By John Sykes
Medicare is the real killer. According to Eugene Steuerle of the Urban Institute, an average couple retiring last year can look forward to consuming Medicare benefits with a present value of $343,000, having paid Medicare taxes with a present value of $109,000.
And don't let that figure get your hopes up, because even that $109,000 is not available today. That money was spent long ago. The government's trust funds are a fraud. Indeed, by some large amount, society missed out over many decades on domestic savings and investment that would have taken place had workers not been relying on unfunded government promises to support them in retirement.
The flip side of this depressing consideration, though, is a happier one. Moving toward a system of real savings, in which payroll taxes would flow into some version of personal accounts controlled by the worker, would bring a big improvement to incentives. We could expect a sizeable growth dividend to help finance the transition.
So what does that third paragraph mean to me? If you roughly average $109,000 over 40 years of work from age 25 –65, $2725, and compound it at 6%, this couple would have $447,0000 sitting in an account to cover that $343,000. Tell me that wouldn’t cover private medical insurance for the rest of their lives!
Trouble is the politicrats have either stolen, borrowed or redistributed all that money!
And don’t you think that the $103,000 surplus over the actual expected expenditures would have covered those too poor to be able to contribute?
Tell the political bums we need serious Health Savings Accounts now!
By the way, this works even better to replace Social Security and provide additional retirement funds! Don’t weep after you figure out how much you have paid in and how much it would be today under similar circumstances.