the future and realize that Social Security never was meant to be a full retirement, but a stop gap measure during the end of the Depression years.

Generally the Home Business Owner is better served to set up their own retirement plan and would benefit from privatized Social Security. Candidates who advocate increased money for recipients usually present vague, “feel good” ideas where it’s coming from. Ultimately, this generally means those who are still working will be paying more and more for those drawing Social Security, as well as trying to put something into the “kitty” for themselves…a “kitty” which the government continues to dip into.

If Home Business Owners decide their own plans for the future, maintaining the self-discipline to carry these out often is difficult, unless mandated. Too many people have gotten into the mode of “the government will provide,” and political candidates lull us into thinking this is the ideal solution. However, someone will pay. Will it be you by not having a retirement plan when Social Security runs out?

Do you have any suggestions?

What are you doing for your future? Which of Bob’s candidates do you think has the solution? Increase the maximum amount of earnings covered, institute a Fair Tax, or somewhere in between? Do you think a privatized Social Security plan will work? Should we cut out any type of Social Security or government retirement plan and let everyone “fend for himself” like they did in “the good ole days”?

Let us know what YOU think.

(c)2008 Mary Emma Allen

Tags: , , Barack-Obama, , , , , , Mike-Huckabee, ,

POSTED IN: Business Blogging, Changes, Planning

16 opinions for Social Security & The Home Business Owner…What Should We Do?

  • Liz Fuller
    Jan 12, 2008 at 7:21 am

    Mary Emma
    I’m glad you pointed out that Social Security was never meant to be a complete retirement plan that we are entitled to in the US. It was a stopgap measure that started at age 65 at a time when the average lifespan was 65. To be comparable, social security,and retirement, would now have to start at around 70 or later. We’ve inched it up to 67 but perhaps that wasn’t high enough.

    You also made an interesting point about small business owners carry additional ss expense. Is that compensated somehow in being able to deduct these costs from income tax?

  • Bob Turek
    Jan 12, 2008 at 7:27 am

    Mary Emma- there must be another way. Given how I feel that the federal, state, and property tax systems are like anchors on anyone trying to work hard in this country, I’m going to study the Fair Tax approach as an alternative. Social Security is an outdated and poor way to assist certain groups in our society. We should still provide assistance but a badly run program inside a badly run tax system is not the way to do it. What do you think of the Fair Tax that Huckabee proposes?

  • Ren Garcia
    Jan 12, 2008 at 7:40 am

    The Philippines also has a Social Security System and the same scenario of payouts exceeding payments has been raised.

    In the Philippines where families are closely knit, elders are taken care of by the earning members of the extended family; i.e., nephews & nieces & cousins, etc. In effect, the clan provides some form of social security.

  • Bob Turek
    Jan 12, 2008 at 7:52 am

    Ren- unfortunately our society is so individualistic and almost anti-family oriented that, I think, the clan mentality would not work. Do you think it might work in the United States? Maybe if we stopped programs like Social Security, such action would stimulate changes like this in our society.

  • Mary Emma Allen
    Jan 12, 2008 at 1:52 pm

    Thanks, everyone, for visiting and giving your input on the complex Social Security issue.

    Liz - Yes, there is a line on the Form 1040 for deducting one half of self-employment tax. You fill out and attach a Schedule SE. Since I don’t have employees, I don’t know how that figures in…the amount the employer puts into “the kitty” for employees.

    As you mention, the government keeps hiking up the age when one can collect full SS. I have heard discussion, as you probably have, about 70 as the age in the future.

  • Mary Emma Allen
    Jan 12, 2008 at 1:53 pm

    Bob, you asked what I thought about the Fair Tax. I haven’t studied that too deeply. I’d be interested in what you find out as you delve into this method more.

  • Mary Emma Allen
    Jan 12, 2008 at 1:59 pm

    Ren, I found it interesting to learn about the Philippines and what’s happening with Social Security and retirement there. I’d be interested in having anyone in other countries chime in to let us know what’s done there.

    We used to have the “clan” type of care for families in this country, when several generations lived together. We had grandparents living with us when I was a child, as did my husband. Currently, we’re a multi-generational family, with daughter, son-in-law and two grandchildren living with us due to family members health situations. At one time we had my mom living with us when she had Alzheimer’s.

  • Bob Turek
    Jan 12, 2008 at 4:18 pm

    Mary Emma- excellent examples of the care for families attitude. All families have reasons to do this whether it be health, inability to care for children, or death of a loved one. Thanks for sharing that.

  • Miki
    Jan 12, 2008 at 5:27 pm

    Mary-Emma and Bob, I find your idea of family care manages to ignore that there are millions, myself included, who have no family from which to draw support. I would like to see the retired Congressional and Executive office holders and their senior staff members forced to live on social security for a while, as opposed to the cushy, guaranteed, untouchable pension plan that they currently have.

    The US is the only industrialized country with no universal health care or social net, nor does it provide quality education to ALL its citizens. The kind of education necessary to earn enough to be able to save or know enough to manage a privatized social security-type account. As I recall, the groups most in favor of privatizing social security were all on Wall Street and salivating over the potential management fees.

  • Mary Emma Allen
    Jan 12, 2008 at 6:04 pm

    As you point our, Miki and Bob, this is a very complex topic.

    *I didn’t mean to imply that everyone should have or does have family to help out. Some people simply don’t. Sometimes the “helping out” can cause hardships, as I note when researching those caring for family members with Alzheimer’s for my Alzheimer’s Notes blog.

    *Getting a good education doesn’t necessarily mean a well-paying job in today’s economy. Many college graduates are working at minimum wage jobs.

    *Privatizing, if it means everyone investing for oneself, doesn’t work either, because many people can’t or won’t discipline themselves.

    *Aren’t many government employees exempt from paying into Social Security (and receiving it) because there is a separate retirement (usually better than Social Security) set up for them?

    *Social Security wasn’t meant as a retirement program…only a stopgap. And wasn’t it originally intended only for a specific number of years, but has run far longer?

    *Possibly, with the uncertainty of Social Security looming in the future, it’s well to alert people that they need to begin thinking of other ways to supplement or set up for retirement and emergencies.

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