Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Sunday, April 30, 2017

Wealthy Americans Are Living Longer and Taking More from Taxpayers

Wealthy americansThe American population continues to live longer and longer, but some are dying younger, according to recent data revealing that life expectancy estimates for 65-year-olds dropped by six months. These trends create a widening gap between the wealthy and poor Americans. Not only are the wealthiest people living longer, they are also reaping the greatest financial reward for their longevity courtesy of the American taxpayers. Tweaks to Social Security, Medicare, and other benefit programs could affect the rich and poor quite differently, namely benefiting well-off Americans, as Congress and the new administration consider changes to these long-standing programs. As they live longer, the wealthy Americans can expect to collect substantially more Social Security over their lifetimes. Ultimately, your life expectancy is a factor when planning and saving for retirement, so being conscious of how this will affect your future is key.

See Ben Steverman, The Rich Are Living Longer and Taking More from Taxpayers, Financial Advisor, April 24, 2017.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2017/04/wealthy-americans-are-living-longer-and-taking-more-from-taxpayers.html

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Comments

Medicare is already significantly progressively funded. There are no wage cap on withholdings, which means that a high earners would have contributed a lot more than median earners. Secondly, monthly premiums are steeply progressive, and have gotten more so recently whenever Medicare cost inflation exceeds flat CPI inflation and ALL premium increases for the given year have to be paid by a SMALL percentage of high earning seniors. Also, the bulk of Medicare expenditures tend to be associated with end-of-life costs, which ALL people can experience, regardless of how long they live. And to the extent that longevity is associated with better health, perhaps the long-lived may end up consuming less. As to Social Security, funding is not very progressive, but payout structure is. This positions the lower earners to receive much higher returns on their contributions. In any event, the biggest difference in SS outcomes may not be longevity but the “need” that many have to short change their payouts by taking distributions well before optimal timing.

Posted by: MG | May 1, 2017 4:51:12 AM

Of course, being rich they are also paying more in taxes, and if living longer paying for longer, and possibly even eventually paying estate taxes when they pass.

Posted by: ruralcounsel | May 1, 2017 7:25:41 AM

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