Catherine Rampell has an interesting column comparing what Social Security and Medicare benefits people get compared to what they paid into it:
For Americans who turned 65 in 2010, Medicare benefits will typically amount to two to six times what beneficiaries had paid into the system, depending on their marital and work histories. For example, an average-wage, two-income couple who turned 65 in 2010 paid today’s equivalent of $123,000 into the Medicare system during their working years. They will receive about $385,000 in Medicare benefits over their decades of dotage, even after subtracting out the cost of premiums. For a similar couple that retired 20 years earlier, the comparable numbers were $43,000 paid in vs. $227,000 received. A decent return, no?
The current system is unsustainable and will break. It’s just a matter of ‘when’.
Just like our CPP and “free” healthcare systems.A simple solution? Elect a gubermint that is more interested and spending on the majority of the citizens of Canada instead of their buddies,special interest a%%holes,and themselves.Yeah,Yeah.I believe in the Easter bunny,pixie dust,unicorn farts,and the good-will of psycopathic,power-junkie politicians.
The self-employed pay double.
Every time someone tries to fix it, you get another story about people eating cat food so that they can afford their medication. Good luck beating emotionalism.
It’s not so simple.
The People have been dumbed-down to such a state where it’s not possible to create enough wealth when young to accumulate any for one’s elder years.
The nation’s capital has been moved offshore.
Every piece of property is encumbered by debt.
Every child has $hundreds of thousands of debt on the day they are born.
Give up.
$123,000 dollars over a 40 year working life is approx. 3075.00 per year paid in.
At a reasonable rate of return of 5% per year on their money, this would accrue to $411,000 upon retirement.
Many die early. The system should be easily self sustaining.
She misses the entire point of SS. The SS fund does not exist it was borrowed and spent by the politicians. It is a black whole of nothingness. All of the future funding will come from either more borrowing or current tax receipts. It will prove to be unsustainable. Big changes are coming and not for the better.
Two words: ponzi scheme.
Jared Diamond’s new book has an interesting section on ageing and the role that seniors play in North American society. Leads one to serious reflection. I cannot help buy think that the younger generation will hold us boomers accountable at some point. The example of our generation putting our parents into ‘homes’ will not go unnoticed.
When the inevitable happens and society has to operate on value rather than perceived value then the chickens will come home to roost. I fully expect the
‘white pill’ will become the norm and societal pressure will more than encourage its use. If seniors have little or no contribution to society and cannot define a constructive role then what other option is there?
doowleb “$123,000 dollars over a 40 year working life is approx. 3075.00 per year paid in. At a reasonable rate of return of 5% per year on their money, this would accrue to $411,000 upon retirement. Many die early. The system should be easily self sustaining.”
Interest will barely cover inflation so little or no real value will be gained over the 40 years. Many die early but the average lifespan is still close to 80 years and those last 15 years are very intensive for medical expenses.
Actually, this is not the fault of republicans or dhimocrapts; it is the fault of bureaucratic ukase and interpretation. Retirees are forced into medicare, even if they don’t want it. Remember, the government is still subtracting medicare premiums from any social security you get. That amounts to $200 – $300/ month for husband and wife. You can’t refuse medicare. If you refuse medicare, the bureaucrats – not the law – takes social security away from you. There is NOTHING in the Medicare/social security law that requires this or allows this, however, I think it is the threat of loss of future medicare premiums that drive it. You may be willing to let go of $200K PV in medical insurance benefits, but you sure don’t want to lose the $500K that you contributed to social security.
In addition, medicare doesn’t pay for much and you have to get supplemental insurance to protect yourself. If you add the cost of supplemental insurance, the medicare premiums, prescription insurance premiums I think you will find that your are now paying about as much as you paid for insurance before retirement.
Now, to top all this off, Medicare wants a report of diabetic sugar levels over time before they will pay for blood testing supplies. That is none of the government’s business. I suspect Mooshelle has interjected herself into the situation, or there is some bleeding heart librul that know your blood sugar level should be public knowledge. T suspect the doctors in congress are all for it also – at least I don’t hear any objections. The government dictators control us completely.
Captcha strikes again. Plus now all my typing voe comment comes out in an extremely small font size – but that did not cause the captch problem.
The generational war began decades ago. The only difference now is that the other side is starting to shoot back.
I have commented in the past about CPP in Canada and have ruffled a few feathers of Boomers at this site. The irony is, I object to the generational warfare, but I get flamed for reading the writing on the wall.
During the 2008 Presidential Campaign after seeing the attacks on John McCain it became clear to me that “respecting your elders” was a thing of the past as far as socialists go; and the epic political battle going forward will be young verses old.
I have said here that Boomers “must come the table” and negotiate. Now, folks can b*tch and complain all they want; but it is what it is. My generation (x) will get screwed much harder than the Boomers, who’ve been duped by their parents and theirs.
We should end the program now; and pay-out what is owed to those who’ve paid in that are over a certain age(perhaps 50). People my age and younger should be freed of this obligation and allowed to save for ourselves; as the CPP money going in will not be there for us in the future.
Robert I do not think it will “break”. Rather the rules for payout – age, amount and what is covered will change – read: decrease – dramatically over the next decade or two, but the program will not collapse. Simply de-indexing , moving the retirement age ever higher and then letting inflation increase (the latter almost garanteed to happen sometime in the future) will go a long way towards to getting these programs back on a “sustainable” course. That that spells misery for those who have chosen to rely on these programs is assured.
I agree. I have great fear for how Boomers and their seniors will be treated once the Millenials take control. They’ve been taught at a very young age that those generations are responsible for all the world’s ills.
Ironically, it’s those very Boomers in the education system that have been pushing this envy; and, its the Boomers themselves that have enabled the Public School Unions by abdicating their responsibiltiy as parents(generally speaking of course).
Boomers have contributed very little and taken a whole lot. This is the tab that will eventually come due. Were it not for my generation, and the tech industry/internet; I struggle to imagine where our country’s economies would be today.
Most of the people in the 20-40 age bracket are fairly worthless anyway. There are exceptions (too few).
Why the use of the future tense? A relative female was explaining to me the realities re beds in the Health
Sciences Complex, which is the nearest that Newfoundland gets to a major hospital. Don’t get sick!! Avoid injuries!
Meanwhile the students at Memorial are crowing about the tuition freeze in the new provincial budget.
Completely unnecessary in a “have” province, as NL now is. See first sentence.
Speaking of which, the latest NL budget is “business as usual”; the Liberals couldn’t have done better,
if by “better” you mean bringing down a budget with plenty of pork. See first sentence.
“If it looks too good to be true, then it probably is.”
It is baffling that people think they can pay-in to a system a fraction of what they plan to take-out; or, would believe that such a thing is possible and sustainable. In my mind, it is deliberate ignorance.
Those folks will likely have to depend on direct charity from the folks instead of the stealth charity folks receive today. The difference? A little helping of Humble Pie.
Boomers “must come the table”
I would like to add, and give my “kudos” to Canada’s Boomer generation for doing just that; as we’ve seen the age for CPP claims going up (2 years) in the future. This is exactly the type of ‘good faith’ we need on both sides of the generational divide.
It’s too bad the Americans can’t get their isht together regarding this.
” I am glad that my taxes pay for food stamps, disability insurance, low-income housing and Head Start”
This is an example of the BS thinking of deluded fools. The SS pot has been raped by every entitlement plan (than those who paid into SS) mainly for disability, which is a very big number for life long benefits. The Democrats push entitlements & the Republicans are OK as long as the funding comes from the SS Trust account.
The SS has >14 trillion in Trust (paid in balance)and is more than sustainable by its self. The SS numbers, if including the Employer, are equal to 2X federal taxation of an individual.
The SS Trust is used to pay nearly every entitlement. The theft of 1 trillion by Obama-care from Medicare was a paper transaction that allowed the printing of a trillion in new currency.
It is the printing of this new currency, in the future, that threatens the economy.
I don’t know if this is true. Most folks I know over 30 are doing just fine.
Anecdotally speaking:
I would suggest that the X generation has been very successful in life(most everyone I know my age are doing fine), and have revolutionized the world through technology. Our most epic failure as a generation has been our views and actions(as a generation) on foreign policy. Too many people my age have bought into the self-loathing and the isolationist view point. This will cost us dearly.
The boomers and their Parents as are bad or worse than the 20-40 yr old set.
People born in the twenties made out like bandits after WW2 getting far more back from govt programs than they paid in – the bulge in the boomer population paying taxes and contributing to social security paid for the relatively smaller cohort that was there parents generation.
The narcissists in the boomer generation see themselves as far more entitled than those before or after them.
The 20-40 yr old set today are the ones taking it on the chin (and elsewhere) compared to their parents and grandparents. If they are screwed up – and a lot of them arent – it’s not their fault but their forebears.
For those that resort to the retarded thought process of In VS Out
1. Why should life Insurance payout more than you paid In
2. Why should Fire Insurance payout more than you paid IN
3. Why should Auto Insurance payout more than you paid IN
The Insurance industry is way beyond healthy.
“If it looks too good to be true, then it probably is.”
Had a great job, forced into retirement so a 35 year old,
married to the owners daughter could get his martial dues.
Not bragging, but they had to find 2 more people,
3 all together, in order to cover the same sales and orders, his problem, not mine..
Anyhow…..
Paid $150,000 into SS, my company matched it for a total of $300,000 but have already received $123,000 plus my wife gets an extra $400.00 per month added to her $375 for staying at home with the kids while I worked.
Soooo,
we have already taken in 160,000 dollars, 10,000 more than I paid in,
and now we are getting the company assets.
–
Good thing about all this, I got into this Ponzi Scheme before any of the other baby boomers so I will be safe…
Oh! Wait ??
Is that the way a Ponzi Scheme Works?
And now the IRS is hitting up current workers for debts of their parents . . .
“Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters like the one Grice got, informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check.
The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years….”
http://www.americanthinker.com/blog/2014/04/nightmare_feds_seizing_money_from_children_for_old_debts_of_their_parents.html
On the other hand, when they paid in 10 dollars in 1970 it was like 100 dollars today in value then. So they are getting shafted. 😉
I usually quote my daddy…..in 1960 er so dollars wuz a foot square.
I recall nid ’60’s $1/yr was big wages and gas was about %.50 er less…a new car was $2-3000.00
Gord;
My parents born on 1919 and 1921 suffered through a depression and fought WW II. A lot of years of sacrifice. Yes, they built the social safety net to protect those that were in need. I suggest they also built it for their children so they would never have to experience what they did. I begrudge them none of it.
Most of that generation used the safety net with reluctance and disapproved of those who used it when lack of initiative was their reason. I remember a time when welfare was administer by the municipalities. If one was collecting welfare without good reason neighbors considered it a civic responsibility to report it! Standard operating procedure today is look the other way. Civic duty is a thing of the past.
I still say that it is the boomers whether willfully or not who ran up the debt that the next generation is expected to pay. It does not take a lot of thinking about this subject to realize that us ‘boomers’ have exploited the system.
Turdeau Sr racked up yearly deficits of + $50 billion for many years without a serious ground swell of concern. To some extent that is why fiscal conservatives were upset with Jim (RIP) as he ran deficits the last 5 years.
My simple arithmetic tells me that if the CPP has a worth of $220 billion and is sustainable at a 4% withdrawal rate then $8.8 billion can be paid out annually. End of conversation. To me the big issue is OAS which comes from general revenue. That comes from taxpayers annually.
My retirement plan is to work until death. And as I said on another thread, I’m a Boomer.
None of us under 60 today are going to see enough CPP when we retire to live on, unless you want to live in a stolen tent on cat food.
Plan accordingly.
Oh I don’t really disagree. If I were to enumerate all the people I dislike the list would be long.
Yes, generational conflict has arrived, coming as it were by stealth. It is similar to bacterial infections which are resistant
to all known antibiotics. It is possible that these might come in with an epidemic but more likely we will just hear of
more and more people succumbing to bacterial disease, where the known antibiotics just don’t work. It has started.
Soylent Green or Logans Run.
OR a combo. Everyone over 55 gets a year off, then goes to “Home” and says goodbye. lunch anyone?
Phantom;
My wife was at the hospital the other night and heard a 80 year old lady turn down the offer to call a taxi for her ride home. She over heard the lady say I don’t have enough money for that. She lives about 2 miles from the hospital and left the building to walk home/hitch hike. My wife caught up to her and drove her home. Told my wife that her husband died of cancer at 52 and that she had no savings and no family. She has no doctor and receives health care through the emergency room.
I truly do not believe that people, boomers or not, seriously think about how they will live in their declining years. How many times to we have to have a senior tell us that the ‘Golden Years’ are not golden! Maximum CPP is +/- $900 and OAS is +/-
$500, no idea what the Supplement is. There is nothing in those figures that would allow for any payment for housing.
I am one of those does not think society owes towards my upkeep. If people are upset by my begging on the street for a place to sleep at night then reinvent the old Poor House concept and warehouse me there.
I get work until I die or commit the right crime when Im 65 to end up in minimum security prison.. The good life..
you have purposely ignored the effect of compound interest would be if the government had properly taken care of the money instead of spending it on current boondogles and corruption.
Some thoughts:
1. Using even a slightly higher discount rate brings the comparison into closer balance, maybe even tilting the scales to the other side, i.e. boomers paid in far more than they’ll ever get back.
The analysis was based on a 2% discount rate, which was defended by the Urban Institute here: http://www.urban.org/retirees/Estimating-Social-Security.cfm#Q2. In that defense, they acknowledge that 3% is “in the same ballpark”. But given that we’re talking about 45 years of payments, going from 2% to 3% changes the future value factor (the payment multiplier) from 72 to 93, increasing the value of that stream of exactions, er, tax payments by about 30%. Using 4% changes the factor to 121, a future value increase of 70%.
Don’t kid yourself: 45 years of payments is worth quite a bit, if invested wisely, not frittered away. (Which, of course, is the problem.)
2. Interest rates have been much higher for substantial portions of the last 45 years. They hit double digits in the late 70s, and continued that way into the 90s.
So the return that boomers could have earned on their money if it wasn’t extorted by the government is potentially even higher.
3. None of that matters.
You can characterize this as a “generational war” all you like. But the war is, and always has been, between those of us who want small, fiscally-responsible government, and those, like the WaPo author, who expect the government to take care of them at others’ expense.
As someone born at the tail end of the baby boom, I’ve been voting to get government out of the hands of these spendthrifts for many years. During that time, they demanded and took a great deal of my money, then wasted it, and more.
Now I have to suffer their similarly-inclined spawn crying to withhold even the pittance coming back to me.
To those of their ilk, whatever their age: get stuffed.
P.S. Ms. Millennial also wrote, “Earlier generations made out like bandits; for example, members of an average one-earner couple who turned 65 in 1990 receive twice as much in Social Security benefits as they paid in taxes.”
Yeah, honey, whom do you think had to cover that little shortfall?
When I was much younger, I sold life insurance. I did a couple of projections and discovered that for the amount of money I was paying to social security, I could invest in a Universal Life insurance policy and, at age 65, cash it in for $1,000,000 plus, depending on results of the company’s investments. Obviously, now returns have dropped off sharply, but 40 years ago, it would have been ideal.