In the NY Times, the writer from some Business School notes:
With Medicare and Social Security, older Americans are taking far more out of the system than they paid in. Consider how much lifetime Social Security and Medicare benefits have grown. For a typical 65-year-old couple, those benefits, adjusted for inflation, are worth over $1.1 million today, compared with $330,000 in 1960. Benefits rise as each generation lives longer and receives amounts that grow with the cost of living and as medical prices rise and expensive medical treatments proliferate. Yet the lifetime taxes this couple pays into Social Security and Medicare amount to about $650,000.
In a paper I wrote some 12 years ago I did a detailed analysis of Medicare returns. Namely those working to 75 will over pay into Medicare almost twice their resulting benefits. In fact Medicare is a system benefiting the poorly employed. However the longevity of that class is lower so the net effect is minimal. Thus the write fails to note the time value of money. It is NOT the total you invested over 40+ years but the Net Present Value of that money. Namely the money plus imputed interest!
One would have expected this educator at some Business School to have at the very least considered that. 40+ years of interest is a significant number. A loaf of bread was $0.35 then and now $3.50! That is a significant difference.
Sloppy student, gets an F!
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