With 10,000 Baby Boomers turning 65 years old every day for the next decade, with the average Boomer household having accumulated a massive retirement savings of $14,500, and consumer spending accounting for 70% of our warped economy, there is absolutely zero probability of GDP going back above 3% ever again. Combine these broke Boomers with Millennials up to their eyeballs in student loan debt and nothing but shit Obama service jobs available, and you’ve got a toxic mixture of lower and lower consumer spending. Ghost malls will proliferate across our suburban sprawl paradise. Maff is hard for people who chose to live for today and not worry about tomorrow. Well, tomorrow is here. I hope these Boomers like the taste of Friskies.
The global demographic crisis expected to play out over the coming years has been a frequent topic of ours (you can read our most recent post on the topic here: “DB Warns 35-Year Economic Super Cycle Is Officially Ending“). The problem, of course, is that baby boomers all over the globe are on the verge of transitioning out of their highest wage earning years and into retirement. That transition brings with it all sort of negative consequences ranging from the detrimental impact on average incomes and GDP to exposing the epic ponzi schemes that workers have heretofore referred to by their more common names of pension plans, social security, medicare and medicaid.
A report from the National Institute on Retirement Security (NIRS) recently pointed out just how ill prepared American’s are for retirement. The study by the NIRS found that the average American household has $2,500 saved for their retirement. Even worse, the study found that even people near retirement (aged 55-64) have only set aside $14,500 which should allow them to live very comfortably for about 2-3 months.
Among working households in the U.S., 40% were found to have no savings set aside for retirement at all and nearly 80% had less than enough to cover 1 year of expenses.
Russ Kamp, a pension consultant, recently summarized the issue to the Financial Times saying, “We have a crisis unfolding here… for millions and millions of Americans, the only thing they’ll have is Social Security.” But, Social Security only provides about 35% of a typical household’s pre-retirement income which, given the statistics above, isn’t going to be nearly enough to fill the earnings gap that most retirees will face.
That said, even the 35% is generous when taking into account the fact that Social Security is insolvent and will run out of money by 2034 according to their own reports. In fact, the Social Security Board’s 2016 annual report points out that the Disability Insurance Trust Fund actually ran out of money in 2016 and has only been able to continue making payments to beneficiaries by borrowing from the “Old Age and Survivors Insurance Trust Fund.”
The Bipartisan Budget Act of 2015 was projected to postpone the depletion of Social Security Disability Insurance (DI) Trust Fund by six years, to 2022 from 2016, largely by temporarily reallocating a portion of the payroll tax rate from the Old Age and Survivors Insurance (OASI) Trust Fund to the DI Trust Fund. The effect of updated programmatic, demographic and economic data extends the DI Trust Fund reserve depletion date by an additional year, to the third quarter of 2023, in this year’s report. While legislation is needed to address all of Social Security’s financial imbalances, the need remains most pressing with respect to the program’s disability insurance component.
The OASI and DI trust funds are by law separate entities. However, to summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the hypothetical combined trust funds for OASI and DI. The combined funds satisfy the Trustees’ test of short-range (ten-year) close actuarial balance. The Trustees project that the combined fund asset reserves at the beginning of each year will exceed that year’s projected cost through 2028. However, the funds fail the test of long-range close actuarial balance.
Alas, the report also admits that the games can only go on so long, as all of the Social Security Trust Funds are expected to run out of cash by 2034.
The Trustees project that the combined trust funds will be depleted in 2034, the same year projected in last year’s report. The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.66 percent of taxable payroll, down from 2.68 percent projected in last year’s report. This deficit amounts to 1.0 percent of GDP.
But we’re sure these problems will just sort themselves out. What we really need to focus on is an all new set of entitlements to payoff outstanding student debt and send kids to college “free of charge.”
Try to have this conversation with a millennial.
Our new administrative girl (23 years old) gets it, but she has been an exception, I have 40 year olds working for me who brag about having $1,000 in the bank.
My son has 35 millennials working, now those people, wow.
All Sanders disciples, to them they don’t give a shit about any of the above.
Socialism/Marxism/Fascism/Progressiveism/DemocracyNow! is the answer and just like some of us that look for the collapse to clear out the powerelite, they look forward to the collapse of the status quo believing in a new horizon of national income, months of vacation, months of family time, free schooling, free healthcare, and golden years spent in bliss basking in free shit.
There are two official perspectives when assessing the solvency of the trust funds
The trust fund perspective – this assumes the fund is eternally funded because the government will never be insolvent
The budget perspective – looks at the actual cash flow
There is no cash in the trust funds for it was lent to the Treasury to pay for General expenses
Treasury debt was issued as collateral
The trust fund is not a store of wealth
It is merely an accounting mechanism
Just a few words on truth (17″) if you care about money at all.
https://youtu.be/o2vp_OoT8DI
Card802- But have you heard this one yet, “The Universe” will provide what I need? Maybe we are doing it wrong. Just axe the universe to pay that winter heating bill or pay that 2K auto repair bill, it will magically happen…….poof!
Its only a crises because the government makes it so.
The government always raises taxes to create the disincentives for work and risk taking. Causing the deflationary depresion.
No problem, the Fed will electronically create all the “dollars” the Federal Leviathan needs. Just what each of these “dollars” will be worth, well that will be handled in a suitably authoritarian manner by the militarized police forces.
It is amazing to me how somebody could spend 35 to 40 years working and not save a dime for retirement unless they always planned on working until they died. How irresponsible can you be to yourself and your family. To those people I really have no sympathy for nor will I be in line to bail you out or help you get by. You fucked up, pay the price.
I know that there are a lot of folks that just did not have high enough paying jobs to set money aside or perhaps they had a medical emergency that drained their coffers, the factory closed and they lost their job, or whatever, but still you should have been able to save more than $14,500 over your career. That breaks down to the equivalent of $360 per year or $30 per month.
Maybe I don’t get it because I have been fortunate to have a decent middle class job and steady work in my career. I have never felt like I really had ‘money’ but we got the bills paid, put a couple of kids through college, covered a wedding, had a little left over in the budget to have a fun vacation most years. But we never felt like we could trust social security to be there when we finally might need it, so we saved. Our parents instilled the concept that ‘whatever your situation you always pay yourself first. No matter what, pay yourself first, 5% of your check, 10%, whatever. If you don’t you will never have anything, there is always something to buy or someplace to go. Live within your means and paying yourself becomes easy.’ Well that simple philosophy and habit works, coupled with the power of compounding we are not worried about SS. We never had the big fancy car or the McMansions or any of the other toys of ‘prosperity’ but we had what we needed and still do.
No friskies for us tonight. Life is a comprised of a collection of choices YOU make every day. It is sad to see that so many people, the majority, chose living in the moment without any regard to the future. Now they have to deal with it.
“It is sad to see that so many people, the majority, chose living in the moment without any regard to the future. Now they have to deal with it.”
So true….. I’ve NEVER seen so many acquaintances that fit that sentence in my life. So many went on “vacations” or got that new car or whatever, and now they find themselves broke and unable to live on the government pensions they now have. Their credit card debts and mortgages, literally sank them into poverty. None of them had any savings “cus we got to go to Mexico and Hawaii twice year.”
I see them trying to feed me at Costco, or fill my gas tank.
Mind you saving money only fed the banks at my expense as well……
“a decent middle class job and steady work” is the key. The problem is that steady work is increasingly rare. The reason why most people have no savings is that it is very hard to save when you lose your job every so many years and have to burn through your savings to get by until you get another job. Then, factor in the declining incomes (lower compensation after each round of job loss), zero interest Fed policies, and increasing cost of living (especially healthcare, housing, and education costs) and the savings hole gets bigger and bigger with no hope for retirement.
Hey peaceful , I’m going to work for the rest of my life or until I getsick then my government is going to take your money and pay for my humble existence.In fact you are now my legal guardian and care taker .Meathead.Oh one more thing , I have no sympathy for you.
If the dollar gets devalued as much as is rumored,
we’ll all be poor…and the endlessly in debt? Starvation.
I have it on very good authority that tRump is going to fix all of this and good times are just about four months away. I can hardly wait!
Who the fuck says you get to retire anyways? I must have missed this memo.
Retirement is a constructed event of less than 100 years. We used to work until death or family cared for the elderly. Now it seems a retirement will be declared a civil right paid for by others.
Giant Meteor 2016
Yep! I find it amazing that in all of human history, only about three generations of people have been able to “retire” to anything besides a grave. Even then it was only in a small number of countries.
Even without Giant Meteor, the free ride is just about over. It’s hard to believe that such clever individual creatures can be so fucking stupid collectively. Witnessing the insanity is a curse!
Bring on the meteor!
The government will inflate the debt away. They will print all the money necessary to pay their promised benefits. We will look away from our i-gadgets and football games one day and realize that we have become Venezuela. We will wonder what the hell happened and insist the government correct the problem.
The problem is that they will take everything the producers have saved and then even the government will be broke.
Yeah, I get it……I get it all. But the point is – how much do you need in this coming environment. So some of you are sitting on larger amounts, that’s great – but do you really think say, $100,000…..or $300,000 or whatever is going to matter. How much do you have to have when risk is rewarding you with 2/3/4 percent? Safety? You can’t afford that shit – not at less than 1 fucking percent. Do the math. Sure, to some extend but to me the point of this is – my takeaway is, that now hopelessness is setting in as unfortunately millenials seem to display for all to see. But they know the hand their holding in this poker game is shit. How committed would anyone be? They’re always bright bulbs with bright futures – but generationally speaking, they see the future and the only real source of angst is from the older people not seeing ‘any fight’ in ’em. Older people always want to watch the younger generation thrash, hustle, make-it-or-break-it, and succeed (or fail) as they did. THAT, in my opinion, is the story here. Let it be known I spoke in defense of the millenial on this hallowed day – now back to criticising everything that moves…….
It’s really hard to say.
Save money, get no interest from a bank, get cleaned out when the bank gets “bailed-in” and seizes your assets to pay their debts incurred by bad bets, starve.
Don’t save money, have no backstop, get sick and be unable to afford treatment, die.
Don’t save money, be a protected minority, be treated with the bill sent to productive employees, be fine until entire system crashes from freeloader overload, starve or die in riots.
Be rich, have laws written to protect your interests, be fine until entire system crashes from freeloader overload, get lynched and eaten when rioters / FSA find your hideout.
Be productive, have backstops, get rural, hide out until flames burn down, maybe survive; experience reduced choices and standard of living, but live to rebuild.
The choices appear to be between really hard and none. Where will you land when the Crunch comes?[img]https://images.duckduckgo.com/iu/?u=https%3A%2F%2Ftse2.mm.bing.net%2Fth%3Fid%3DOIP.M545dfbeabac066193bcf74a642ddc2bco0%26pid%3D15.1&f=1[/img]
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