Publications by C. Eugene Steuerle for Retirement Policy

On February 22, 2012, Eugene Steuerle addressed Re-Imagining Pensions, a conference cosponsored by the Urban Institute, the Pension Rights Center, and Covington & Burling. Steuerle presented options for allowing workers to purchase annuities within Social Security, as well as granting partial benefits to accommodate phased retirement. While such options technically exist today, they are buried deep within the maze of Social Security’s complex provisions. Simplifying and clarifying these options would enable workers to provide themselves with a greater degree of inflation-protected longevity insurance in retirement.

The Congress, the President, and various commissions have begun discussing real Social Security, Medicare, and Medicaid reform. This paper suggests that as these discussions move forward, it would be helpful to examine lifetime contributions and benefits for Medicare and Social Security to understand the programs’ internal fiscal situations and their broader role in overall budget policy and, most importantly, as a way toward a more unified and coherent approach to entitlement reform for seniors. This approach also provides a useful window on how equitably lifetime benefits and taxes are distributed and on the fiscal stability of the overall system.

The White House and Congress reached a deal in August 2011 to raise the debt ceiling and cut $2.1 billion in government spending over ten years. While big programs that affect Americans’ retirements were not reduced, they’re likely to take a haircut when a mandated 12-member, bipartisan, bicameral "super committee" makes its recommendations for at least $1.2 trillion in cuts in November. Steuerle explains what the debt ceiling deal accomplished, the political landscape and stakes faced by the "super committee," and the outlook for future and current retirees.

Gene Steuerle testifies on alternative ways to restore solvency and undertake benefit reforms in Social Security, concentrating on four: restricting automatic growth in benefits where needs are least, adjusting benefits so they both encourage employment and are concentrated more in older ages, removing many sources of inequity and inefficiency that penalize beneficiaries, and reforming private pensions so they better protect the majority of workers who today end up with little in the way of private retirement benefits.

How much will you pay in Social Security and Medicare taxes over your lifetime? And how much can you expect to get back in benefits? It depends on whether you're married, when you retire, and how much you’ve earned over a lifetime. These tables provide estimates of the lifetime value of Social Security and Medicare benefits and taxes for typical workers in different generations at various earning levels.

What does matter is that Social Security expenses are expected to rise by about 50 percent—from about 4.3 to 6.3 percentage points of GDP—from 2008 to 2030, and taxes aren't. As the baby boomers retire, higher expenses and less tax revenue mean that the national deficit will rise year after year.

Gene Steuerle makes a progressive argument in the American Prospect against subsidizing middle-age retirement through Social Security. In recent negotiations, many liberals focused so intently on protecting the current benefit system that they overlooked real opportunities to improve the equity and progressivity of the system. America needs to look at all the elements of our nation's social contract — those created deliberately and those that arose by accident — and question whether they forward our goals of social justice and progressivity as well as make the best use of our most valuable resource, our people.

It is often useful to compute contributions and benefits over a lifetime when studying policies for retirement and Social Security. However, these calculations are complicated by factors like economic growth and inflation, which change the relative value of investments over time. The fact that $1 in the bank today might accrue enough interest to be worth $1.03 next year leads economists, accountants, and actuaries to find ways to equate the two amounts at a point in time. This fact sheet explains how the discount rate affects present value calculations.

What do you pay in Medicare taxes? And what Medicare benefits can you expect? It's no secret that early generations of Social Security beneficiaries got benefits worth more than the taxes they had paid, although the most recent waves of retirees getting Social Security can make a stronger case that they have paid for their benefits. But let's leave Social Security aside for the moment to consider an even bigger problem of the same stripe. Past and current retirees, and most working-age adults, will never pay for all their Medicare benefits.

Institute Fellow C. Eugene Steuerle discusses the pressure to fix Social Security soon, the benefits of acting now, reforms proposed by the president’s National Commission on Fiscal Responsibility and Reform, and how these proposals would affect the elderly and those nearing retirement.

Return to list of authors.