You would think the world is ending

[cypher1]

I've always worked for large companies, so maybe I'm naive, but don't most people get 2-3% raises every year?

I wouldn't say most people in large companies. Employers always find excuses with budgets, not hitting their quarter goals, etc. In the last 4 years at my previous employer, my average raise was about 1% for excellent performance reviews from management. During the recession I watched our IT staff shrink, and friends laid off and moving back home with parents, so I didn't complain about my "raise". I realize that's not all companies do that, and there are many other factors that can affect annual raises/payroll.

[disneysteve]

I've always worked for large companies, so maybe I'm naive, but don't most people get 2-3% raises every year?

I've never worked for a large company and no, I've never gotten a 2 or 3% raise every year. I actually haven't had a raise for years.

[QuarterMillionMan]

Fortunate for me this doesn't affect my paycheck. I'm employed by an entity that doesn't pay into the social security administration. I'm not referring to an illegal business or "under the table," so to speak but rather a legal operation. However, I have earned over 40 credits of social security credits from previous employers but I'm not necessarily optimistic that in 20 years when I do retire the SSA will have enough funds for me to draw upon in that future time (approx the year 2032), at least I'm not counting on it.

[FrugalTexan75]

When the 2% went into effect I was self employed, so didn't really notice it. I'll probably up my withholding by 2 to equal it out. I have a pretty small income, so the 2% does hurt - just mainly hurts my saving goals.

[ActYourWage]

Being precise with money, any money removed from my spending plan, I find significant.

[cypher1]

While I agree it's not the end of the world, that 2% for me used to be another 100 saved each month or between 1200-1300 annually.

[siggy_freud]

I don't see it as a pay cut, so much as I am not longer getting the 'extra' 2% I had been for two years. Yes, we're splitting hairs here, but it's not as if this was ever publicized as permanent.

[Gina23]

I'll be getting cut 2 grand, but we'll see what happens... I just increased my withholding because I was too slim there, so hopefully that offsets it a bit.

Agree, whoever became accustomed/entitled to 2% has some serious budget issues. I'm not advocating for a 2% cut by any means, but it was "yay for the time being thing" not something that one should become dependent upon.

[humandraydel]

No matter how you look at it, a 2% pay cut is a big deal.

I've always worked for large companies, so maybe I'm naive, but don't most people get 2-3% raises every year? So basically this year I lost most of my raise to the 2% tax increase. So I actually won't notice, it will just feel like I didn't get a raise.

[disneysteve]

I agree that it will have an impact, but it won't put me in peril. At least not the way that some of my coworkers are saying that it will.

For sure. That's the benefit of living below your means. Still, I don't want to see my savings rate drop, which means we will probably try to trim spending to make up the difference. Retirement is only getting closer.

[bjl584]

Unfortunately, I think that we all saw this coming (at least those of us that pay attention.) We've been saying for years that taxes are going to have to go up. Well, here you go. This is the start of it. Those of us that are savers will adjust and will prosper in the long run.

[bjl584]

I also live below my means and save a lot but a 2% drop in pay still has an impact. I typically save about 25% of my income. If my income drops by 2%, I may not be able to continue to save 25% unless we cut spending somewhere to "find" that money. So the result is either less money to spend or less money to save. In either case, it is less money to work with.

I agree that it will have an impact, but it won't put me in peril. At least not the way that some of my coworkers are saying that it will.

[disneysteve]

It's not like a pay cut. It's like no longer getting a bonus.

I disagree. A bonus is typically a one-time payment, like at Christmas time. Something that you get regularly, every week for two years, isn't something I'd think of as a bonus.

For someone living on the edge I could definitely see a 2% reduction in pay causing an issue. I live below my means and I save a lot, so this won't bother me

I also live below my means and save a lot but a 2% drop in pay still has an impact. I typically save about 25% of my income. If my income drops by 2%, I may not be able to continue to save 25% unless we cut spending somewhere to "find" that money. So the result is either less money to spend or less money to save. In either case, it is less money to work with.

[YLTL_Dan]

What do they say, it takes doing something about 10 times before it becomes a habit? That means the social security tax cut became a habit and most people adjusted to it

It's funny they even cut it in the first place since social security has been in peril since lawmakers started robbing from it. I'm sure it will be around when I retire (I'm 30) because so many people won't be able to live without it... but I'm not sure I'll ever get any of it!

[bjl584]

Taxes weren't raised. The tax break was allowed to expire.
It's not like a pay cut. It's like no longer getting a bonus.
I think those who will feel it the most are those who have been in the workforce only a couple years and don't remember the pre-tax cut days. Sometimes being old is an advantage.

Maybe, maybe not. To me, this could be compared to someone (that isn't good with money) working and all of a sudden is required to start working overtime. What do most people do with a "raise" like that? Most likely, they will raise their standard of living. Then, one day down the road the overtime is cut off. They get a pay "cut" and are stuck with a bunch of expensive monthly payments for things that they can no longer afford. People are pretty short sighted for the most part. For someone living on the edge I could definitely see a 2% reduction in pay causing an issue. I live below my means and I save a lot, so this won't bother me, but I can see it effecting someone that isn't as disciplined financially.