Hey everyone. Not long ago, I published a video where I said that between myself and my wife, we would collect more than $5 million in such security benefits. Now I know that’s a huge number and there were a lot of comments on that video called my numbers into question. They said there’s no way that anyone will ever get more than $5 million in Social Security benefits. Some of them had their own calculations, but all of the commenters wanted one thing, to see the math behind my numbers. No way Social Security can pay out that kind of money, they said. So today, I’m gonna show you how under our current law, my wife and I could receive, it’s actually nearly $6 million and benefits.
Now, I think it’s really important, though, to say right here at the front, my purpose for this video was not to boast about my earnings history or how much I would eventually collect. It’s actually quite the opposite. You know, when the system was built, FDR said that it was built to give some measure of Protection to the average citizen and to his family against the loss of a job and against poverty ridden old age. Since then, that system has been growing. In fact, it’s been growing. What I think is way too fast. You know, in 1950, the Social Security program took up 1.8% of the federal budget. And in 2023, three at now 21%. That’s the single highest atom in the entire budget.
Now I’d love to hear from you in the comments if that surprises you, if that’s a bigger piece of the federal spending pie than. Got it. Wise. You know, I know it’s more than national defense, more than Medicare, more than the interest they’re having to pay out on the trillions of dollars in bonds that they’ve issued for the government spending. It’s hard, you know, when this system was created, it was purely an anti poverty program. But now it has swollen to become a government sponsor answer retirement plan. So I don’t think it’s any wonder that it’s in trouble. And despite the attempts by lawmakers over the years to fix it, continues to have issues with solvency. So just why is it growing so fast? How did it get from 1.8% to 21% for a budget? Well, one of the reasons is how the program has changed over the past few decades. You know, now we have spousal benefits, survivor benefits, children’s benefits. And the one that slipped in that didn’t seem all that big, the annual adjustments for inflation. This is what’s driving the system to get bigger and bigger until people like me are gonna be collecting millions of dollars and benefit pay. So just a quick refresher here before I dive into the math about how I stand to collect nearly $6 million in benefit.
So to keep up with inflation, a Social Security system uses two types of inflation measurements to help ensure that benefit payments reflect the general rise and the standard of living. They use wage inflation as measured by the wage index, price inflation as measured by a certain version of the Consumer Price Index. The version of inflation that is used depends on where you are in the timeline. That hinge point is your eligibility year, which is the year you die, become disabled or turn 62. Prior to your eligibility year, your benefits are inflated by changes to wages and specifically, it’s the average wage index. But beginning with your eligibility year, they are inflated with price inflation. And it’s been this way since the 1977 Social Security amendments. But the problem is that since this system has been put the place, wages have grown faster then prices.
Now I know that some people don’t believe that, but we have to base this on the data that’s available. And that’s the average wage index for the increase to wages and the Consumer Price Index for urban wage earners and clerical work first often call the CPI W. That’s the price inflation piece. And when we look at that data, you could see that in most years, wages did grow faster than prices. And if we average it out, wages have grown at an average of 4.28% and prices have grown at an average of 5. 9%.
Now I know it’s easy to look at the difference in those two numbers and think there’s no way that a change of that amount can make a sizable difference in the longevity of the Social Security Trust fund, and that’s why it’s growing so far fast. Well, it does. In fact, the Social Security Board of trustees looked at the impact of changing the whole system back to only increasing benefits tied to price inflation because it’s growing slower, and it found that if it were put into place starting in 2029, it was off 80% of the long term shortfall. And by the 75th year, it would put the Social Security Trust fund at 172% surplus. So not only would this fix the program, it would ensure that it was there for future generations. And obviously, the best part is you didn’t hear anything about tax increases or benefit cuts in that.
Now, I did go into detail about that in the video that I released not long ago, called the simple such security fix that no one is talking about. So if you want to find out more about the details on how this change would actually work, who it would affect and so on. You can watch that video next. So let’s jump into the math. There were really two issues here. First, people took issue with the fact that I’d plan to live out to age 90. I’m gonna cover that in another video. I don’t even want to get into that here. But when you dive into the numbers on life expectancy, you’ll quickly realize that you have to look at more than just the headline number. But for those of you who think, Devin, I’ll never live to 95, that’s okay because I’m gonna show you the other numbers as well. And let me tell you, even the numbers for a life expectancy at 80,85 are shocking. But the big problem that people had was my assertion that my wife and I could collect just over five and a half million dollars in such security benefit. So I get it. This is a flabbergasting number and almost sounds like we hit the lottery. But I promise you, this number is real. And if you wanna know how this is gonna happen, you gotta understand how the current system work. So stay with me.
So let’s take it back to 2000. I was still a baby financial advisor and a tender 32 years old. But at that point, I’d already been in the business for a few years. That year, the maximum wage base was $102,000. That’s the level of my earnings in 2008 that would have been subject to such security taxes. Every year, the wage base is adjusted if the average wage index increases. So in 2009, the wage base increased to 106,800, and it actually stayed there for three years before it started moving again. So let’s just assume that my earnings were at that level or beyond for each year after that, because those are the only earnings that would actually be counted in the calculation for Social Security benefits because, yeah, I’m not paying taxes beyond that amount. But those earnings beyond that amount also are not being used in that formula for future benefit.
Now we know what the numbers are on that maximum taxable wage base all the way up until 2024. But for all the years after that, we have to make some assumptions. Now I’m sticking with a fairly conservative Assumption that the average wage increases we’ve experienced since 1978 will continue, so this means that the maximum taxable wage base will increase by 4.28% per year.