How to Avoid Paying Into Social Security

November 15, 2007

What? Is that possible, to avoid Social Security payments?  Well, like most things in personal finance the answer is that it depends.

My wife didn’t pay one cent into Social Security for the last seven years of working, better yet, it was all legal and above board.  As a state employee, she still contributed to a mandatory state retirement plan but she was exempt from paying into Social Security.  Being a teacher does have some benefits : )

Teachers get the summers off and don’t have to pay Social Security, at least in our state anyways.  Of course they don’t get paid as well as people in the private sector but the benefits are nice.

One of the things I dislike about the Social Security money coming out of my paycheck is that I’ll likely never see any of it again.  When she was working she had the comfort of knowing that all the money she contributed would probably be there for her when we turn old and gray.  It’s as if the personal finance fairy came up to us and asked if we wanted to stop throwing money away every month and poof, it was done.

Of course, now that she’s not teaching and working a different part time job, any money she pays into Social Security will automatically be forfeit.  I haven’t researched it myself but according to other teachers if you draw from the state retirement plan, any money you did pay into Social Security before or after teaching is forfeit. This really hit one lady who worked in corporate America for 10 years before becoming a career teacher. All her Social Security contributions from that time were down the drain.

Anyhow, if you’d like to avoid paying into Social Security, just become a teacher!

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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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33 Responses to How to Avoid Paying Into Social Security

  • Donna

    Why do I have to pay in Social Security and I will never receive any benefits? I will get my husbands railroad retirement at. 60, and we cannot get both.. Social Security and Railroad retirement . So why do I have to pay it ?

  • Ken

    First off SS was originally supposed to be voluntary, that is until politicians realized that they could make it mandatory and use these funds to pay for their special projects. It needs to be revamped and the only way that will happen is if the idiots on capitol hill are forced to use the same broken system that American citizens are paying for with SS taxes. It should be voluntary and Federal Income tax should be done away with the way it was supposed to have been after World War 2. The 2 things we the American people allowed FDR to do one was designed to be temporary and the other was supposed to be voluntary. Now both are mandatory and eating up 23% of our salaries and that money is actually being given to people that have never worked a day in their life in this country much less paid anything into the SS system, I applaud anyone who has found away around at least part of it.

  • Joshua Marcus

    Your teacher wife better be in her late sixties, because the rude awakening is coming in the form of a IOU, California style, whether you live there or not; just because your Social Security dodger of a wife found a way to entitle herself to legally thumb her nose up at the rest of us forced to, does not mean she will escape. Hope she’s old!

  • zap

    What I would like to know is…If I just turned age to work, why in the hell should I pay S.S. I won’t get it when I retire. Its just another form of government screwing us to put money into their pockets…

  • Franziah U.

    There are stricter criteria for debt collectors and loan companies to garnish Social Security and other types of federal benefits. Banks are prohibited from garnishing federal benefits unless the account in question has a 2 month supply built up, and people who depend on such benefits seldom are able to achieve that. However, federal benefits can nevertheless be garnished by parties other than banks.

  • Anonymous

    Let me answer and clear a couple of things. First of all, as long as you keep working, you still have to contribute to Social Security, that’s by law. There is no age limitation, even if you are already receiving benefits.
    Second, Social Security (SS) is not a retirement plan (certainly is not an investment), although includes benefits for old age. SS is primarily in essence insurance and disability benefits:
    social welfare program that includes old-age and survivors insurance and some unemployment insurance and old-age assistance.
    I don’t pay SS for me or thinking of me, I do it thinking on my children and your children if we are not here.

  • Kim Tanner

    To George Benson:

    I am in the process of getting my CPA lisence…still going through the school another year. From what I understand, after you reach 71, you do not have to pay social security, but you do have to continue to pay federal tax.

  • Reason

    To the ignorant population..SOCIAL SECURITY IS A PONZI SCHEME of Which we should encourage politicians to ELIMINATE!

    • mark

      Yup, it sure is a Ponzi scheme. Get rid of it. If someone did a financial scheme like SS in the private sector and got caught they’d be in jail. I haven’t worked for 7 years and I’m proud of it…I do everything I can to not work so I never have to contribute to this crime called SS. You wonder why the economy is lagging and unemployment is high? It because the gov takes all our money so no one has any incentive to work, and the people that do are doing so because they’re debt-slaves.

  • Tired of SS

    SS is crap and should be entirely optional at this point. Eff joo US government.

  • George W. Benson

    I am a 71 year man that is still woriing. Is there an age as to when I no longer have to pay income tax and social security.

  • Kain

    You’re an idiot Joe Dog. Social Security is a ponzi scheme. There are lots of people who rave about how much money they earned in this ponzi scheme or that ponzi scheme but it’s the people at the end of the pyramid that get hosed. Social Security is not a trust fund. It is all a lie. The money is taken into the system and replaced by government IOU’s and promptly spent. It is not “invested” over the life of your working but rather all the people paying into the system NOW pay for those IOU’s to the people who are retired NOW. When I retire in 30 years, it will be my children and grandchildren who are paying for my Social Security. Now look at it from an investors point of view. I pay a little over 6% into SS and my employer pays the same (for about 12.5%). I also put in 3% into my 401K which my employer matches 3% (for about 6%). Assuming I make approximately 10% returns on my diversified 401K over the next 30 years (very realistic), My 401K will give me 3-4x the monthly amount that SS will pay out, and no “greedy CEO” stole a dime. How can that be??? Because my 401K is a true investment and not a ponzi scheme. It’s not greedy CEO’s and corporations that we need to be worried about, but a gigantic federal government that acts like a corporation and is run by greedy liars tricking stupid people like you into supporting their socialist ponzi scemes.

  • David J

    Until then, I will help pay retired hard working Americans that need it.

    Jeremie – actually, you’re doing the opposite. You’re giving money to the richest age demographic in the country. The vast majority of them don’t need it. All it does is hinder the progress of the younger generation. SS is a tired old relic of New Deal socialism.

  • Joe Dog

    There are a lot of liars out there…… I developed leukemia in 1988 and was sick for over three years… I worked for IBM at the time…. IBM put me on sick leave and after 18 months sick pay they reduced my sick pay to 75% OF MY regular pay. I had three kids in college at the time and my wife worked as a school teacher.. I started to worry a little, but we did not have any credit card bills and only car payment and house payment, but they were small. I joked with my manager one day and said I cant buy milk for my kids….Well my manager informed me that I was elgible for social security disability benefits. Well I applied and started getting monthly payments for myself and kids under 18.. When combined with my IBM payments I was getting more than when working. That is social security benefit that rich folks dont like talking about and insurance companies dont want you to have… If you are working under social security benefits you do not need to pay insurance premiuns for disability, social security provides it for you and your kids under 18 for as long as you are disabled and when you reach 65 they convert you to retirement. I was on disability from november 1988 to may of 2008 from age 46 to age 65 plus some months my benefit started at 1200.00 plus a month and today I receive 1860.00/month plus 830.00/monthly for an adopted grandson who is a dependent and will continue to get his payment along with any increases until he is out of high school or 19years old. People that is 2690.00/monthly from just social security. I also get a vetereans disability payment and an IBM retirement.. The social security and the vetereans payments are increased each year. IBM has not increased the monthly payment at all and it is now 300.00/month lower than my other benefits. Privatize your social security and some CEO will share your money. IBM is a total rip off not a cola since 1992 and I dont think there was one then. If I continue to live to age 80 my social security would be twice my IBM retirement… Believe those liars if you want.

    • sharon

      Also, is it possible to pay into Social Security while, at the same time, pay into Teacher Retirement? I hate to pay into both systems, but I really don’t look forward to a life of deprivation.
      Thank you!

  • Joe Dog

    Why all the lies about teachers not getting social security if they retire on state retirement system?????? Who ever says his wife does not pay social security because she works 10 months is a liar… When teachers retire after 30 years service they start getting their retirement at age 55 and age 62 they can start getting reduced social security payments and get their regular social security payment at age 65. My wife in north carolina gets 1850.00/monthly from social security and 3288.00/monthly from state retirement and that is a total of 5138.00/monthly which is more cash monthly than when working. My sister is doing the same in Richmond Virginia. A cousing is doing even better in Buffalo New York. In Illinois they do not pay into social security and they dont receive any unless they earned 40 credits at some other job… Why the lies about social security???? I will tell you why,,, look at the stock market they have stolen all that is there and they need your 401k and your social security…. Only the very rich want to get rid of social security….
    The reason is limited resources….. Can you just imagine how well my wife and I live with retirement income over 10,000.00 cash per month and no car note and no house note… We have actually purchase three townhouses in last three years for investments for our grandchildren and to send them to college if necessary… Our combined 401k is now over 750,000.00 and we dont touch it, we are reinvesting it out of the country. We will not be supe rich, but we will be independent and rich folks dont like that… None of our adult kids will ever borrow for a car, or a house, we can finance those purchases with our 401k or save and pay cash… This has been possible even thought we did not plan this.. We had no idea that the retirements and social security would amount to that much and it now seems like it was just yeaterday when we started. We were close to divorce several times… Now I see why you should not divorce, retirement benefits are too great and you lose… Our friends that divorced are working and paying mortages, while those that stayed the course are on vacation or cruising or whatever.

  • LESLIE G. MOORE

    I am working and collecting full social security. I am paying into social security thru pay roll deduction. When I retire, will I receive more benefit because I am still paying into social security?

  • rebecca

    The forfeit thing can’t be right. My dad is/was a teacher and he deliberately chose to work summers at Target for a while until he qualified for SS.

  • Robert

    Hey, it ate my previous comment! :)

    Not paying into SS for a period theoretically reduces the benefits you will receive, but so does potential bankruptcy of the system, so depending on your outlook, it may or may not constitute a problem.

  • Robert

    Lowering the amount you pay in theoretically alters the amount you would receive, but depending on your outlook of Social Security’s future, that may not really be considered a problem. :)

  • MoneyNing

    I wish I didn’t have to pay social securities! It’s something I will never get back either. It’s a good idea but the implementation sucks I must say…

  • Jeremie B

    Must be nice not paying into the world’s biggest pyramid scheme eh? Eventually, I just want to make huge dividend income so I can avoid it too ;) Until then, I will help pay retired hard working Americans that need it.

  • dave

    Social security is a “pay as you go” program, so no, you probably won’t be recieving any of your social security taxes back as retirement payments, because they are going to current retirees.

    That doesn’t mean you won’t be getting any social security benefits, however. The 2007 trustee report on Social Security estimates that tax revenue and the social security trust should be able to pay full benefits through 2041, and that payroll tax would be able to fund 70-75% of promised benefits through 2081. Not great, but not nothing!

    As for “forfeiting” social security benefits if you are a teacher and draw a pension, that isn’t completely true. If you are a teacher or public employee who isn’t covered by social security (I think there are about 14 states where that is the case), then you don’t gain eligibility for SS benefits for that job.

    But since many teachers have other jobs during the summer, or other careers (like the lady you mentioned), those earnings do count towards qualifying for SS benefits. The confusing part is that the pension does reduce the amount of benefits that you would otherwise get, and can eliminate spousal/widow(er) benefits.

    There’s lots of information to be found on the Social Security website (ssa.gov) about all the specifics, so don’t just take my word for it! :)

    • sharon

      I am a teacher in Texas. The problem for me is that I have taught in public school for 5 years, but I taught in private schools and college for a few years before that. Before I became a teacher I paid in 40 quarters to Social Security. I plan to retire at or around 70 years old. The problem is as a teacher in Texas, I can’t draw Social Security and Teacher retirement. Consequently, the amount of money I will draw from Social Security or Teacher Retirement is about the same amount which is only about $1390 per month. I certainly don’t see this as much of a “Wind Fall.” It seems that there should be a way for a person such as myself to be able to draw both Social Security and Teacher Retirement because it is neer impossible to live on $1390 per month. I have paid into both systems. Other people who earn retirement from their jobs get to draw that retirement and Social Security. There should be provisions in place for people that have worked hard and need to have enough money to survive until death.

  • Scott

    I am not sure that the amounts would be completely forfeit. I know there is a windfall provision that reduces benefits but does not eliminate them, especially if a teacher worked a short time and had a non-government job for a long time.

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