Look at the facts
It is important for all current seniors to put aside the TV sound bites and generalities and deal with the facts. Over and over, one hears, I put money in Medicare and Social Security and deserve my benefits at retirement. So don’t mess with it! Here is a factual example— based on the Medicare and Social Security Tables—www.ssa.gov/OACT/ProgData/taxRates.html and www.ssa.gov/OACT/COLA/cbb.html.
The average female born in 1940, working from age 20 through 66 1/2 (1960-2007) and earning at the maximum wage base through 1985 reaching $39,600 and then 1994 reaching $40,000 and 2000 reaching $45,000 contributed $16,904.55 to Medicare and was eligible to draw Medicare at age 65 for the rest of her life –expectancy about 81 years of age. It is easy to see that one hospital visit for surgery wipes out the entire amount.
Using the same data, Social Security contributions were $75,629.91 and benefits started at age 66 1/2. The benefit is likely $1,000 per month which is $12,000 per year. In 6.2 years, this female has received back all of the money she contributed. If this female lives to age 81 ½, she will have collected $168,000.
Now—- when you see the numbers, you can see the problem. Who pays the benefits when you exceed your contributions? How about the seniors who didn’t work 46 ½ years at the significant wage in the example? How about the seniors who never worked – say some spouses? Where does that money come from for their benefits? How about the “poor” who don’t make much contribution to Medicare or Social Security yet receive full Medicare and at least a minimum Social Security?
One important source of contributions to cover the shortfall, in the above example, is that this female’s employer was required to match her contributions which when added almost covers her Social Security benefit if she dies at 81. However, with the high cost of healthcare, even with the employer money contributed towards Medicare, it is still a “drop in the bucket” which is the bigger problem. Seniors are paying about $110 a month out of their Social Security check towards Medicare in retirement which helps but a co-pay for services should probably be added. The other source of contributions to seniors Medicare and Social Security are our children and grandchildren. Their payroll tax withholdings are going directly to our benefits. Thus, enter the words Ponzi scheme. If it takes nearly all the contributions our young people make today to fund current senior benefits then—the first people to draw the benefits take all the money and the current and future young people are left “holding the bag.”
In summary, right now Medicare especially needs to change to be saved –even for us seniors. The numbers speak and when millions of welfare and poor are added to Medicare at 65 or Medicaid before 65, the deficit becomes crushing. It seems we current seniors enjoyed a lifetime of great prosperity but failed to understand what the ever increasing entitlement state would do to all of us!