Average American Pays Less into SS and Medicare than They Receive

[Toro]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

 

[Listening]

I am not sure what point you are trying to make here.

When I first read this, I have to be concerned with the assertion people will somehow get more out of the system than they put in.

At first blush:

The government does nothing to add value to the dollars it collects.
Therefore it is nothing more than a pass through system with administrative costs.
So, the money going in has to equal the money coming out.
If someone is getting more out than they put in.
Somene else is putting more in than they are getting out.

These are just a few quick thoughts.

I would like to know why you posted the article.

 

[jillian]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

if that is the case, what is the long term effect on finances?

the thing is, when ss was started, the average life expectancy was 61 years old. (maybe 62, i don't recall which). it is much higher now.

so perhaps the answer is to raise the age a few years??

i know that's blasphemy, but maybe the right thing to do?

 

[uscitizen]

To me the OP means that it works as an insurance policy should.

 

[Sunshine]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

That is likely true. But you have to consider other things besides just bald numbers. When my husband and I married in the 60s together we made $10,000. He had a good full time job and I had a part time job. In that day $50,000 would build a house with an indoor pool, and people earning $20,000 were considered to be rich. Of course in that day we would not be paying in the amount that we would be paying now. Now he has been dead over 25 years, I make 6 figures on my own and I pay one hell of a lot. That's just simple math.

BUT.........if SS had kept our money invested and not plundered our retirement funds over frivoloties, then the investment would have kept up with inflation and there would be no problem.

 

[Sunshine]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

if that is the case, what is the long term effect on finances?

the thing is, when ss was started, the average life expectancy was 61 years old. (maybe 62, i don't recall which). it is much higher now.

so perhaps the answer is to raise the age a few years??

i know that's blasphemy, but maybe the right thing to do?

The age has already been raised.

 

[Truthmatters]

Well it seems to me all we have to do is lower medical costs and we will be fine.


That can be done by taking more of the unnessesary costs out of the medical field.

Gotta do research.

Gotta pay for the needed products involved in treating people

Gotta pay the staff

gotta pay for the buildings and upkeep.

MMMM where in the hell can we cut cost?

CUT OUT PROFITS!


Problem solved huh?

 

[jillian]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

if that is the case, what is the long term effect on finances?

the thing is, when ss was started, the average life expectancy was 61 years old. (maybe 62, i don't recall which). it is much higher now.

so perhaps the answer is to raise the age a few years??

i know that's blasphemy, but maybe the right thing to do?

The age has already been raised.

it hasn't gone into effect... and will only be raised GRADUALLY for people born 1960 and later....

glad to be of assistance. information is your friend.

What is the Social Security Retirement Age? | National Academy of Social Insurance

 

[CoolBreeze]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

That is likely true. But you have to consider other things besides just bald numbers. When my husband and I married in the 60s together we made $10,000. He had a good full time job and I had a part time job. In that day $50,000 would build a house with an indoor pool, and people earning $20,000 were considered to be rich. Of course in that day we would not be paying in the amount that we would be paying now. Now he has been dead over 25 years, I make 6 figures on my own and I pay one hell of a lot. That's just simple math.

BUT.........if SS had kept our money invested and not plundered our retirement funds over frivoloties, then the investment would have kept up with inflation and there would be no problem.

Thanks for pointing out the obvious to the lefties Sunshine. If the policos wouldn't have squandered the SS funds and invested it, SS wouldn't be in the situation that we now find it in.

 

[Sunshine]

if that is the case, what is the long term effect on finances?

the thing is, when ss was started, the average life expectancy was 61 years old. (maybe 62, i don't recall which). it is much higher now.

so perhaps the answer is to raise the age a few years??

i know that's blasphemy, but maybe the right thing to do?

The age has already been raised.

it hasn't gone into effect... and will only be raised GRADUALLY for people born 1960 and later....

glad to be of assistance. information is your friend.

What is the Social Security Retirement Age? | National Academy of Social Insurance

It most assuredly HAS gone ito effect. My full retirement age is 66 and has been for some years now.

 

[Sunshine]

It is estimated that for the average couple aged 65, each earning $43,500 a year, over their lifetime, they will on average pay $598,000 in SS taxes and receive $556,000 in SS benefits. They will pay $119,000 in Medicare taxes and receive $357,000 in Medicare benefits. In total, the couple will pay $717,000 in taxes and $913,000 in benefits, or $196,000 more than they received.

For an average couple aged 46, each earning $43,500 a year, they will pay $917,000 in taxes for SS and Medicare and receive $1,226,000 in benefits, or $309,000 more than they receive.

The study assumes a 2% real rate of return.

Social Security and Medicare Taxes and Benefits Over a Lifetime
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

That is likely true. But you have to consider other things besides just bald numbers. When my husband and I married in the 60s together we made $10,000. He had a good full time job and I had a part time job. In that day $50,000 would build a house with an indoor pool, and people earning $20,000 were considered to be rich. Of course in that day we would not be paying in the amount that we would be paying now. Now he has been dead over 25 years, I make 6 figures on my own and I pay one hell of a lot. That's just simple math.

BUT.........if SS had kept our money invested and not plundered our retirement funds over frivoloties, then the investment would have kept up with inflation and there would be no problem.

Thanks for pointing out the obvious to the lefties Sunshine. If the policos wouldn't have squandered the SS funds and invested it, SS wouldn't be in the situation that we now find it in.

Well, if I live long enough I plant to draw.

 

[Toro]

if that is the case, what is the long term effect on finances?

Bad.

the thing is, when ss was started, the average life expectancy was 61 years old. (maybe 62, i don't recall which). it is much higher now.

so perhaps the answer is to raise the age a few years??

i know that's blasphemy, but maybe the right thing to do?

I posted this earlier. It is a graph of forecasted life expectancy at various times in the UK, but it also applies to the US.

We've tended to under-estimate the increase in lifespans.

The other problem has been that medical expenses have been rising about 8% a year for the last 30-40 years. Clearly, that cannot continue forever but it can continue for some time. This is why Medicare is more of a problem than SS. We have to find a way to match contributions for Medicare to benefits received. Otherwise, it will just eat the budget.

 

[Toro]

To me the OP means that it works as an insurance policy should.

Not really.

For an insurance pool, the aggregate cost of running the pool and paying out benefits will approximate the revenues received for the premiums. IOW, the cost for the average insured will equal the payouts to the average insured. This is not happening in the trusts, at least in the Medicare trusts, as Americans have, in aggregate, taken out 3x as much as they've put in for Medicare. This is mathematically unsustainable. An insurance company that did this would be bankrupt.

 

[expat_panama]

...like to know why you posted the article.

Let me guess. The idea is that Social Security is good for us so we should be grateful and not complain about being forced to pay for something we never asked for but Toro knows is best for us.

My next guess is that Toro hasn't convinced anyone.

 

[Sunshine]

To me the OP means that it works as an insurance policy should.

Not really.

For an insurance pool, the aggregate cost of running the pool and paying out benefits will approximate the revenues received for the premiums. IOW, the cost for the average insured will equal the payouts to the average insured. This is not happening in the trusts, at least in the Medicare trusts, as Americans have, in aggregate, taken out 3x as much as they've put in for Medicare. This is mathematically unsustainable. An insurance company that did this would be bankrupt.

The government can't as yet raid your insurance policies.

 

[Toro]

BUT.........if SS had kept our money invested and not plundered our retirement funds over frivoloties, then the investment would have kept up with inflation and there would be no problem.

I don't think this is quite correct.

SS has always been invested in government bonds and obligations. The funds compound at a blended rate of government bond rates. Generally, the real return on government bonds since interest rates were fully deregulated decades ago have been positive, i.e. they've been above the rate of inflation.

 

[Toro]

...like to know why you posted the article.

Let me guess. The idea is that Social Security is good for us so we should be grateful and not complain about being forced to pay for something we never asked for but Toro knows is best for us.

My next guess is that Toro hasn't convinced anyone.

You're wrong a lot.

When one presumes, they usually are.

 

[Sunshine]

BUT.........if SS had kept our money invested and not plundered our retirement funds over frivoloties, then the investment would have kept up with inflation and there would be no problem.

I don't think this is quite correct.

SS has always been invested in government bonds and obligations. The funds compound at a blended rate of government bond rates. Generally, the real return on government bonds since interest rates were fully deregulated decades ago have been positive, i.e. they've been above the rate of inflation.

It doesn't matter how what is not there is invested. Much of the money is gone. Raided over the years by the government.

 

[Cuyo]

...like to know why you posted the article.

Let me guess. The idea is that Social Security is good for us so we should be grateful and not complain about being forced to pay for something we never asked for but Toro knows is best for us.

My next guess is that Toro hasn't convinced anyone.

Before Social Security, half of senior citizens lived in poverty. Now it's 10%.

That should be all you need to know.

 

[Toro]

I am not sure what point you are trying to make here.

When I first read this, I have to be concerned with the assertion people will somehow get more out of the system than they put in.

At first blush:

The government does nothing to add value to the dollars it collects.
Therefore it is nothing more than a pass through system with administrative costs.
So, the money going in has to equal the money coming out.
If someone is getting more out than they put in.
Somene else is putting more in than they are getting out.

These are just a few quick thoughts.

I would like to know why you posted the article.

To show that people have been taking out more than they have been putting in. SS and Medicare are supposed to be self-funding. They are not.

So you can use the information anyway you wish.