Social Security: Why Are Taxes Going Up While Benefits Go Down?

There's a pernicious trend impacting Social Security taxes and benefits that will likely catch many retirees by surprise. Not only are Americans paying more into the system during their working years, but they're also getting comparatively less out of it once they retire.

The results of a leading study on this topic shows what's going on here. Prior to 2010, the average retiree received more in benefits than he or she paid in Social Security taxes. From that point forward, however, the opposite has been true, and things are only getting worse.

What's to blame? Demographics. As the baby boomer generation ages, the burden on the Social Security system increases. And as this happens, the Social Security Administration, or SSA, has responded by gradually increasing the retirement age.

As Motley Fool contributor John Maxfield discusses in the video below, the net effect of this is a longer window during which you pay into the system and a shorter window during which you draw out of the system.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3041807, ~/Articles/ArticleHandler.aspx, 9/4/2015 6:25:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

Today's Market

updated 9 hours ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes