I was cleaning out my desk recently and came across the last Social Security earnings record I received before starting to receive benefits in November 2009.
The report told me that in the fifty years between 1959 when my total earnings were $105 and 2009 my employers and I paid $233,562 in Social Security taxes.
That’s a lot of money, but when I calculated what my wife and I have collected on my earnings record it turns out we have already received in benefits more than I and my employer paid into the system in 50 years. In fact, we exceeded the payment amount in 5.11 years from November 2009.
Oh I know, not only did we pay those taxes, in theory anyway we lost the fifty years of potential earnings on that money. But you know what, it’s highly unlikely that I would have saved all that money or that my employer would have paid its contribution to me in wages and that I would have saved that either and I suspect that’s true for most people. Besides, in the early years, the taxes were quite small.
To receive a similar monthly benefit for life (without an inflation COLA or a 100% survivor benefit) would cost in excess of $600,000.
So, once again I ask … is Social Security a good deal? Too good of a deal to afford?
Consider this; in the first fifty-three years Social Security was in effect the payroll tax rate was increased nineteen times; on average once every 2.8 years. However, despite repeated warnings from the Trustees, the tax rate has not been increased in the last twenty-five years. Now to keep the program going for the foreseeable future we must play catchup with tax rates and/or make other changes.
Why you may ask hasn’t the tax rate or other elements of SS been adjusted regularly to meet the changing demographics and costs for the program? Well, the answer is our politicians are cowards worried more about your vote than telling you the truth and doing the right thing.
Today populist rhetoric continues to mislead and promise more and more with no credible way to pay for all the promises.
QUINNSCOMMENTARY 
Sorry, ignoring the employer contribution and earnings is misleading. Please recalculate and use the annual rate of return of the S&P 500 or some other index to determine what your cumulative balance would have been. You can argue that the government made investment mistakes and that the earnings should not be part of the consideration, but it was those folks who created this “security” or “retirement” system … so, failure to effectively invest trillions of dollars is their mistake – certainly not yours and mine.
In fact, I believe you will find that your account balance would have been so significant, and post-commencement earnings would have been so significant, THAT THE ANNUAL EARNINGS ON YOUR ACCUMULATED BALANCE, EARNINGS AFTER SEPARATION AND YOUR BENEFIT COMMENCEMENT EXCEED ALL BENEFITS YOU HAVE RECEIVED.
That is, my bet is that you have not received even one dollar of your contributions – had the monies been invested properly, they would still be working on your post-separation, post-commencement earnings. That is the more than likely situation I will face when I commence Social Security Spouse benefits upon my reaching age 66, and the full Social Security benefit (individual and spouse) upon my reaching age 70.
Also, assuming my employment continues to age 66 or later, I and my wife certainly expect to receive less in hospitalization benefits than I (and my/her employers) paid in, also adjusted for earnings.
The only folks who may have received more than they contributed are the members of the greatest generation, and perhaps the oldest boomers. As you note, members of Congress like Howard Metzembaum and Tip O’Neill, and past presidents, like FDR, Jerry Ford, Jimmy Carter and George W. Bush all used expansions in entitlements to buy votes among the elderly.
Bottom line, this is not a situation where you should be happy with the benefit you receive by understating the true cost. If you forgive and forget, you consign your children and grandchildren to an even worse fate than is already their lot.
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But aren’t you forgetting all the ancillary benefits such as disability pension, survivor annuity, ex-spouse annuity, child benefits, etc.
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