Social Security not good deal it once was
WASHINGTON -- 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.
Previous generations got a much-better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades.
"For the early generations, it was an incredibly good deal," said Andrew Biggs, a former deputy Social Security commissioner and now a scholar at the American Enterprise Institute. "The government gave you free money."
If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes -- more if you were a low-income worker -- as long as you lived 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.
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.
The trustees who oversee Social Security say its funds, which have been built up over the past 30 years with surplus payroll taxes, will run dry in 2033 unless Congress acts.