Social Security Hits Shocking Milestone

by James W. Harris

"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….

"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…"

So reports The Associated Press, based on a study by the Urban Institute, a Washington think tank.

Previous generations received a relatively high return on the Social Security funds seized from them, AP notes.

"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 as you made it to age 78 for men and 81 for women.

"As recently as 1985, workers at every income level could retire and expect to get more in benefits than they paid in Social Security taxes, though they didn't do quite as well as their parents and grandparents."

Now, however, Social Security is becoming a net loss for the average citizen.

And this is happening as millions of baby boomers hit retirement age, leaving fewer workers paying into an ever more costly program. 

"Future generations are going to do worse because either they are going to get fewer benefits or they are going to pay higher taxes," sums up the Urban Institute's Eugene Steuerle.

It is estimated that Social Security will run out of income in 2033, when payroll taxes will only bring in enough to pay about 75 percent of benefits.

Younger workers are now being offered a sorry deal by the political establishment: they must pay even higher taxes, accept lower benefits, face later retirement ages, or be stuck with some painful combination of all three.

Social Security is the largest government program not only in America but in the entire world. It is the single largest expenditure in the U.S. budget.

As Social Security's inherent instability and unfairness becomes more and more obvious, perhaps the more libertarian-leaning post-boomer generations will become sick of being victimized and instead investigate libertarian reforms.

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