OASI PAYMENT BY INCOME LEVEL
©1998 Larsen
The Old Age Survivors Insurance Benefit (OASI) payable to retirees is found in the table below. It lists the amount paid by income group. The total payment for each income group is divided by the number of seniors receiving those benefits. An average benefit is then calculated for each senior by income. Other income is calculated by using the mid point between income groups and subtracting off the OASI benefit.
Applying a 70% benefit cut across the board regardless of income is shown in column listed BENEFIT AFTER A CUT OF 70%. To provide a safety net for those lower income people welfare payments from the general revenue will be used and is found in WELFARE MAKEUP FROM GENERAL REVENUE. The total cost of the welfare payment from general revenues is $10.718 Billion. Total OASI SAVINGS are an adjusted $188.573 Billion in 1995 dollars.
What does this do? It provides those with incomes of less then $20,000 with almost the same amount of income. Remember this is income by retiree, not family. Therefore, two retirees in the same household would have twice as much. The 70% across the board benefit cut would allow a reduction of 70% in the FICA tax. This would provide the seed required to transition Social Security out of the retirement business and put the responsibility in the hands of the individual.
The average benefit in 1998 was $9,231 per retiree compared to $8,970 in 1995. What is interesting to note is the higher income groups have the same or lower OASI benefit as lower income groups. The reason is very simple. Most workers take early retirement. If retirees are in such dire straights, as far as income is concerned, then why does the majority take early retirement? Early retirement at 62 verus 65 lowers the OASI benefit by 20% (5/9 of 1% per for every month prior to full retirement).
| OLD AGE SURVIVORS INSURANCE BENEFIT BY INCOME LEVEL | |||||||||
| INCOME UNDER | NUMBER OF SENIORS (millions) | TOTAL BENEFIT PAID (millions) |
AVG BENEFIT |
OTHER INCOME |
BENEFIT AFTER A CUT OF 70% | WELFARE MAKEUP FROM GENERAL REVENUE | NEW BENEFIT WITH OTHER INCOME | NEW COST (General and OASI Revenues) | OASI SAVINGS |
| $10,000 | 6.74 | $47,499 | $7,047 | $2,114 | $4,933 | $7,047 | $47,499 | $33,249 | |
| $15,000 | 4.54 | $41,833 | $9,214 | $3,285 | $2,764 | $3,870 | $9,919 | $30,120 | $29,283 |
| $20,000 | 3.88 | $35,387 | $9,120 | $8,380 | $2,736 | $1,915 | $13,031 | $18,047 | $24,771 |
| $25,000 | 3.27 | $30,837 | $9,430 | $13,070 | $2,829 | $15,899 | $9,251 | $21,586 | |
| $30,000 | 2.84 | $27,619 | $9,725 | $17,775 | $2,918 | $20,693 | $8,286 | $19,333 | |
| $40,000 | 3.90 | $38,470 | $9,864 | $25,135 | $2,959 | $28,094 | $11,541 | $26,929 | |
| $50,000 | 2.21 | $22,203 | $10,047 | $34,955 | $3,014 | $37,969 | $6,661 | $15,542 | |
| $60,000 | 1.27 | $11,871 | $9,347 | $45,655 | $2,804 | $48,459 | $3,561 | $8,310 | |
| $75,000 | 1.14 | $12,039 | $10,561 | $56,940 | $3,168 | $60,108 | $3,612 | $8,427 | |
| $100,000 | 0.91 | $8,056 | $8,853 | $78,650 | $2,656 | $81,306 | $2,417 | $5,639 | |
| $200,000 | 0.76 | $6,478 | $8,524 | $141,475 | $2,557 | $144,032 | $1,943 | $4,535 | |
| + $200k | 0.32 | $2,410 | $7,531 | $2,259 | $2,259 | $723 | $1,687 | ||
| 1995 | 31.74 | $284,703 | $8,970 | $10,718 | $143,661 | $199,291 | |||
| ADJUSTED SAVINGS | 66.2% | $188,573 | |||||||
