Photo by Richcano via Getty Images
When someone says a retiree is “living off Social Security,” it’s not usually $100,000 a year. But some US retired couples will be receiving that much in a few years — and a proposal to cap their benefit at that amount has started a painful and much-needed conversation about who should get government benefits and how much.
America’s welfare state is not just a safety net for the most needy or unlucky. Over time, it has become a significant source of income and services for the middle and upper-middle class. There is nothing wrong with that, in principle, if it’s what Americans want. In reality, however, the federal government cannot afford it. Cutting benefits for wealthy retirees is an obvious first step, but truly getting the debt under control will require reductions for other people, too.
The $100,000 annual Social Security benefit — which will go to about 0.05% of retired couples at first — may seem unbelievable. But if you and your spouse have both earned the maximum salary for the last 35 years (it was $53,400 in 1991 and is currently $184,000), and you each claim your own benefits, your household will get $99,648 this year, indexed for inflation. If you both wait till age 70 to claim, you’ll get nearly $125,000.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
______________________
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.