Decreasing Returns on Social Security
Anyone with a money market account or mutual fund knows, that return on investment is down across the board. Although many Americans do not consider Social Security an investment, it is the foundation of retirement funding for most people in this country. What once was a great deal for elderly workers is no longer the case. In the past, workers paid far less in Social Security taxes, so they often received more back than they paid in.
According to a recent article by the Associated Press, a worker who retired in 1960 could expect to receive seven times what they paid in to the system as long as they lived to 78. Since the 1990’s high income earners have been receiving less than they have paid in because of the progressive structure of Social Security. Now more middle-income earners are in the same situation. A typical middle income couple that both contributed to the system will not receive the amount they paid into the system unless they continue to collect benefits beyond 85. The problem is occurring because of fewer workers contributing compared to the amount of retirees receiving benefits. Currently, there are only 2.8 workers contributing for each retiree.
This budget problem affects Social Security Disability payments as well since those payments are funded from the same source. Several factors have stressed that system including the aging of baby boomers, slowing of the economy, and the increase of women in the workforce. For more detail see our Social Security disability informational news blog.
For the full AP article: http://www.google.com/hostednews/ap/article/ALeqM5heZljyVLTuLty0r3nZ6KfiTVk_Mg?docId=68060b5bb4384d699b2e686f5f979b26