We already know that Social Security will be dealing with tough challenges in just a few years if something truly significant doesn’t change, and soon.
We also know that last year’s pandemic probably made things much worse. In fact, this year the “new normal” for Social Security could turn any cost-of-living adjustment (COLA) for next year into an empty gesture.
(Can we agree the entire Social Security program would be euthanized if it were a mutual fund or private pension?).
Overall, the bureaucrats who should be working around the clock to come up with real solutions for retirement savers are giving us the impression that…
“Benefits are going to get cut. Deal with it.”
This is not comforting.
Inflation in the U.S. is close to spiraling out of control. For the near-term, any COLA offered by Social Security is likely to evaporate like water on a hot street. Consider: the 2021 adjustment for inflation was 1.3% which is just noticeably smaller than the 4.2% year-over-year official inflation number and almost invisible compared to the nearly-8% inflation based on real-world experience.
One source claims the COLA will be 4.7% in 2022, but we’ll have to wait and see. Hopefully the actual inflation rate won’t be 6x higher than the adjustment this time…
Remember, every time the Social Security Administration makes a cost of living adjustment, Social Security’s reserves dry up faster. There’s no incentive beyond playing fair to prevent those COLA numbers from being lowballed year after year.
That’s one “solution” that might be marginally more politically acceptable than actually cutting benefits.
Even so, anxiety about Social Security’s solvency and worry about benefits is everywhere.
A financial tech company, Covisum, even created a Social Security benefits cut calculator to let us calculate optimal scenarios. Obviously, the expectation that benefits will be cut is baked into the tool.
An article on CNBC laid out the reasoning for this potentially dire scenario:
The funds Social Security draws from to pay benefits are running low. Benefit cuts could be one of the changes politicians consider to fix the system.
Let’s keep in mind that any Social Security benefits cuts would reduce the guaranteed monthly payments to the very retirees who paid for it. That’s an outright injustice.
Furthermore, cutting benefits to “balance the books” is like paying less than the minimum monthly payment on a credit card bill (because you can’t afford the minimum amount), and then claiming you fixed the problem by lowering your payment.
Failing to meet your financial obligations is not a solution for individual Americans, nor should it be for America’s federal agencies.
Retirees who filed for Social Security benefits early due to the economic impact of COVID-19 added stress to the already-faltering agency. According to Covisium, that could mean an even earlier deadline for the Social Security Administration:
This increase in Social Security claims and reduced income from workers has many experts estimating that the Social Security system will run out of funds as early as 2029. (Emphasis added).
The current Social Security Trustees Report doesn’t factor in this potential disaster because it was issued “pre-COVID.”
The next update will have to answer some tough questions…
In the meantime, how should we plan for retirement? Or are we doomed to give up on the dream?
Are you doomed to work away your golden years?
The answer is there isn’t an easy answer to this question. You’ll find a lot of articles rehashing the standard advice, like:
- Spend less than you earn.
- Be financially disciplined.
- Save a fixed percentage of your income.
- Take advantage of employer matching.
- Pay down debts.
- Reduce expenses.
- Live below your means.
And so on.
These are good reminders, of course. The problem is, “one size fits all” financial advice doesn’t suit every situation.
On the other hand, surging inflation does affect every retirement saver. In fact, it’s the “silent killer” of many future plans…
Arm yourself against the “silent killer” of wealth
Financial Times Advisor offers this perspective:
“But as always, inflation is the silent killer. People do not realise their pensions and savings are at risk because prices are going up. So as a society, as an industry we could do better to help encourage people to make their savings work for them.” [emphasis added]
More and more, you’re on your own when it comes to outwitting the “silent killer.” The good news is, you have options. Since you know your situation best, the best advice is to take control of your own retirement savings plan
That means taking some time and examining your risk profile, diversifying your assets, assessing how your investments perform in inflationary environments and considering physical assets in your savings.
Physical precious metals like gold and silver have had inherent value for thousands of years. They are tangible, finite resources. They have also proven to be an excellent hedge against inflation and might be the perfect weapon you need to defeat the silent killer.
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
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In 1972, my Econ 101 professor told the class that SS was the largest Ponzi scheme in the history of man and if an individual devised such a plan, they would be arrested and thrown in prison.
When these articles say SS “will run out of funds as early as 2029”, the “funds” they are writing about are Special Treasury Notes that will have to be redeemed by Congress with funds from the budget, or additional borrowing. The FICA taxes you paid (& matched by your employer) into the system throughout your working life were used by Congress to fund their special projects i.e. Viet Nam, War on Poverty, Great Society, etc.
SS is just another block in the Jinga tower that will soon crash.
Yes it is…..and it better not collapse until after I do.
If I collect starting at 62, I will get the money back when Im 84 that I put in, but most of my neighbors, collecting 80k a year in government pensions, who put in about 160k. get their money back in 2 years and collect for another 30 years off the taxpayers, yeah that is fair.
Public Servant= slaves to the people-hahahahaaha
they all stayed home during the pandemic, and the private sector had to work.
Before I got injured, and sporadically afterwards, I paid into CPP/OAS here in canukistan. Couple decades worth of paying in. Got to the point where I just am not able to work, can’t stand for long, can’t sit long, can’t walk any distances; kinda hoop’d. Workers comp told me they will never pay me because nobody saw me get injured and one boss didn’t know anything about it because the field suprervisor didn’t report it and my other boss said didn’t happen, even tho I called him. That was when I worked in the bush, alone, on his delimber. I have X-rays out the ying yang, MRI and CAT scans that all show the mechanical damage and neurologists reports, but to WCB I’m trying to scam them.
So I get no Workers comp, never have and zero covid money. But the great news is… I get $180/mo on my CPP while all these other parasites get $2000/mo to sit on their asses and do nothing. Even my daughter who got put out of work for a month got a $1500 cheque. She applied ONCE, and got two following cheques. Then the government said oh sorry that was a mistake, but don’t worry about it we don’t want the other two cheques back.
Communism… (insert a Stucky colorful rant here)
The fact is that many of us paid into SS for many years and that money is ours. No equivocation can be tolerated. For many seniors this is our only source of income and if we are going to talk about universal income then social security has to be part of it or, at least, universal income must subsume social security. Anything less than protecting this money for generations that paid into it for decades upon decades is not acceptable. Remember the Social Security Trust fund (Al Bore’s lock box) whatever happened to the notion that we need to safeguard social security?
Funny how Social Security is going broke but there’s an endless amount of money to help foreign countries and illegals.
Yup, odd how those who NEVER contributed to SS because they are here illegally are getting SS checks. Odd as well are those committing SS fraud who never get caught or punished and even more odd is how SS is used as a slush fund by politicians and the money stolen is never returned.
Yeah, you never hear that the welfare fund is drying up.
So you are telling me we have lots of money to give to shitbums who do not want to work, but no money to fund Social Security to return the money working people have paid? Is that what you are telling me?
SS pays wads to Blacks for children with Disabilities (Mental, Behavior, etc). That should not be part of SS!!! Also, SS payments should be the priority over all Welfare Payments and SS should be the Last to be cut or we should peacefully protest in the streets until Politicians agree. Have a Blessed Day all y’all Pizza Sheets Liberals.
Considering we paid about 10% of are salaries into this not including medicare, I would take what I paid in at 3% interest and walk away. Most idiots don’t realize that your employer didn’t pay half of it. You paid all of it.
PMs kill me. The spread is outrageous. It takes a long time for it to even out. Sure if you’re young and not on the cusp then it makes a little more sense. But, I think there are better hedges.
This is because non-White immigration is catabolic.
and who is responsible for it?