Thursday, May 12, 2011

The millionaire retirees next door

Starting next year, [the typical husband and wife who reach age 66 and qualify for Social Security], receiving the average benefit, will begin collecting a combination of cash and health-care entitlement benefits that will total $1 million over their remaining expected lifetime.

According to my calculations based on government data, such married couples will begin receiving monthly Social Security checks that will, on average, total about $550,000 after inflation. They will receive health-care services paid for by Medicare that, on average, will total another $450,000 after inflation. The benefactors will be a generation of younger workers who are trying to support themselves and their families while paying taxes to finance the rest of government spending.

...Many of the million-dollar couples believe they rightfully deserve the benefits they have been promised. They have, after all, spent all of their working years paying into Social Security and Medicare. And true enough, the typical 66-year old couple and their employers, on their behalf, have contributed nearly $500,000 in payroll taxes (in today's dollars) toward these benefits during their working careers.

But regardless of how much they have contributed, the hard reality is that the federal government has already spent it. No matter how deserving they are, it is younger generations of workers who have to come up with the money.
Democrats routinely point to public opinion polls demonstrating support for government programs such as Social Security as a validation of the welfare state. But why should such polls be at all surprising given that these programs are a wealth transfer tool in which people obtain resources paid for by someone else? Is it really news that people enjoy perceived free lunches?

As Bastiat said, "The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else."

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