Regarding Social Security, the author states, “Few of us realize that most of us get back up to three times what we paid in...” as though there is a problem with that.
However, if you had paid $100 per month into a bank account that earned just 4% interest from age 21 to age 65, you would have paid in $52,800 and gotten back $186,247.14.
That’s well over three times as much.
But wait! Thanks to the rule of 72 and the miracle of compound interest, if you increase the interest rate to just 7% you will be looking at $331,328.37. Almost twice as much! And if you could get 10% (it was much higher than that during parts of the last few decades) you would be looking at $824,972.94. MORE than twice the last figure.
It is also 15 times more than you would have put into it.
So this “get back three times what you put in” comment suggesting that you are getting too much back is pure BS.
That is not the way Medicare works. It is a pay as you go system. Today's retirees get their benefits paid by today's workers. Medicare Part A has been in the red since 2008. By law, the premiums paid for Medicare Parts B and D pay only 25% of the costs. The rest must come from the general fund.
Medicare is unsustainable as currently structured. It will consume the entire federal budget if not changed. You can rationalize this all you want, but Medicare beneficiaries get on average three times more in benefits than they paid into the system.
And those costs will go up since medical costs are increasing faster than inflation. And we have an aging population with 10,000 people retiring every day for the next 20 years. By 2030, one in five in this country will be 65 or older. And by 2030 there will be just two workers for every retiree compared to 3.3 today and 15 to one in 1950.