The Urban Institute has released its most recent projections on what baby boomer retirees as well as Generation Xers and millennials will be receiving in Social Security and Medicare benefits, updated with the latest information based on income, prices, mortality and related factors.
Overall, the average-income single boomer retiring in 2020 will receive about $500,000 in total benefits, while millennials who turn 65 around 2050 will receive roughly $1 million in total benefits, according to authors C. Eugene Steuerle and Caleb Quakenbush in their report, Social Security and Medicare Lifetime Benefits and Taxes. The average-income couple for boomers will receive about $1 million, and for a millennial couple, $2 million. The underlying data was taken from the 2018 Social Security and Medicare trustees’ reports.
The study provides multiple scenarios based on income and marital status, and retirement year. For example, a single man with average high earnings, set at $83,000 in 2018 dollars, retiring in 2020, would receive total in Social Security and Medicare (net of premiums) benefits of $650,000, while having paid $608,000 in lifetime taxes. The millennium man making a similar adjusted average wage retiring in 2050 would receive $1.1 million in benefits while paying out $864,000.
The authors note that “these growth factors are independent of what is sometimes called the baby boom problem, the impact of a declining birth rate starting around the mid-1960s on numbers of beneficiaries relative to numbers of taxpayers. This issue does affect our analysis of the scheduled growth in benefits and taxes per person or per couple. Some reports mistakenly report on Social Security and Medicare’s financial imbalances as owing almost solely to the ‘aging’ of that population, but these data show it is much more complicated, and that real economic growth provides many ways to accommodate that aging while still allowing higher levels of real benefits for future cohorts or retirees. “
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Also, it is typical that retirement and health benefits exceed the amount paid in taxes, thus “the value of the benefits from those programs is greater than an annuity that the household would have been able to purchase on the private market with their lifetime taxes,” the authors state.