At the request of Democratic presidential candidate Bernie Sanders, the U.S. Government Accountability Office has published a study about the impact of life expectancy on Social Security benefits.
As expected, GAO found that the shorter lifespans of low-income workers reduce the total amount of benefits they receive during retirement. Specifically, people with incomes of $20,000 per year receive “as much as 11 to 14 percent” less benefits “compared to what they would receive if they had an average life expectancy.”
Sanders is trumpeting these results to lobby for increasing benefits for low-income seniors and raising taxes on high-income workers. In every step of his argument, Sanders creates misleading impressions that fuel divisiveness among Americans.
Sanders’ most glaring lapse is his failure to mention that low-income workers receive far higher annual returns on the taxes they pay into Social Security. For example, a person who works for 44 years and earns $20,000/year will receive annual Social Security benefits equal to 11.3 percent of his lifetime payroll taxes. In contrast, a person who earns $80,000/year will receive only 6.5 percent. In other words, the low-income worker receives 1.7 times the annual return of the high-income worker. This ratio grows with wage differences:
Due to shorter life expectancy, the average $20,000/year worker receives fewer years of benefits, but his lifetime benefits are still about 1.4 times larger than the $80,000/year worker. This critical information is buried in an appendix of the GAO report and dispersed across two graphs. Making such key data inaccessible to readers is a common ploy of academics who mislead their audiences.
As expected, GAO found that the shorter lifespans of low-income workers reduce the total amount of benefits they receive during retirement. Specifically, people with incomes of $20,000 per year receive “as much as 11 to 14 percent” less benefits “compared to what they would receive if they had an average life expectancy.”
Sanders is trumpeting these results to lobby for increasing benefits for low-income seniors and raising taxes on high-income workers. In every step of his argument, Sanders creates misleading impressions that fuel divisiveness among Americans.
Sanders’ most glaring lapse is his failure to mention that low-income workers receive far higher annual returns on the taxes they pay into Social Security. For example, a person who works for 44 years and earns $20,000/year will receive annual Social Security benefits equal to 11.3 percent of his lifetime payroll taxes. In contrast, a person who earns $80,000/year will receive only 6.5 percent. In other words, the low-income worker receives 1.7 times the annual return of the high-income worker. This ratio grows with wage differences:
Due to shorter life expectancy, the average $20,000/year worker receives fewer years of benefits, but his lifetime benefits are still about 1.4 times larger than the $80,000/year worker. This critical information is buried in an appendix of the GAO report and dispersed across two graphs. Making such key data inaccessible to readers is a common ploy of academics who mislead their audiences.
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