“My father told me you could stop paying social security and forfeit all the money you’ve already paid in,” writes young Michael Mattox. “My friends say this isn’t true. Since I’m 24 and maxing out my 401k, I think I’d be better off investing the extra $200/month I pay in Social Security taxes into a non-deductible IRA. So the question is, is this true? And if not, WHY NOT?”

The answer is: no, it’s not true. No one can opt out of the Social Security system. Your dad’s wrong. Your friends are right.

And the reason is: It’s a law. You’ve got to pay Social Security tax.

And the reason for that is that the system needs cash from current workers to pay benefits to those already retired — your grandparents and, one day, your father.


There are a few Americans who don’t participate in the system, most notably railroad employees. Even today, if you go to work for a railroad, after 10 years’ service your social security files get sent over from Washington (or wherever) to the railroad and you’re covered under the railroad retirement system. Toot! Toot! So I suppose you could always leave your current employer and go to work for Southern Pacific (or whatever it’s called now) and opt out of Social Security that way. At least I . . . think . . . you . . . can, I think you can, I THINK you can, ITHINKYOUCANITHINKYOUCANI…

Federal employees hired before 1984 are covered by the civil service system. And employees of a relatively few state and local governments, which opted out of Social Security, are not part of the system. You could try to find one of those and go work there. But Congress forbade any further government entities to bolt from the system — and odds are new legislation will one day pull even those back into the system.


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