Look at various websites and memes on Facebook, listen to comments from seniors and you may be convinced that 1️⃣ Social Security is not an entitlement, 2️⃣ Retirees paid for their benefit through taxes and 3️⃣ the benefit was earned.
Here are some facts to consider. Until recent years the SSA Administration sent out your earnings record each year around your birthday. It showed how much you and your employer paid in taxes your entire working life.
I looked at mine for the year before I began collecting Social Security.
What is shows is that my wife and I received in benefits an amount equal to all my taxes paid since 1959 within only 2.510 years of starting our benefit (adjusted for COLAs). My benefit alone recouped all taxes in 4.091 years. If you count the employer contributions as well, we received a benefit equal to both my and my employers contributions in only 5.020 years
STILL THINK YOU PAID FOR YOUR SOCIAL SECURITY BENEFIT?
So, who is paying for my benefits? My children and your children and someday their children. Social Security is currently using every penny of taxes collected to pay today’s benefits. Nothing is being accumulated to pay benefits to the people paying taxes. In addition, all taxpayers are paying because the government pays the trust interest on the Treasury Bonds it holds.
Somebody should ask Bernie Sanders about that.
But it gets worse. For anyone collecting a benefit, who was divorced and remarried, two spouses or more could all be collecting a benefit off the workers account. Or a person who was single all their life and married a year before collecting SS would also collect a spouses benefit. Except for recent anomalies, my benefit, my wife’s benefit and yours increases each year.
If I wanted to buy an annuity (without a COLA) for my life and guaranteed for 20 years to provide for my wife, it would cost me about $950,000; far more than I paid in Social Security taxes and over four times the combined taxes paid by me and my employers since 1959.
Not an entitlement you say? 🤑
Note: One could argue that if I could take those taxes and invest them for forty-years, I would have far more than even the $950,000. That’s surely possible, but also not a possible result. In any case, it’s not the point of all this because you can’t do it.