Social Security- Bane or Blessing?

[nathan61]

I am currently teaching at the American School of Antananarivo, and the board of directors is talking about teachers paying a mandatory 7.5% of their salary into social security next year. I am a little sensitive about this because they just told us and it is May. We signed our contracts for next year having no idea about this new "benefit."

I have been teaching abroad for the last seven years and hardly have a penny in the social security system. For someone like me (who is saving plenty for retirement and doesn't plan on teaching in the USA) are social security payments really a benefit? It is my belief that most schools do not pay into the system, so my chances of racking up 10 years of social security payments are pretty slim.

Any thoughts will be much appreciated!

[interteach]

You don't accumulate Social Security points by the year, but by the quarter. You need 40 quarters to be vested.

Even though I'm funding my retirement quite well, I wouldn't mind be able to contribute to SS - but that's only because I'm a US citizen. It could be a good secondary savings plan.

[Rob]

Social Security will be part of the retirement system I'm sure in your future. After 40+ years of teaching overseas, I'm glad I was in three of the schools that contribute into social security if for no other reason that I now have Medicare. I have more than 23 adult years of not paying into any social security, so that the three schools I was in allowed me to barely qualify for Medicare and still receive about $600/month is social security.


Rob

[porter1]

There is a table the government provides that stipulates the pay-in and its function of pay-out. I believe there is a tipping point where one can maximize pay-out for a limited pay-in. It's not a linear function. I would also advise paying into it toward the end of one's career, as the nominal, but not real value, of the pay-in would be higher.

[sid]

7.5% seems high, particularly if unexpected, but it might be easier than you think to get those 40 quarters, and it could be well worth it. If you're like many Americans, you worked a few jobs along the way through high school and college, perhaps before going international, so you should probe how many quarters you already have. You can check this through the SS website. Then consider how many more quarters you need to put in, and remember that if you make that cut, you'll have guaranteed income and access to other benefits for life. It might not be an amazingly high amount of income, but something is better than nothing. Perhaps just a year or two more at this school would be enough to tip the balance.
I agree that a school shouldn't really be adding this in without better notice - as you point out, before contracts are renewed - but it is also possible that it isn't entirely up to the school. Some American schools, with their official relationships with the US embassies, are legally required to do such things. I don't know if your school is one of them...

[lgtallie]

In the three schools I have worked at internationally, none of them gave me the option of paying into SS. I know I paid into it until I moved overseas so it might be worth it for me to continue paying into it until I am vested...but, will it be around 30 years from now when I retire? I would probably pay into it given the option because I'm an optimist, but I would love to see some proof that SS will still be around in the future.

[nathan61]

Thanks for all the input. I agree that SS could be really good. For me the trouble is that I only have about 4 quarters vested in it because I have been overseas since graduating from university. It doesn't seem like many schools are contributing, so the chances of getting 40 quarters in the system seem slim. The school is choosing to adopt it, and they could have told us before we signed on for another year, but they decided not to mention it. I don't know if I should moan about it to them or not, but it is a significant pay cut that we were not expecting.