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Glossary entry · The silent subtractors
FICA
Definition
Federal Insurance Contributions Act tax. Splits into 6.2% Social Security (capped at a yearly wage base, $168,600 in 2024) and 1.45% Medicare (no cap), withheld from every paycheck. Employers match the same amount.
Example
On a $70,000 salary, the employee pays $4,340 in Social Security plus $1,015 in Medicare, $5,355 total in FICA.
Related
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor, every year, forever.
Read →Tax
The other silent subtractor. Almost every gain you make is taxed somewhere.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
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