Social Security and Medicare Taxes and Benefits over a Lifetime



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and Taxes and Benefits over a 2013 Update C. Eugene Steuerle and Caleb Quakenbush November 2013

Copyright November 2013. The Urban Institute. All rights reserved. Permission is granted for reproduction of this file, with attribution to the Urban Institute. The Urban Institute is a nonprofit, nonpartisan policy research and educational organizations that examines the social, economic, and governance problems facing the nation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

and Taxes and Benefits over a 2013 Update The following tables update estimates for the expected present value of and for and for 2013. 1 For this analysis, the demographic and economic assumptions of the 2013 Old Age, Survivors, and Disability Insurance (OASDI), and trustees reports were integrated into our model. Values are presented in 2013 dollars and assume a 2 percent real discount rate. 2 No major changes in policy have occurred since the last update, so the overall picture presented for that program remains largely the same. For, slower growth in overall health costs in the economy have been incorporated into the Center for and Medicaid Services (CMS) longterm projections, resulting in somewhat lower total than found in 2012. In its estimates of future costs, the CMS actuaries use what is known as a current law baseline, which assumes that all laws concerning the program are implemented as scheduled. However, policymakers routinely override scheduled changes to the program which would lower payment rates to service providers, and they are likely to continue to do so. As a result, the baseline put forward in the trustees report likely understates projected costs. To account for this, we adjust future costs per enrollee to reflect an alternative scenario provided by the CMS actuaries that incorporates lawmakers current policy of canceling scheduled cuts in payment rates to physicians and other scheduled spending reductions. 3,4 The numbers presented are averages for hypothetical workers with specific work histories and longevity characteristics. and experienced by specific households in the economy will vary based on a number of factors, including income, health, and choices about marriage, divorce, children, and retirement. For example, the greater expected of women compared to men with the same earnings profile stem from longer life expectancies for women. These estimates assume beneficiaries receive all scheduled under current policy, regardless of the status of the or trust funds. Since both funds face shortfalls in the intermediate future, policies for both programs will inevitably change, which will greatly influence the and of current and future s. From that perspective, future are likely overstated or understated or both for many of the typical households represented. 1 See http://www.urban.org/socialsecurity/.cfm 2 For more background on our methodology, see http://www.urban.org/retirees/estimating--.cfm. 3 John D. Shatto and M. Kent Clemens, Projected Expenditures under Illustrative Scenarios with Alternative Payment Updates to Providers. http://www.cms.gov/research-statistics-data-and- Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/2013TRAlternativeScenario.pdf 4 For a further discussion of how differing spending assumptions can affect, see http://www.urban.org/publications/412661.html

Expected and Benefits and Taxes, 2013 dollars Single Male Earning Average Wage ($44,800 in 2013 dollars) 1960 9,700 118,000 15,000 133,000 19,000-19,000 1965 10,300 133,000 27,000 160,000 31,000-31,000 1970 11,900 156,000 38,000 194,000 48,000 2,000 50,000 1975 14,200 178,000 51,000 229,000 72,000 5,000 77,000 1980 16,100 216,000 65,000 281,000 101,000 9,000 110,000 1985 15,100 200,000 82,000 282,000 129,000 14,000 143,000 1990 14,900 209,000 100,000 309,000 163,000 22,000 185,000 1995 16,000 228,000 120,000 348,000 201,000 30,000 231,000 2000 16,200 243,000 140,000 383,000 239,000 39,000 278,000 2005 17,900 277,000 161,000 438,000 278,000 50,000 328,000 2010 18,700 286,000 178,000 464,000 312,000 62,000 374,000 2015 18,000 287,000 197,000 484,000 337,000 70,000 407,000 2020 18,700 303,000 224,000 527,000 360,000 78,000 438,000 2025 19,400 319,000 258,000 577,000 386,000 85,000 471,000 2030 20,500 341,000 297,000 638,000 411,000 91,000 502,000

Expected and Benefits and Taxes, 2013 dollars Single Female Earning Average Wage ($44,800 in 2013 dollars) 1960 9,800 154,000 24,000 178,000 19,000-19,000 1965 10,600 178,000 41,000 219,000 31,000-31,000 1970 12,300 207,000 56,000 263,000 48,000 2,000 50,000 1975 14,700 232,000 72,000 304,000 72,000 5,000 77,000 1980 16,100 265,000 89,000 354,000 101,000 9,000 110,000 1985 15,100 240,000 107,000 347,000 129,000 14,000 143,000 1990 14,900 246,000 126,000 372,000 163,000 22,000 185,000 1995 16,000 261,000 146,000 407,000 201,000 30,000 231,000 2000 16,200 273,000 166,000 439,000 239,000 39,000 278,000 2005 17,900 308,000 188,000 496,000 278,000 50,000 328,000 2010 18,700 314,000 207,000 521,000 312,000 62,000 374,000 2015 18,000 314,000 230,000 544,000 337,000 70,000 407,000 2020 18,700 331,000 260,000 591,000 360,000 78,000 438,000 2025 19,400 348,000 298,000 646,000 386,000 85,000 471,000 2030 20,500 371,000 341,000 712,000 411,000 91,000 502,000

Expected and Benefits and Taxes, 2013 dollars One-Earner Couple Earning the Average Wage ($44,800 in 2013 dollars) 1960 14,500 220,000 39,000 259,000 19,000-19,000 1965 15,400 252,000 68,000 320,000 31,000-31,000 1970 17,800 293,000 94,000 387,000 48,000 2,000 50,000 1975 21,300 330,000 123,000 453,000 72,000 5,000 77,000 1980 24,100 393,000 154,000 547,000 101,000 9,000 110,000 1985 22,700 359,000 189,000 548,000 129,000 14,000 143,000 1990 22,400 371,000 227,000 598,000 163,000 22,000 185,000 1995 23,900 398,000 267,000 665,000 201,000 30,000 231,000 2000 24,300 418,000 306,000 724,000 239,000 39,000 278,000 2005 26,800 473,000 350,000 823,000 278,000 50,000 328,000 2010 28,000 483,000 385,000 868,000 312,000 62,000 374,000 2015 26,900 483,000 427,000 910,000 337,000 70,000 407,000 2020 28,000 509,000 484,000 993,000 360,000 78,000 438,000 2025 29,100 535,000 556,000 1,091,000 386,000 85,000 471,000 2030 30,700 570,000 638,000 1,208,000 411,000 91,000 502,000

Expected and Benefits and Taxes, 2013 dollars One Earner Couple Earning a High Wage ($71,700 in 2013 dollars) 1960 16,100 245,000 39,000 284,000 25,000-25,000 1965 16,800 276,000 68,000 344,000 38,000-38,000 1970 20,100 330,000 94,000 424,000 61,000 2,000 63,000 1975 24,900 385,000 123,000 508,000 93,000 6,000 99,000 1980 30,100 491,000 154,000 645,000 136,000 13,000 149,000 1985 28,400 450,000 189,000 639,000 179,000 22,000 201,000 1990 28,400 470,000 227,000 697,000 231,000 33,000 264,000 1995 30,600 509,000 267,000 776,000 292,000 46,000 338,000 2000 31,500 542,000 306,000 848,000 354,000 60,000 414,000 2005 35,300 622,000 350,000 972,000 420,000 77,000 497,000 2010 37,100 639,000 385,000 1,024,000 485,000 97,000 582,000 2015 35,700 640,000 427,000 1,067,000 535,000 111,000 646,000 2020 37,000 672,000 484,000 1,156,000 575,000 124,000 699,000 2025 38,400 707,000 556,000 1,263,000 618,000 136,000 754,000 2030 40,600 754,000 638,000 1,392,000 657,000 145,000 802,000

Expected and Benefits and Taxes, 2013 dollars Two-Earner Couple: Average Wage/Low Wage ($44,800/$20,200 in 2013 dollars) 1960 16,100 235,000 39,000 274,000 27,000-27,000 1965 17,100 269,000 68,000 337,000 44,000-44,000 1970 19,600 312,000 94,000 406,000 70,000 2,000 72,000 1975 23,300 350,000 123,000 473,000 105,000 7,000 112,000 1980 25,800 411,000 154,000 565,000 146,000 13,000 159,000 1985 24,300 376,000 189,000 565,000 187,000 21,000 208,000 1990 24,000 389,000 227,000 616,000 237,000 31,000 268,000 1995 25,600 417,000 267,000 684,000 292,000 43,000 335,000 2000 26,000 438,000 306,000 744,000 347,000 56,000 403,000 2005 29,700 497,000 350,000 847,000 404,000 72,000 476,000 2010 32,100 508,000 385,000 893,000 453,000 89,000 542,000 2015 30,900 508,000 427,000 935,000 489,000 102,000 591,000 2020 32,500 536,000 484,000 1,020,000 521,000 113,000 634,000 2025 35,900 563,000 556,000 1,119,000 560,000 123,000 683,000 2030 37,900 600,000 638,000 1,238,000 596,000 131,000 727,000

Expected and Benefits and Taxes, 2013 dollars Two-Earner Couple: Average Wage ($44,800 each in 2013 dollars) 1960 19,600 272,000 39,000 311,000 37,000-37,000 1965 21,100 312,000 68,000 380,000 61,000-61,000 1970 24,600 363,000 94,000 457,000 96,000 3,000 99,000 1975 29,400 410,000 123,000 533,000 145,000 9,000 154,000 1980 32,200 481,000 154,000 635,000 201,000 18,000 219,000 1985 30,200 440,000 189,000 629,000 258,000 29,000 287,000 1990 29,900 455,000 227,000 682,000 327,000 43,000 370,000 1995 31,900 489,000 267,000 756,000 403,000 59,000 462,000 2000 32,400 516,000 306,000 822,000 479,000 78,000 557,000 2005 35,800 586,000 350,000 936,000 557,000 99,000 656,000 2010 37,400 600,000 385,000 985,000 624,000 123,000 747,000 2015 35,900 601,000 427,000 1,028,000 675,000 141,000 816,000 2020 37,300 634,000 484,000 1,118,000 719,000 155,000 874,000 2025 38,800 667,000 556,000 1,223,000 772,000 170,000 942,000 2030 40,900 712,000 638,000 1,350,000 821,000 181,000 1,002,000

Expected and Benefits and Taxes, 2013 dollars Two-Earner Couple: High Wage/Average Wage ($71,400/$44,800 in 2013 dollars) 1960 20,600 286,000 39,000 325,000 43,000-43,000 1965 21,800 326,000 68,000 394,000 69,000-69,000 1970 25,700 389,000 94,000 483,000 109,000 4,000 113,000 1975 31,300 451,000 123,000 574,000 166,000 11,000 177,000 1980 36,200 557,000 154,000 711,000 237,000 22,000 259,000 1985 34,100 511,000 189,000 700,000 308,000 36,000 344,000 1990 33,900 532,000 227,000 759,000 395,000 54,000 449,000 1995 36,400 575,000 267,000 842,000 493,000 75,000 568,000 2000 37,200 610,000 306,000 916,000 593,000 99,000 692,000 2005 42,900 699,000 350,000 1,049,000 699,000 127,000 826,000 2010 46,500 718,000 385,000 1,103,000 797,000 158,000 955,000 2015 44,700 719,000 427,000 1,146,000 873,000 182,000 1,055,000 2020 47,000 757,000 484,000 1,241,000 935,000 202,000 1,137,000 2025 51,900 797,000 556,000 1,353,000 1,004,000 221,000 1,225,000 2030 54,800 850,000 638,000 1,488,000 1,068,000 236,000 1,304,000