Skip to main content
No. of Recommendations: 9

<<<That might be "modest" in GH's world, but I do not consider it a "modest tip".>>>

"It is modest, because lower wage earners have lower life expectancies than high wager earners. Therefore, even though they get a higher relative payout, you are looking only at "each month", versus the total payout over their (average) lifetime. "

<<<The latter person paid almost twice as much SS tax (1.94x or 94% more) but receives only 33.9% more benefits (647.10/1908.05). 94/33.9 is a 2.77x tip.>>>

"Now multiply it by the total (expected) payout over their respectively different lifetimes and see what you get."

Your URL does not appear to supply the necessary information.

"In 1980, the difference in life expectancy at age 65 between the highest and lowest socioeconomic groups was 0.3 years. By 2000, the difference had grown to 1.6 years. That increase in the gap equals more than 80 percent of the increase in overall average life expectancy at age 65 over that period."

1.6 years is 19.2 months. But your citation does not give either category as an absolute, so the question you asked me to perform cannot be calculated from the information you supplied.

If the numbers are 10 years (120 months - 1908.05*120 = $228,966) versus 11.6 years (139.6 months - $2,555.15*139 = $356,699) [collect 1.56x more while paying 1.94x more] you get a much different answer than if the numbers are 2 years (24 months - 1908.05*24 = $45,793.20) versus 3.6 years (43.6 months - $2,555.15*43.6 = $111,405). [collect 2.43x more while paying only 1.94x more].

In addition, your citation uses highest and lowest deciles as the proxies (See Figure 2), but my $55k equivalent is a lot higher than the bottom decile and please note that everyone in the $106,800+ category will not be in the top decile. Thus, you are suggesting an apples to oranges comparision, too.

Furthermore, your cited source disagrees with your initial premise that SS is not a welfare program.

"For Social Security, a widening gap would worsen the long-term shortfall in financing and reduce . . . the extent to which it redistributes resources from high-income to low-income beneficiaries on a lifetime basis."

"WELFARE: An assortment of programs that provide assistance to the poor. The cornerstone of our welfare system is Aid to Families with Dependent Children (AFDC), which was created by the Social Security Act (1935)."

"Welfare can take a variety of forms, such as monetary payments, subsidies and vouchers, health services, or housing. Welfare can be provided by governments, non-governmental organizations, or a combination of the two. Welfare schemes may be funded directly by governments, or in social insurance models, by the members of the welfare scheme."

"There are many different types of welfare, but each are generally concerned with a government trying to provide for the welfare of its citizens. This may take place through social welfare provisions, social security, or financial aid."

Regards, JAFO
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.