It's an entitlement for lower earners due to progressive nature of benefits that delivers a ROI that exceeds a 10 year T. This higher return for lower earners is because higher earners will receive a ROI that is far lower and in many cases, negative....
not just lower earners...I ran the numbers thru AI..... even a single person averaging 70K year while working will get more in benefits than paid in SS taxes:
from grok:
To determine whether a single person earning an average of $70,000 per year will receive more in Social Security benefits than they pay in Social Security taxes, we need to estimate both the taxes paid and the benefits received over their lifetime. This analysis involves several assumptions about earnings, work history, retirement age, life expectancy, and Social Security rules. Below, I’ll break it down step-by-step based on available data and reasonable assumptions, while critically examining the establishment narrative around Social Security.
Step 1: Social Security Taxes Paid
Social Security taxes are levied on earnings up to a taxable maximum, which is $176,100 in 2025. Since the person earns $70,000 per year, all of their income is subject to Social Security taxes.
Tax Rate: For a non-self-employed individual, the Social Security tax rate is 6.2% (the employer also pays 6.2%, making a total of 12.4%, but we’ll focus on the employee’s contribution unless considering the full tax for fairness).
Annual Tax:
$70,000 × 0.062 = $4,340 per year in Social Security taxes paid by the employee.
Work History:
Assume the person works for 35 years, as Social Security benefits are calculated based on the highest 35 years of indexed earnings. If they earn $70,000 annually (in real terms, adjusted for wage inflation), their total contribution is:
$4,340 × 35 = $151,900 in Social Security taxes paid by the employee.
If we consider the full 12.4% tax (employee + employer), the total paid is:
$70,000 × 0.124 = $8,680 per year
$8,680 × 35 = $303,800 over 35 years.
Note: The employer’s contribution is often viewed as part of the economic cost borne by the employee (e.g., through lower wages), so including it may be more realistic. However, for a direct comparison of “what the person pays,” the employee’s 6.2% is often used. I’ll calculate both scenarios.
Step 2: Social Security Benefits Received
Social Security benefits depend on lifetime earnings, the age at which benefits are claimed, and life expectancy. The benefit is calculated based on the Average Indexed Monthly Earnings (AIME) and the Primary Insurance Amount (PIA), derived from the 35 highest-earning years, indexed for wage inflation.
Estimating AIME and PIA
For simplicity, assume the person earns $70,000 annually (in 2025 dollars) for 35 years, and their earnings are indexed to reflect wage growth over time. The Social Security Administration (SSA) uses a formula with “bend points” to calculate the PIA. For 2025, the bend points are approximately (based on SSA projections):
90% of AIME up to $1,177/month
32% of AIME from $1,177 to $7,099/month
15% of AIME above $7,099/month
Assuming $70,000 is close to the average wage (the SSA’s 2023 average wage was $66,100), we can estimate the AIME. If earnings are constant in real terms, the AIME is roughly:
$70,000 ÷ 12 = $5,833/month (unindexed)
However, indexing adjusts past earnings to reflect wage growth. For a rough estimate, if $70,000 is near the average wage, the AIME for someone retiring in 2025 after 35 years at this level is typically around $5,000–$6,000/month, depending on indexing. Let’s assume an AIME of $5,833 (unadjusted for simplicity, as precise indexing requires historical wage data).
Using 2025
bend points (approximated):
First bend point: $1,177 × 0.90 = $1,059.30
Second bend point: ($5,833 − $1,177) × 0.32 = $4,656 × 0.32 = $1,489.92
Total PIA = $1,059.30 + $1,489.92 = $2,549.22/month
This PIA (Primary Insurance Amount which is benefits received at full retirement age) corresponds to the benefit at Full Retirement Age (FRA), which is 67 for people born after 1960.
Annual Benefit
$2,549.22 × 12 = $30,590.64/year at FRA.
Adjustments for Claiming Age
Benefits vary based on when they’re claimed:
Age 62: Benefits are reduced by about 30% for claiming 5 years early:
$2,549.22 × 0.70 = $1,784.45/month or $21,413.40/year.
Age 70: Benefits increase by 8% per year for delaying past FRA (3 years):
$2,549.22 × 1.24 = $3,161.03/month or $37,932.36/year.
Lifetime Benefits
Lifetime benefits depend on life expectancy. The average life expectancy for a 67-year-old in 2025 is about 83 years for men and 85 for women (based on SSA actuarial tables). Assume an average of
84 years (17 years of benefits from age 67).
Claim at 62: 22 years of benefits (
to age 84):
$21,413.40 × 22 = $471,094.80
Claim at 67: 17 years of benefits:
$30,590.64 × 17 = $520,040.88
Claim at 70: 14 years of benefits:
$37,932.36 × 14 = $531,053.04
Step 3: Comparing Taxes Paid to Benefits Received
Now, compare the taxes paid to the benefits received:
Employee Contribution Only ($151,900)
Claim at 62: $471,094.80 > $151,900 → Benefits exceed taxes.
Claim at 67: $520,040.88 > $151,900 → Benefits exceed taxes.
Claim at 70: $531,053.04 > $151,900 → Benefits exceed taxes.
Employee + Employer Contribution ($303,800)
Claim at 62: $471,094.80 > $303,800 → Benefits exceed taxes.
Claim at 67: $520,040.88 > $303,800 → Benefits exceed taxes.
Claim at 70: $531,053.04 > $303,800 → Benefits exceed taxes.
In all scenarios, the lifetime benefits exceed the taxes paid, whether considering only the employee’s contribution or both employee and employer contributions.
Program Solvency:
The SSA projects that the trust fund may be depleted by 2035 unless reforms are made. If benefits are reduced (e.g., by 20–25%), the lifetime benefits could drop significantly, potentially falling below taxes paid.
Life Expectancy: Longer life increases benefits; shorter life reduces them.
Life Expectancy:
Longer life increases benefits; shorter life reduces them.
Final Answer
For a single person earning $70,000 per year (not self-employed) over 35 years, their lifetime Social Security benefits are likely to exceed the Social Security taxes they pay (whether considering only the employee’s 6.2% contribution of ~$151,900 or the full 12.4% contribution of ~$303,800), assuming they live to an average life expectancy (age 84) and claim benefits at ages 62, 67, or 70. Estimated benefits range from ~$471,000 to ~$531,000, depending on claiming age.
However, this conclusion is sensitive to:
Taxation of benefits, which could reduce net benefits by 10–20% if other income is high.
Time value of money, which reduces the present value of future benefits.
Future program changes, which may reduce benefits if Social Security’s trust fund faces insolvency.