In November of 2013, C. Eugene Steuerle and Caleb Quakenbush of the Urban Institute issued a comparison of the expected present value of lifetime benefits and taxes for Social Security and Medicare for 2013. Values were presented in 2013 dollars and assumed a 2 percent real discount rate.
The analysis shows that older people received the greatest ratio of benefits to taxes, while recent retirees and people who will retire in the next 15-20 years will receive roughly the same ratio of return in terms of the benefits divided by taxes. For example, a single male who retired in 1960 had a ratio of benefits to taxes of 7.0. For a single male who retired in 1980, the ratio was 2.6. A single female who retired in 1960 had a ratio of 9.4, while a single female who retired in 1980 had a ratio of 3.2.
The benefits to taxes ratio was a constant 1.2 for single males retiring in 2010, 2015, 2020 and 2025. The ratio slightly increased to 1.3 for single males anticipated to retire in 2030, presumably due to increased life expectancy. For single females retiring between 2010 through 2030, the ratio was consistently in the 1.3 to 1.4 range.
The 2 percent discount rate is noteworthy. The results would very likely be very different if the discount rate was a higher rate, such as an average discount rate for such an analysis over the past 40 years.
The results show that there are winners and losers under federal programs.
