Boomers vs. Your Paycheck: Who Pays for Social Security?

Social Security is mostly pay-as-you-go.

So you pay six percent of your wages, your employer pays six percent, on earnings up to a hundred and eighty-four thousand dollars.

So that money immediately goes out the door to current retirees almost right away.

There is no vault with your name on it at all.

In nineteen fifty, there were sixteen workers paying in for every retiree.

Now there are two.

That's right, sixteen workers in nineteen fifty paying in.

Now there are two.

All right? The very first monthly check at that time went to a woman named Ida May Fuller.

Cato figures that she paid in about five hundred dollars, and adjusted for c- inflation, she collected about, I kid you not, half a million dollars.

[laughs] I'm not kidding.

Yeah.

So five hundred dollars and collected half a million dollars.

A great deal for Ida.

Every deal since then has gotten a little bit worse.

The twenty twenty s- six Social Security trustees report came out, and it actually gets worse.

The main retirement trust fund, which is called OASI, runs out of reserves in the fourth quarter of twenty thirty-two.

That's pretty fast.

That's one quarter sooner than last year's estimate.

After that, incoming taxes cover seventy-eight percent of scheduled benefits.

So combine retirement and disability, and the date is the third quarter of twenty thirty-four, so it's sneaking up on us very fast.

Uh, with, uh, you know, uh, twenty-- only eighty-three percent of it would be payable on, at that rate.

The seventy-five year shortfall jumped to four point four percent of taxable payroll, up from three point eight percent last year.

Why? Well, it's because we're all assuming lower birth rates, lower immigration, and less tax revenue on benefits after last year's big tax law.

Now, we can kill a couple of myths at one, uh, at once with this.

Social Security is mostly pay-as-you-go.

So you pay six percent of your wages, your employer pays six percent, on earnings up to a hundred and eighty-four thousand dollars.

So that money immediately goes out the door to current retirees almost right away.

There is no vault with your name on it at all.

In nineteen fifty, there were sixteen workers paying in for every retiree.

Now there are two.

That's right, sixteen workers in nineteen fifty paying in.

Now there are two.

All right? The very first monthly check at that time went to a woman named Ida May Fuller.

Cato figures that she paid in about five hundred dollars, and adjusted for c- inflation, she collected about, I kid you not, half a million dollars.

[laughs] I'm not kidding.

Yeah.

So five hundred dollars and collected half a million dollars.

A great deal for Ida.

Every deal since then has gotten a little bit worse.

The twenty twenty s- six Social Security trustees report came out, and it actually gets worse.

The main retirement trust fund, which is called OASI, runs out of reserves in the fourth quarter of twenty thirty-two.

That's pretty fast.

That's one quarter sooner than last year's estimate.

After that, incoming taxes cover seventy-eight percent of scheduled benefits.

So combine retirement and disability, and the date is the third quarter of twenty thirty-four, so it's sneaking up on us very fast.

Uh, with, uh, you know, uh, twenty-- only eighty-three percent of it would be payable on, at that rate.

The seventy-five year shortfall jumped to four point four percent of taxable payroll, up from three point eight percent last year.

Why? Well, it's because we're all assuming lower birth rates, lower immigration, and less tax revenue on benefits after last year's big tax law.

Now, we can kill a couple of myths at one, uh, at once with this.