When discussing entitlement reform options, a helpful starting point is the package of benefits received versus contributions made within Social Security or, more broadly, within Social Security and Medicare.
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.
Tables from C. Eugene Steuerle, Caleb Quakenbush, and Stephanie Rennane provide estimates of the lifetime value of Social Security and Medicare benefits and taxes for typical workers in different generations at various earning levels.
The “lifetime value of taxes” is based upon the value of accumulated taxes, as if those taxes were put into an account that earned a 2 percent real rate of return (that is, 2 percent plus inflation). The “lifetime value of benefits” represents the amount needed in an account (also earning a 2 percent real interest rate) to pay for those benefits.
Additional information about the lifetime benefits tables:
More by Eugene Steuerle on lifetime Social Security benefits:
Government We Deserve: “The Pointless Debate over the Social Security Trust Fund.” | PDFRetooling Social Security for the 21st Century: Right and Wrong Approaches to Reform