Comparing Lifetime Costs and Benefits of Entitlement Programs
This is from Gene Steuerle:
[o]ver a wide range of scenarios, [Medicare] beneficiaries retiring at age 65 in 2011 can expect to receive dramatically more in total benefits than they have paid in dedicated taxes. For example, single beneficiaries and dual-earner couples who had earned the average wage throughout their working careers can expect to receive about $3 in Medicare benefits for every $1 paid in Medicare payroll taxes. If only one member of the couple had worked, we calculate a six-fold difference between contributions and benefits since both spouses are eligible for Medicare yet only one has paid taxes….
While a single woman who worked a full career at the average wage can expect to receive Social Security benefits roughly in line with her payroll contributions, a married woman who never worked but whose husband paid the same taxes as the single woman can expect to receive about $180,000 in spousal and survivor benefits. Unlike private pensions, these additional benefits are essentially free but only to those who are married, regardless of need, contributions or any child rearing. They are financed by all Social Security taxpayers, including single mothers who get no spousal or survivor benefits at all.
Examining both programs together (bottom panel) highlights the large dollar value of benefits being paid out and the fact that total lifetime benefits consistently outweigh lifetime contributions across a range of scenarios. It is no wonder these programs now account for one-third of all federal spending each year.
Our work shows that seniors do in their 80s do very well. But young people will only get back a fraction of what they paid in.
It’s the “being a woman” benefit. You have to raise some kids and take care of your husband when he gets sick. But, you get to cash in on his pension.
The problem isn’t so much survivor benefits as it is how the benefits are funded. It’s one thing to inherit a 401k or stock market brokerage account. It’s another to inherit a stream of social security funding that comes from current workers.
I agree with Devon about younger people being cheated by the system. But, I think the joke might be on older workers who will see their children and grandchildren come home to live with them because tax rates are too high for them to live on their own.
Everyone wants a free lunch.