Originally Posted by badhatharry
I just did a rough calculation. If a person saved $150 per month @6.5% interest for 35 years they would have almost $250,000. That reflects the $65,000 amount the average person put into medicare and the average benefit is $103,000. So where'd the money go???
Also, since there were so many boomers contributing to support fewer retirees for so long there should be lots of surplus. Is the problem that people like my parents got full benefits despite not having contributed as long as the retirees of today?
To answer both questions: There has never been a Medicare fund. Nor a Medicaid Fund. Nor a Social Security Fund. At no point has there been a vault full of money in which we've held the retirement/medical accounts of tomorrow's seniors. The money collected back then was spent on the general budget of its day, and retirees are collecting from the general budget of today.
So not only is there no interest on that money to throw around, there's no principal.
If a person put in $65,000 over their career, there is a balance waiting for them of $0, plus an IOU for $103,000, which will be paid by today's tax-payers (or, more accurately, today's and tomorrow's.)
These programs have always been the sort of schemes which we put people in jail for when they are run by the private sector.