The nonpartisan budget watchdog, revisiting one of its favorite subjects, found that Americans retiring this decade are on track to collect, in the form of entitlements, about 133% of everything they and their employers paid in taxes, measured in present-value dollars. Strip out the employer match, and the return nearly doubles: Roughly 265% of what workers put in themselves. A median-wage retiree in 2027 will collect about $730,000 in lifetime benefits on combined contributions of less than $200,000. The math holds together because today’s payroll taxes are covering the gap. Who pays those taxes, and who is retiring and collecting? Largely millennials and baby boomers, respectively.
In nominal dollars, the gap is even more dramatic. A median-wage worker retiring in 2027 can expect about $730,000 in lifetime Social Security benefits, compared with less than $200,000 paid in taxes by that worker and their employer combined, according to CRFB. Benefits outpace total taxes paid after just six years of collecting. They outpace the worker’s own direct contributions after only three.
The consequence is a financing cliff that’s now closely dated. Social Security’s retirement trust fund is projected to be depleted in 2032, with the combined retirement and disability trust funds exhausted by around 2033 or 2034. After that point, according to the SSA Trustees Report, incoming payroll taxes alone would cover only about 78% of scheduled benefits—triggering an automatic, across-the-board cut of roughly 22% unless Congress intervenes before then.
The promise of retirement for Millennials is just a mirage. Conservatives keep sabotaging social security even though it has worked for 3 generations.
Here we go again with the doom & gloom propaganda. Social Security is literally the easiest problem in DC to fix. Just raise the income cap from $185.5K to $250K, or $500K, or $1 Million, or remove the cap altogether.
That’s all it would take to solve the problem.
You see, taxing the rich would actually DESTROY the economy! /s
Baby boomers are collecting 265% of what they paid into Social Security
Brief recap on how retirement savings work: you invest, and the money grows. See also: inflation adjusted dollars.
and millennials are paying the price
Fucking headslap. We have a basic understanding of how SS works. My kids will be “paying the price” for Millennials. This is nothing but inter generational rage bait.
Yes, my 401k is doing even more than 265% than I put in already years away from retirement, and that’s not because the government is funneling money into it on my behalf.
Thank you. I thought I was going crazy for a second.
Not only is the amount supposed to grow, but it’s also supposed to keep ahead of inflation. And the last 40-50 years have had A LOT of that.
That’s… How it’s supposed to work. Don’t fall for the trap of getting mad at guaranteed income lol. You will regret it
Right? I don’t know how the US system works but in Canada we invest contributions and grow them. If you’ve been paying in since you started working I would hope it’s grown in the meantime.
The problem is that in the USA we have Republicans intentionally mismanaging the social security system and then being like “SEE? IT’S BAD!” and way too many people eat that shit up.
Guaranteed to whom lmao, aging societies won’t be able to keep paying it. Us millennials will be unbelievably lucky if we get it. Gen Alpha will surely only be paying, not receiving.
Yes, if nothing is changed for decades, the current systems may have issues.
Fortunately, we have decades to come up with some solutions. Which I’m sure we’d all rather be focusing on than talking shit online.
i have a very simple solution which will never happen since it fucking solves it. remove the income cap.
They could get rid of the cap on social security tax. It’s pretty fucking low.
Okay but you cannot take away the employer contribution for your math. That portion is part of your compensation.
That’s similar to doing math on 401(k) and taking out employer match. It doesn’t make sense. It’s YOUR money either way.
Goddamn, I’m so sick of this bad faith argument. Fucking Fortune bullshit.
Remove the Social Security Cap on incomes over $184k and this problem goes away. It’s really that fucking simple.
TAX THE FUCKING RICH ALREADY.
Yeah, a reasonable cap on what you get out but none on what you put in. Because yeah if you’re making $200k a year you should be saving if you want to maintain a wealthy lifestyle, but everyone should be able to sleep indoors and keep eating off of a social security income.
Baby boomers are collecting 265% of what they paid into Social Security
A median-wage worker retiring in 2027 can expect about $730,000 in lifetime Social Security benefits, compared with less than $200,000 paid in taxes by that worker and their employer combined
Adjusting the $200k for inflation, that’s around $800k.
If anything, SS recipients should be getting back more than $730k. That’s deferred consumption which was recycled through public spending into increased domestic growth. Growth that the vast majority of these workers never got to see, as their salaries fell behind the inflation rate.
But ask the editors of Fortune Magazine what they think of uncapping the Social Security tax, so it applies to people making more than $180k/year. Ask them how they feel about paying for SS directly out of the General Fund, rather than getting a special Poor Tax that can’t be exempted through deductions and credits. Ask them how they feel about paying for SS out of an Equities Transaction Tax, such that trillionaires issuing the next round of IPOs take responsibility for the millions of senior citizens who they are brain-fucking with AI slop on a daily basis.
Social Security is the promise this country (kinda-sorta) makes to its elderly. If you worked your whole life, you won’t be impoverished the day your employer doesn’t consider you a value-add anymore. The taxation scheme for SS is fucked, but only because it taxes labor income rather than labor value. We’ve seen the gross wealth in this country rise from $2.2T to $167T between 1960 and 2027. And you’re telling me we’re running out of money to pay our retirees?
Fuck off. Anyone should be able to see through this bullshit.
Exactly. It is obvious that this is trying to lie to you, because of course employees should be entitled to the employer match that employers paid into SS. If SS were a private fund, then those retirement funds would have been earning interest and the payors should be entitled to interest on their savings. “But, the index fund is paying you out more than you put in!!! The stock market will run out of moeny!” No, that is exactly what index funds, and retirement funds, are suppose to do.
I think just like the US Secret Service, Social Security is… uh… not fond of the acronym… ;-)
The most obvious slight of hand here is the suggestion that employer contributions shouldn’t count as part of what employees paid in. That is part of their compensation and shouldn’t be ignored when suggesting that younger generations are paying for baby boomer’s social security.
To me this reads like someone is trying to poison younger people against social security so they won’t complain when it is taken away.
The $200,000 cited is combined contributions, meaning it does include what the employer paid in
I assumed it was already adjusted since it says “measured in present-value dollars”
about 133% of everything they and their employers paid in taxes, measured in present-value dollars. Strip out the employer match, and the return nearly doubles: Roughly 265% of what workers put in themselves.
(Emphasis added.)
The article already adjusted for inflation. It would be 365% if calculated based on nominal dollars.
The problem isn’t individual retirees collecting more than they paid in. The problem is billionaires and hundred-millionaires being exempted from paying into it.
I sort of don’t want to wade into this, but…
[…] about 133% of everything they and their employers paid in taxes, measured in present-value dollars. Strip out the employer match, […]
I agree with pretty much all of what you said, but they are accounting for inflation.
Edit: Oh, no. My apologies.
The article is kind of bullshit. They jump from saying the value is measured in present values to nominal without actually adjusting their numbers. I’m not a mathamagician, but something is fucky here in a way that extends beyond mathematical errors. They claim a discrepancy (employee + employer contributions), use an edge case to inflate the numbers (going with just employee contributions), then repeatedly mention that higher discrepancy while saying it’s due to both employee and employer contributions. It’s like an AI went off the rails trying to write persuasively, and the “writer” just let it fly anyway. Some basic logic doesn’t seem to work here.Shit. I read the summary from the OP before I commented. My mistake.
THEY DIDN’T ACCOUNT INFLATION IN PAYMENTS??
Oh, cool, a multi-prong attack on Social Security, just like I commented on that other article here on Social Security.
Get the younger generation all whipped up and butthurt about the “olds” collecting what is characterized as “too much”. While the oligarchs bitch about “balancing the budget” by cutting services.
Instead of the fucking obvious option - lift the caps.
I wish I could downvote this article more than once.
Thank you for saving me the time and energy to say precisely that.
If the caps were removed, it would completely solve the problem.
That’s it.
Yet again, they try to divide us any way they can.
Or the 2nd obvious solution. Repealing the tax cuts that have occurred the last 25 years. They have added 10 trillion dollars to the deficit, and were just a giveaway to people that didn’t need the tax cuts.
Sorry for my ignorance, but what caps are you talking about?
Edit sorry again, another post explained, all good
It’s an old lie, sir, but it works.
So I guess Fortune magazine just discovered inflation today? Fuck your dumb oligarch divisive bullshit, the only problem with Social Security is that the wealthiest haven’t been paying enough into it.
They do say measured in present value dollars, so technically this isn’t inflation. But it is effectively interest. The idea that social security taxes should be a 0% interest bank account is absurd. Nobody would reasonably put their retirement savings in a 0% interest bank account, even one that is inflation protected, and expect to have a successful retirement. They also fudge the numbers by looking at the median retiree and not the average retiree. Social Security is a progressive payout system, meaning those who put in the most get the least back proportionally (it could be more harshly progressive IMO, but that is a separate conversation). Meaning that in a wealth-concentrated environment like ours, social security is effectively a transfer of wealth from the richest boomers to the other boomers, but Fortune pretends that isn’t happening and chalks it all up as a transfer of wealth from millennials to boomers, which is quite disingenuous
Their own graph illustrates how bullshit their own argument is:
In the text they are comparing taxes without interest at “less than $200,000” (aka as $197.000 or “almost $200.000” if the author weren’t a ghoul) with benefits without interest at $730.000, without mentioning interest/inflation adjustment at all. Since taxes were paid decades before the benefits will be received, their accumulated interest is going to be much higher, which is illustrated well by the graph.
If the graph can be trusted, then with interest the break even point of contributions/benefits happens at 82 or 83 years of age. The usa life expectancy is 79 years. So according to their own data, the average boomer will have contributed more than they will receive. And that is with the current regressive taxation scheme, where high earners contribute less.
But I believe the GOP have been "borrowing " money from Social Security hence why there won’t be anything for future generations. For fuck sake I might as well die if thinking going live on it. The average baby boomer is not living on their SS. Also got letter in 2010 telling me I would be eligible to collect when 72, fucking 72 years old. I suppose to work until I am almost dead? Fuck that.
Time fucking cull some billionaires.
Yeah interest and inflation both crap on this, I’d think. There are many other ways to shit stir about the majority of the boomers but this one is weak
Honestly would include us genXers. Still working with no end in sight.
First of all, “there’s no money for this” coming from the federal government is a lie, on any topic. They just don’t want to, and take advantage of people not knowing how money works. There’s always money for bombs, but for schools and social services not so much.
Second of all, as others have said, capping social security payments per year is stupid. It should be progressive. The first $x don’t get taxed at all, then higher rates as your income goes high.
Third, it shouldn’t be tied to your personal contributions. We live in a society, despite what anti social conservative monsters say.
While I agree the cap on social security contributions should be lifted, I don’t think we need three separate progressive payroll taxes at the federal level. Currently both income and medicare are separate progressive tax brackets. Taxes are already complicated enough!
Just lump them all together, increase the number of brackets (90% top rate), and tie the income ranges to inflation.
We could increase all progressive income (80% for net worth over $100 million) and inheritance tax, VAT, increased capital gains tax to average of 40%-50% for all families while providing guaranteed housing vouchers, childcare, pensions, food and healthcare for all. And also provide VAT rebates for low-income families. The average working-class family would come out ahead as their share of cost is reduced on basic necessities.
Workers are the backbone of society and should be making these kind of policy decisions, not the Epstein class. The Epstein is extracting all of their wealth off the backs of the workers and tax dollars from the federal government that should be going to the people.
Isn’t that how Social Security is supposed to work? In 30 years it’s going to be Gen A paying for millennials. It only has reserves because the trust fund was set up to cover the baby boomers because they knew it was a much larger generation. The trust fund was never intended to be a permanent fixture.
You’re describing a ponzi scheme. There must be more than just, “each generation is paid for by its successors,” or it eats itself. Fortunately, there is more.
Not really. A ponzi scheme involves paying people out of capital received from new investors rather than profit. AI, crypto, NFTs, basically every venture-capital based tech product of the last couple decades could probably qualify as a ponzi scheme. It’s hard to argue that a tax-supported government service falls into the same category as all those other things.
Mmmm intergenerational battles among working class people… this is a good headline for the Epstein class
The media sure is pushing the “cut social security and medicare” narrative this month — instead of pointing out that yearly military budget is $1 trillion.
