People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. ...
"For the early generations, it was an incredibly good deal," said Andrew Biggs, a former deputy Social Security commissioner who is now a scholar at the American Enterprise Institute. "The government gave you free money and getting free money is popular."
If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes, and more if you were a low-income worker, as long you made it to age 78 for men and 81 for women. ...
A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank.
This "study" is misleading since it ignores the value of Social Security disability, survivors and dependent benefits. A person who remains healthy to retirement age and has a spouse who has earned wages at about the same rate never uses any of these benefits but a person who buys homeowners insurance receives nothing tangible from the insurance until they suffer some calamity such as their home burning down. That does not mean that homeowners insurance is useless. The study stacks the deck against Social Security by assuming that the married couple had similar incomes. If one spouse had a significantly higher income there would be dependent benefits which would change the equation dramatically. The equation would also be changed dramatically if the couple had a child who became disabled before age 22 or if they had to adopt one of their grandchildren. By the way, I can't find this study at the Urban Institute website.
The best answer to this attack is to point out that the public just isn't buying it. See this survey issued in July 2012 by the Hofstra University Center for Suburban Studies:
So continue the attacks on Social Security, Republicans.The attacks play well on Fox News, so they must be good politics, right?
6 comments:
Charles, you apparently did not read all of the article (or at least not very carefully), because later in the article it talks about spousal benefits and other benefits and how SS is still a good deal if those are collected.
I'm getting whiplash trying to figure out if the GOP line on Social Security is that the system is going broke because benefits are too generous, or if the alleged problem is benefits aren't generous enough? I suppose it depends on the phases of the moon.
You can find the Urban Institute study referenced in the article at this link:
http://www.urban.org/publications/412281.html
Those numbers for amount paid into Social Security are simply wrong. Working back from their figure of $600,000 (rounded):
600,000/2=300,000/person
300,000/2=150,000 - employer paid 1/2
150,000/.0765=1,960,784 .0765=todays tax rate, which was much lower in the past
The average worker would need to make 2 million dollars over his lifetime to pay that much into the system at todays tax rate. In reality, the average worker, turning 66 this year, will have earned about 1 million dollars over his lifetime, paid about $55,000 into Social Security, matched by his employer to $110,000, and doubled by his spouse to $220,000. Far below the numbers quoted in the article
The lifetime wages referenced are what Mr Biggs and his wife are expecting to accumulate as employees of the various "think tanks" they work for. Being lackeys for the one per cent pays very well.
Thank you, Charles, for pointing out the insurance aspect. I pay my homeowner's insurance every year, have for 33 years, and I am so glad I've been fortunate never to have had to make a claim. With social security, I've had insurance protection for my children (if I died young), for me now (if I become disabled), and I'll get a return if I live to retirement age, guaranteed for life with cost-of-living increases. And, I've not had to support my parents because they received their own social security after a lifetime of hard work.
A12:41 is on the right track -- someone with access to the real figures should publish the correct calculations.
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