Retired Americans collect more in benefits than they paid in taxes during their working lives. A system that cannot be sustained unchanged.
Has America promised more than younger taxpayers care to deliver?
The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of Social Security’s and a small portion of Medicare’s costs.
The typical couple retiring today will receive Social Security benefits 13 percent higher than their lifetime contributions, and Medicare benefits that are triple their lifetime contributions into the system, even after adjusting for inflation and net present values.
As 74 million retiring baby boomers are added to this fragile system, paying all promised benefits would eventually require raising the payroll tax to 33 percent, or imposing a 34 percent value-added tax (basically, a national sales tax).