Navigation Links
For post-boomers, public education worth more than Social Security and Medicare
Date:4/15/2010

It's popular to assume retiring baby boomers will benefit from Social Security and Medicare at the expense of younger generations, as analysts estimate that these government-run programs will pay out more than they collect in payroll taxes by 2017.

But a far-reaching new study from the University of California, Berkeley, concludes that younger Americans specifically those born between 1972 and 2060 are actually getting the better deal when the value of public education is factored in as an intergenerational entitlement program on a par with Social Security and Medicare.

"Receiving public education is a really big benefit, and the fact that kids get it at the start of their lives rather than at the end makes it even more valuable," said Ronald Lee, a UC Berkeley demographer and economist who coauthored the study, "Who wins and who loses? Public transfer accounts for U.S. generations born 1850-2090."

On average, Americans pay the taxes that subsidize education 30 years after receiving the benefits, the study noted. By contrast, people start drawing their Social Security and Medicare benefits 30 years or so after paying taxes into these government funds. Thus, each education dollar is worth $10 in retirement benefits, according to the study, which is published in the March issue of the journal Population and Development Review.

The study marks the first time that analysts have treated public education from kindergarten through college as an intergenerational entitlement benefit, which refers to programs funded by taxes paid by generations other than the recipients. The analysts calculated the value of public education relative to the recipients' lifetime earnings.

Contrary to conventional wisdom, "older Americans are not making out like bandits when you factor in the value of public education," Lee said.

Previous studies on government entitlement programs, also called public transfer accounts, have looked at public pension and health plans only when balancing the transfer of benefits from one generation to the next, concluding that the baby boomers those born between 1946 and 1964 will strain and possibly even drain Social Security and Medicare, threatening to leave future workers with government IOUs.

Using historical data and future projections, Lee and his research team calculated the net value of Social Security, Medicare and public education at all levels minus taxes for Americans born from 1850 through 2090. They found that people ages 38 and younger including those born 20 years from now will make net gains in earnings of 4 to 6 percent over their lifetimes. By contrast, those now aged 63 to 80 will have paid out more in taxes than they will have received in Social Security, Medicare and public education benefits, losing 1 to 2 percent in net earnings over their lifetimes.

The researchers' calculations are based on a person's "net present value at birth," which takes into account the taxes paid and benefits received throughout a person's life, then establishes his or her worth as a lump sum today.

While the study found greater benefits for those born after 1972, it projects that tougher times are ahead for generations born 50 years from now. Unless significant changes are made to the Social Security and Medicare programs, those later generations would have to be heavily taxed 44 percent of their lifetime earnings and their benefits reduced, to make up for severe shortfalls due to population aging and escalating health care costs, according to the study.

Nearly 80 million baby boomers are phasing into retirement and by 2017, Social Security is expected to pay out more than it collects in payroll taxes, according to a recent report from the Social Security and Medicare Board of Trustees.

"The current young and future generations are sometimes viewed as victims of profligate public policy in the United States, whereby the current elderly cohorts live comfortably at their expense," the UC Berkeley study said.

"In fact, however, an elderly person born in 1936 experienced a net loss of about 2 percent of lifetime earnings, while a baby born today is projected to realize a net gain of 5 percent Evidently, adding education to the mix dramatically changes the generational equity picture," the study concluded.


'/>"/>

Contact: Yasmin Anwar
yanwar@berkeley.edu
510-643-7944
University of California - Berkeley
Source:Eurekalert

Related medicine news :

1. Smoking Bans May Be Boosting Public Health
2. NCSBS Invites the Public to Pledge to Help End Infant Abuse for Child Abuse Prevention Month in April
3. rAVe Publications Awards HyperSign "Most Innovative New Digital Signage Solution"
4. UCSF Tops Public Institutions in NIH Funding, Ranks Second Overall
5. ACS Webinar features tips for finding and building a career in public policy and chemical industry
6. Dealing With Those All-Too-Public Tantrums
7. Askthedoctor.com Makes Medical Information More Accessible to the Public by Completing Phase 1 of US Expansion
8. NYIT Hosts Public Health and Wellness Fair
9. Despite much-higher poverty rates, rural Oregonians use less public assistance
10. National Poll Finds Americans Oppose Tax on Soft Drinks; Dont Believe it Will Go to Improve Public Health
11. Foundation for Ethics in Public Service, Inc. is Available to Review Allegations of Fraud or Corruption Related to The Healthcare Reform Bill
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:10/13/2017)... ... October 13, 2017 , ... Talented host, actor ... on sciatica in a new episode of "Success Files," which is an award-winning ... innovation and investigates each subject in-depth with passion and integrity. , Sciatica occurs ...
(Date:10/13/2017)... ... October 13, 2017 , ... “America On The Brink”: the ... “America On The Brink” is the creation of published author, William Nowers. Captain ... As a WWII veteran, he spent thirty years in the Navy. Following his ...
(Date:10/12/2017)... ... October 12, 2017 , ... Planet Fitness, one of the largest and ... plans to open a flagship location in Covington, LA at 401 N. U.S. Highway ... store next to Office Depot in the Holiday Square shopping center. Its location allows ...
(Date:10/12/2017)... ... 2017 , ... The American College of Medical Informatics (ACMI) will present the ... Opening Session of AMIA’s Annual Symposium in Washington, D.C. AMIA’s Annual Symposium ... a pioneer in the field of medical informatics, this prestigious award is presented to ...
(Date:10/12/2017)... ... October 12, 2017 , ... Dr. Parsa Mohebi, the Los ... article to the newly revamped Cosmetic Town journal section, featuring articles ... procedure known as Follicular Unit Extraction (FUE). , Dr. Mohebi says ...
Breaking Medicine News(10 mins):
(Date:10/4/2017)... South Korea , Oct. 4, 2017  South ... its next-generation CPR training aide "cprCUBE" on Kickstarter. The ... chest compression during cardiac arrests with better efficiency compared ... It also offers real-time feedback on efficacy of the ... The crowdfunding campaign has a goal to raise $5,000. ...
(Date:10/2/2017)... ORLANDO, Fla. , Oct. 2, 2017  AllianceRx ... services company formed by Walgreens and pharmacy benefit manager ... of its new brand, which included the unveiling of ... Fla. , as well as at a few ... introduces the new brand to patients, some of whom ...
(Date:9/27/2017)... -- Commended for their devotion to personalized service, SMP Pharmacy Solutions ... in the South Florida Business Journal,s 50 Fastest-Growing Companies, and ... the national specialty pharmacy has found its niche.  To that ... be honored by SFBJ as the 2017 Power Leader in ... receive his award in October, Bardisa said of the three ...
Breaking Medicine Technology: