According to an analysis from the Center on Budget and Policy Priorities, no social program does more for the American public than Social Security. Yet, there’s always debate over just how much Social Security actually does for the average retired worker. After all, in September 2018, the average retired worker was bringing home just $1,417.22 a month, or a little over $17,000 a year, based on data from the Social Security Administration. That doesn’t seem like a lot of money considering that many of these workers potentially paid into the system for three, four, or even five decades. Read on to find out why you're probably getting your money’s worth from Social Security.
With the exception of high-income earners, everyone else appears to be making out like a bandit from Social Security (and especially Medicare). In short, they’re collecting far more income from Social Security than they’ve paid into the program.
According to the Urban Institute, a single middle-income man, which is defined as having $51,900 in earnings in 2018, would have paid $299,000 in lifetime Social Security payroll tax, assuming this individual turns 65 in 2020. However, he will collect an estimated $318,000 in lifetime benefits—a gain of $19,000 over what was paid in.
The only folks who don’t win appear to be high-earners, which are defined as having $83,000 in income in 2018 dollars. By 2020, a high-earning man turning 65 would be expected to pay $479,000 in lifetime payroll tax while collecting “only” $421,000 in benefits—a net negative of $58,000.
It’s also worth pointing out that since women, on average, live longer than men, their net gain using the above dollar amounts in Urban Institute’s analysis is even higher.
You can find the full article at Motley Fool.