Don’t take this advice.

Recently, a client told me that her tax preparer told her not to pay Social Security tax because it will not be there when she wants to use it. That is the absolute wrong advice to take.
Most taxpayers have to pay Social Security taxes on their income, regardless of whether they work for an employer or are self-employed.
Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $137,700 (in 2020), while the self-employed pay 12.4 percent.
Social Security tax it not a choice. I told her she was not to use that tax preparer again.

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2 thoughts on “Don’t take this advice.

  1. Yes, amazingly bad advice not to pay Social Security. While there was only a “reply” button for this SS-related post, my question is about the stock market — most related to your posts about “the $64,000 question” and “going all cash”.

    I’ve heard that the stock market is presently over-valued, insomuch as its relation to the GDP. I’ve heard that the ratio of total stock valuation to GDP has only been as high as it is now during great-recession-type events in the past.

    Completely setting aside election-related jitters, what are your thoughts vis-a-vis the present valuation of the stock market and the possibility of a major crash or otherwise “correction”?

  2. There is some talk of a correction, but we have been hearing that most of this year. As we regularly review holdings and allocation vs. current mix, reallocation is done to protect balances. Keep in mind, while we need to heed what is going on right now, we are investing for the long term.