How Lifetime Benefits and Contributions Point the Way Toward Reforming Our Senior Entitlement Programs

By: C. Eugene Steuerle, PhD, Institute Fellow and Richard B. Fisher Chair, The Urban Institute2; Stephanie Rennane, University of Maryland

Reforms to Medicare and Social Security will likely be debated over the next few months as the new “super committee” formed by the debt ceiling agreement works to develop its long-term deficit reduction plan. In this essay, Dr. Eugene Steuerle and Stephanie Rennane help to inform this debate by presenting findings from their newly updated analysis showing that seniors retiring today can expect to receive dramatically more in entitlement program benefits during retirement than they contributed to the programs while working. For example, the average Medicare beneficiary can expect $3 in benefits for every $1 paid in payroll taxes. The authors posit that the magnitude of the resources involved when viewing these programs in tandem over a lifetime gives policymakers new impetus and flexibility to develop coordinated entitlement reforms that promote a coherent, equitable and sustainable support system for current and future generations of seniors.