When it comes to true social security reform, forget about it. The politicos will never fix the real cause of the problem.
If the Republican party tried to right the social security ship, the democrats and liberal media would roast them and they would be drummed out of office. On the other side, we hear candidates espousing more giveaway programs, including social security, with no concern about how to pay for it.
Google “social security” and you will find many pundits offering ideas to fix the program. They all propose various ways of raising taxes, moving the retirement age back, means-testing benefits, adjusting the cost of living formula and raising taxes on benefits.
It’s a joke! If congress passed meaningful social security reform, it would look good on paper, but not solve the problem.
What’s the problem?
This Wolf Street article outlines raising the debt ceiling, increasing budget deficits and who is buying our ever-increasing debt.
Here is what grabbed my attention:
“US government entities bought $173 billion in Treasury securities over the 12 months, bringing their total holdings to $5.9 trillion by the end of September. These Treasury securities (“debt held internally”) are held by the Social Security Trust Fund and government pension funds and belong to the beneficiaries of those funds.” (Emphasis mine)
Huh? The government collected social security taxes, put IOU’s in the social security trust fund and spent the money. Taxpayers owe money to themselves.
That is like an individual making a contribution to their 401k, borrowing it back out and spending it. Technically they have an IOU in their 401k, but I doubt many would sleep well at night thinking their retirement dreams will come true.
Harry Browne was spot on:
| “Social Security is a fraudulent scheme in which the government collects money from you for your retirement – and immediately spends the money on something else.” |
The money is gone! The trust fund is full of government IOU’s – political promises.
The US Debt clock presents a different picture:
The IOUs in the trust fund are now over $20 trillion; shown as “social security liability”. Social Security (a politician’s promise) is now included in US unfunded liabilities.
It gets worse. Social security tax receipts no longer cover the benefits paid – cash flow is negative. Peter G. Peterson Foundation shows us the trend, concluding the “theoretical” the trust fund will be depleted in 2035, around 15 years away:
The political charade is very clear. Congress will borrow almost $3 trillion on top of all other spending, to make up the shortfall in social security taxes collected and pay benefits. Politicians have ignored this inconvenient truth for years.
Hank Johnson wrote in the Huffington Post, “Social Security is not just another government spending program. It is a promise from generation to generation.”
Larry Elder tells us, “According to the Social Security Administration, in 1945, 41.9 workers supported each individual retiree, while today only 3.3 workers support each retiree. This system cannot continue.”
FDR and Hank Johnson were mistaken. What about the “generational promise?’ The damn politicians not only saddled future generations with impossible debts to pay, but they also destroyed any hope for their own retirement.
Senator Mitch McConnell tells us:
| “More young people believe they’ll see a U.F.O. than that they’ll see their own Social Security benefits.” |
Perhaps some future Congress will pass social security reform – however, it will NOT solve the problem.
Social security reform is political trickery. Congress will raise social security taxes, cut benefits and it will look good on paper. The dirty little secret is benefit reductions and tax increases will just give them more money to spend elsewhere to buy votes. Congress will trumpet how they saved social security. Baloney, they’ll raise taxes and cut benefits just like the last “reform”.
Cutting spending and balancing the budget is not in a politician’s DNA. Both political parties pay no attention to the deficit.
It’s time we quit kidding ourselves, and deal with things we can control.
Set realistic expectations.
Rachel Greszler writes, “What Social Security’s Shortfall Means For You”:
But what does this year’s 2019 Trustees Report…mean for current workers and retirees?
…. 2035 is only 16 years away. That means that anyone below the age of 52 today is on track to receive only 75% to 80% of their scheduled benefits.
But it’s not just younger workers who will receive benefit cuts. Consider people who are retiring in 2019 at age 62: Benefit cuts will kick in for them at age 78.
| “Social Security’s insolvency is not some far-off event. It will affect virtually all current and future workers and many of today’s current retirees. (Emphasis mine)” |
Prepare for the worst and hope for the best.
Regardless of our age, we can’t depend on receiving social security benefits anywhere close to what the program calls for today.
In December 2016 Yahoo Finance told us, “Here’s a First Draft of GOP’s Plan to Overhaul Social Security.”
Here are some highlights:
- Gradually increasing the retirement age for full benefits from age 67 to 69.
- Adopting a less generous Cost of Living Adjustment (COLA) formula.
- Means testing, reducing benefit payments to wealthier retirees.
- Eliminate COLA increases for wealthier individuals.
- Increase the minimum benefit for lower-income workers.
The article summarizes, “(This) proposal…is little more than an opening bid in a much larger conversation about entitlement reform (emphasis mine) in the coming year.”
Eventually benefits will be cut, cost of living adjustments reduced and taxes will go up. If you prepare for the worst and it isn’t as bad as you thought, that’s a good thing!
Saving for retirement is OUR responsibility. Those who hope to have and/or continue to enjoy a reasonable retirement must accept that fact. Make necessary adjustments NOW so you are never at the mercy of Big Brother.
Take full advantage of IRA and 401k programs. If you are not maximizing your contribution, build a plan to not only get you there but also take advantage of the “catch up” provisions. Get serious about truly saving, sacrificing some “wants” today to pay for “needs” in the future.
Increase your inflation hedge. The most buying power a retiree will have will be their first monthly check. Congress has watered down the inflation protection formula. Inflation will reduce the buying power of each subsequent monthly check.
Continue adding gold to your savings. Only Gold provides historical gold prices. During the Carter years, gold almost tripled in value, appreciating well ahead of the inflation rate.
Accept the fact your social security check will not keep up with inflation. Eventually retirees will have to tap into savings to pay the bills.
Strive for “lifestyle certainty” – having enough money to pay the bills regardless of what happens in the markets, inflation increases or any other unexpected economic changes – without having to worry. Retirees can depend on the government to send them something, but they cannot depend on it to continue to pay all the bills it may have covered in the past.
Think before deciding to defer benefits. The government offers higher benefits to those who defer taking them when they are eligible.
A popular tool for financial planners is a program called “social security optimizer”. Beware! With a few limited exceptions, it is a gimmick and can cost you many thousands of dollars.
In one example, the computer spit out the recommendation and proclaimed it saved well over $100,000. What the report omits is dishonest. Whether you defer benefits or take them at the earliest possible time, the break-even point is around 80 years old. All the theoretical savings would not kick in until after the break-even point. Can you guarantee you and your spouse will live that long? If not, you would have been better off taking your benefits early.
How much do you trust the government not to change things? Can anyone guarantee congress will not change social security as it exists today in the next 10-20 years? Somewhere around 2035 they are going to be forced to do something.
If you want a full breakdown, check out our special report, “When Should I File For Social Security?”
There is a special section outlining how you can push the break-even point well past your normal life expectancy and truly maximize your benefits.
Eventually congress may trumpet a social security reform bill. It will be a tax increase coupled with a reduction of benefits, while they spend the money elsewhere. They will kick the can down the road and continue to burden future generations with promises that are fiscally unable to keep. They have done it before and will do it again.
Don’t be fooled. While you may not see a UFO, accept the fact the government will never fix the real cause of the social security problem. Congress will raise taxes and cut benefits whenever they can. Do what it takes to fund as much of your retirement as possible so you don’t have to depend on Big Brother. You will be glad you did.
For more information, check out my website or follow me on FaceBook.
Until next time…
Dennis
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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Their generous friend died, so they went to his funeral knowing they each owed him $100.
The first mourner, a Christian, placed a $100 bill inside the coffin.
The second mourner, an atheist, placed $100 inside the coffin.
The third mourner, a jew, scooped up the $200 and placed a $300 check inside the coffin.
That’s Social Security logic.
A bit of advice, SAO: leave the jokes to the pros.
“leave the jokes to the pros”
well I think it’s funny … or I would if it weren’t so apt ….
You forgot to apply that to yourself.
Amateur.
Slow day on TBP, eh?
It’s a documentary on early comedy and comedians. You want to see slow, you should be here on weekends. Actually, it was worse at one time when they rolled up the sidewalks on TBP around 4pm eastern time.
You know a Jewish football cheer? Get the quarter back, Get the quarter back.
“Get the quarter back”
(laugh)
Hey, don’t worry long before 2035 the whole fraudulent edifice is going to collapse in spectacular fashion. You cannot borrow your way to prosperity but politicians will also NEVER willingly disappoint a constituent….so the can-kicking will continue until collapse occurs. Just human nature.
https://www.zerohedge.com/markets/skyrocketing-costs-will-pop-all-bubbles
“long before 2035”
not sure we’re going to make it much past the next election ….
FYI, If you have a life insurance policy that’s been in place for more than two years, the exclusion for suicide generally goes away. Check the fine print, though.
Did Eppy have one in place? Silverstein did on his twin towers.
Yes but suicide has a certain finality to it in this world.
“Take full advantage of IRA and 401k programs. If you are not maximizing your contribution, build a plan to not only get you there but also take advantage of the “catch up” provisions. Get serious about truly saving, sacrificing some “wants” today to pay for “needs” in the future.”
Government can raise tax rates in the future and obliterate this suggestion by the author. Better to live within your means, live healthy life and save after-tax money in savings account or real estate (land) investment. A word to the wise.
And the government would NEVER consider taking over those wonderful IRA & 401K accounts, to protect everyone……
The government just changed IRA and 401K withdrawals in the latest spending bill. No longer can your children or grandchildren take withdraws on inherited sums over their lifetime but they must take it out over a shortened time period of 10 years. The government expects 1.6 billion more dollars in taxes over the next 10 years.
I don’t believe that is law yet. It was being proposed, but I don’t think it passed. As one who is sitting on an inherited, I generally watch these things.
get out of IRA’s!!! the govt controls them and you get subsistence $ back from the money YOU saved. Elitist bastards want to control everything!!
Hangings are in the near future!!!
To an extent that’s true. But really it is more complicated. I do think IRA’s (and the like), in the current environment, are to be recommended AS ONE PIECE AMONG SEVERAL (diversification) THAT MUST BE PURSUED.
Other pieces include,
1) Non-IRA investment Account
2) PM’s
3) Land/Real Estate
4) Community
5) Pb and delivery systems
6) Food & Water
All of these should be pursued over a lifetime to the best extent one is able.
“If congress passed meaningful social security reform” …
… us old boomers would starve.
“it’s a promise from one generation to another.”
(laugh) yeah. one generation promises that the next generation will pay for it all. “my grandson will pay you in fifty years for the burger I eat today.”
(can a promise be imposed on someone by a second party?)
Think about this every time your wife wants a new f’ing pair of shoes for her collection.
What does this have to do with shoes?
Saving $$ vs. wasting $$. You know, they way you did it. 🙂
Oh… Haha… you have no idea. I found a new pair of “Bearpaws” boots at Teen Challenge here for $7.50 and debated with myself about buying them. They retail around $60-$100+, great leather and stitching, furlined, so I guess they were worth the $7.50.
I really do wear army boots half the time.
Mention reducing or abolishing SS and you hear the screeches, even on TBP “ I paid in! It is mine! Screech!”
It was spent. And people collect far too much – way more than they put in on average. It is gone. Get over it.
Not only that, but it has become another way to fund the entitlement culture through disability payments which drain the nonexistent “funds” further. Does that Greta Thurnberg qualify for Swedish public assistance for autism like autistic kids here get?
Not only is it gone, we enthusiastically elected the people who gone’d it. And most of them are still in office!!!
Go figure.
Some people collect too much. Running the numbers; if you took my social security contributions and put them in a private conservative fund, I would have about double what I will get back from the govt Unless I live to be 200 or so) and would be able to live off the interest and leave the principal to my children.
It is gone, it was not invested, and some – a great many – take far more than they put in. They appreciate your contribution.
But….I can’t declare them as dependents on my tax return – sigh.
“It was spent … It is gone. Get over it.”
roger that.
they cut SS we paid for and they best fine a nonextradition counrty and a hole to crawl in because any politician that fucks with the measley, criminal ponzi scheme that we were promised will rue the day they were born!!
Screech! I paid for it! Screech! Better not take mine! Screech! I do not care if they rob the young to pay me, if they take it I will roll my wheelchair down to the Congress and get them! Screech!
What did I tell you? Even on TBP there are screechers.
BTW – you were not promised. SS is not enshrined in law as a promise.
“you were not promised.”
true dat. it’s in all the ss letters they send you – “congress can change the law at any time”. ‘course, they can be voted out at any time too, so there’s that ….
“Take full advantage of IRA and 401k programs” ?
I do remember what happened to those beautiful 401k accounts in 2008 and that was only a test.
Don’t worry the wigs in the beltway have already long ago discussed on how to best confiscate your IRA and 401k account. Remember that both of those have been invented by the very same crooks that steal everything else from us.
“Buy gold” – sounds good. But what do you spend your gold on when the shelves in the grocery store are suddenly empty? There might be a better chance in having your own veggie garden.
Can’t pay what was promised to those forced by law to invest in the social security insurance program well NO SHIT !
Cut by as much as you must as long as all government checks paid to individuals are cut by the same percentage . This includes government pay and retirement checks , yes senator and congressman your pay and retirement is on the same chopping block !
Equal protection under the law it’s not just a fair minded idea it’s the fucking law !