Social Security & Medicare Lifetime Benefits & Taxes: 2020

Research Report

Social Security & Medicare Lifetime Benefits & Taxes: 2020

November 17, 2020

Abstract

This report presents updated figures in 2020 dollars for the lifetime benefits earned and the lifetime taxes paid by hypothetical workers participating in Social Security and Medicare. For a single male earning average wages every year and retiring in 2020 at age 65, lifetime Social Security and Medicare benefits would equal about $570,000 and, for a couple with average and low wages, about $1,113,000. Those amounts rise and fall for other hypothetical households as their incomes rise and fall relative to average wages. They also increase significantly for future retirees, as benefits rise with real wages in the case of Social Security, and with higher health care costs and new health services in the case of Medicare. Lifetime Social Security and Medicare taxes are still scheduled to be significantly lower than lifetime Social Security and Medicare benefits for most workers in future decades, partly because the low Medicare tax was designed to cover only hospital costs, but not doctor, outpatient, and other hospital services costs (and even those hospital costs remain well above the revenues required to fund them).

Given the near-term depletion of Social Security and Medicare Hospital Insurance trust funds, these data allow policy makers to visualize how reforms might adjust currently scheduled retirement and health benefits and taxes along several dimensions: on a lifetime, as well as annual, basis; among people with different earnings histories; and intergenerationally, or across different future cohorts.

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