She paid in to the system. She was entitled to every penny.
A government union negotiates a fully legal pension plan for its employees. The pension plan is so generous that it will totally bankrupt the whole state. Who cares??? They paid in. They're entitled!
At some point, people have to look at the math. These things do not work in the real world. In terms of rhetoric, sure, you can "justify" them. But the math will win the argument in the end. Ponzi schemes inevitably fail. People pay in a small amount, and expect to receive a large amount. Life doesn't work that way.
Have Seniors Really Paid for Their Medicare Benefits? Cont.
By Andrew Biggs
August 19, 2009, 3:25 pm
Patrick Appel at the Daily Dish picks up on yesterday’s post showing that most seniors will receive significantly more in Medicare benefits than they ever paid in Medicare taxes, undercutting the claim—coming from Republicans, believe it or not—that President Obama’s proposed Medicare cuts are unfair to seniors, who have “paid for their benefits.” (E.D. Kain also weighs in.)
Appel raises the good point that the figures I presented yesterday are only for someone who actually survives to retirement age. “Senior citizens can get slightly more out of Medicare than they put in while not bankrupting the country because many workers will not live long enough to collect payments.” That’s true. But how big an effect does it have?
To check, I effectively repeated my prior calculations, but on a mortality-adjusted basis. That is, I start with a person who is 21 years old. I then construct a stream of taxes through age 64 and Medicare benefits from age 65 through 100. Each dollar figure is then multiplied by the probability of being alive at that age. Taxes at age 22, for instance, are multiplied by 0.999, since there’s a near certainty that a 21-year-old will live to age 22, but benefits at age 95 are multiplied by only 0.08, since there’s only around an 8 percent chance that a 21-year-old will survive to age 95. These mortality-adjusted taxes and benefits are then converted to present values to account for interest.
What’s the result? The typical 21-year-old as of 1965 would have paid around $62,290 in Medicare taxes (versus $64,470 on a non-mortality adjusted basis) while receiving around $140,346 in benefits (versus $173,886 on a non-mortality adjusted basis). So Appel’s point clearly has merit.
That said, the broader point still stands: in my original calculations, a new retiree in 2009 would have paid Medicare taxes equal to around 37 percent of his expected benefits. Adjusted for the chance of dying before retirement, that share rises to only 44 percent. So even with reasonable adjustments for mortality, the typical retiree today has paid for less than half the Medicare benefits he can expect to receive over his lifetime. Importantly, rising life expectancies will tend to increase benefits more than taxes, making today’s deal better over time.
http://blog.american.com/2009/08/have-seniors-really-paid-for-their-medicare-benefits-cont/
“Ponzi schemes inevitably fail.”
To date, SS has largely been self-financing: that is, the “average” person is paid roughly the same amount they paid into the system. One can quibble about whether they might have done even better (given that retirement savings ought to be earning some sort of rate of return) http://www.forbes.com/sites/merrillmatthews/2011/07/29/youve-been-robbed-the-real-scandal-behind-the-pew-centers-wealth-gap/, but at least there’s ROUGHLY some correspondence.
Medicare is completely different. The “average” person gets about $3 in benefits for every $1 they pay into the system. Thus, anyone who thinks they are “entitled” to Medicare benefits doesn’t understand the extent to which in actuality they are being subsidized by others (read: younger workers who generally are in a worse financial position than the elderly they are subsidizing!).
We could entirely solve the SS problem and still go bankrupt due to Medicare and Medicaid entitlements.
The first Social Security recipient paid in about $24 (total) and received about $24,000 in total payouts.
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I’ll aways remember the guy in his 70s from the Mariel Boatlift Carter let in from Cuba...
Castro opened the prisons and mental asylums and allowed thousands of them to come on boats..
This one guy boasted to the TV camera that he hadnt worked one day in his life in the US but he was already signed up to get SS
Or as they put it in Goodfellas, " F You, Pay Me!"
“A government union negotiates a fully legal pension plan for its employees. The pension plan is so generous that it will totally bankrupt the whole state. Who cares??? They paid in. They’re entitled!”
I was reading my local paper’s “insert” on Sunday and it was focused on Social Security. One of the articles was talking about the benefits for those folks that are Federal employees and that will get a federal pension. It sounds like they don’t pay in, but are entitled to SSIP, however at a smaller portion.
I can’t find a source for that, so I can’t give you specifics, however it had me steaming....
Technically incorrect. Ida May Fuller (who you're referring to) was the first recipient of monthly SS checks.
Ernest Ackerman was the first recipient of SS (when it issued lump-sum payments) and he got a whopping $0.17 after having paid in $0.05.
From the start it was a ridiculous system.
See First Payments
Give us our money back with interest and we're otta here. I'm sure young people feel the same. To hell with giving Washington deadbeats one more slush fund to distribute to the eternally dependent.