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War On The Young: Social Security Edition

How unfair is Social Security going to be on the coming generations? Here’s a report being highlighted by CNN that’s worth looking at:

A couple who each earned the average wage during their careers and retired in 1990 would have paid $316,000 in Social Security taxes, but collected $436,000 in benefits, according to data crunched by Eugene Steuerle, an economist at the Urban Institute.

Had that couple turned 65 in 2010, however, they would have paid $600,000 in taxes, but could expect to collect just $579,000. This is the first time in the program’s history that taxes outweighed benefits for this group, a couple with average earnings.

The imbalance will get more pronounced for future generations of retirees. Couples now in their early 40s will have forked over $808,000 in Social Security taxes by the time they retire, but get back only $703,000 in benefits.

And with all that, the system is still not on sound footing.

Most of our readers are aware that Social Security is a Ponzi scheme not a savings program, that the vaunted trust fund is an accounting mirage, and that nothing much is being done about it by anyone. But sometimes it takes some concrete numbers to properly get your head around what’s really going on.

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  • Andrew Allison

    In addition to not adjusting for inflation, the report doesn’t take into account that if one spouses continues to work, the other will be taxed on SS benefits.

  • BrianFrankie

    Honestly, I’m actually kind of encouraged by this quick take. As someone in my early 40’s, I’m well aware I’ll (personally, not including my spouse’s wages) fork over more than $600k in taxes, and it will be considerably over $800k when my spouse’s income is included. But we’ll get more than $700k in benefits? About 87% of our input tax will return?

    I’ve been expecting no more than 50%, and planning for 0%. Overall, 87% return of principal is much better than I would have guessed. I hope Professor Steuerle is correct.

    On the other hand, you note the system is still not on sound footing, so I think I’m going to continue planning based upon never receiving any SS benefits…

  • Merina Smith

    In light of this, can we quit dumping on Boomers?

    • Jim Luebke

      Not until you help fix the problem, balance the budget, and take your share of the reduced expectations that my generation has to look forward to.

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