From Peter Reagan for Birch Gold Group
Social Security and Medicare benefit programs are in big financial trouble, and have been for quite some time.
The recent 254-page report issued by the Treasury Department revealed the most-current summary of the incredible shortfalls that the Trust Fund is suffering:
Take note of the fact that according to this report, Medicare could start to recover somewhat, but it wouldn’t approach that recovery for almost 73 years.
Unfortunately, the OASDI benefit (that pays the monthly “check”) doesn’t appear like it would recover at all, assuming lawmakers continued with “business as usual.” It would suffer a 20% reduction in benefits by 2034, then decrease even further by 2097.
These updates further confirm what we’ve already shed light on before:
- If Social Security were a bank, it would become insolvent.
- The truth is, the money you put into the program through payroll taxes is spent before you retire. That means the money isn’t even yours.
- If the program were an “investment,” there would be endless lawsuits.
With all of this in mind, here’s a question to ponder…
The inevitable retirement crisis just around the corner
The same Treasury report that provided the most current update about the Trust Fund also revealed another incredible fact…
Social Security and Medicare are massively underfunded, and politicians have been using the Trust like a piggy bank for quite some time:
U.S. Treasury Secretary, Janet Yellen, casts long shadows over the prospect of a secure retirement. According to the latest financial report released by the United States government, Social Security and Medicare face a staggering underfunding of $175 trillion. To put that into perspective, that amounts to approximately $1.4 million per household, dwarfing the median household net worth in the U.S., which stands at a mere fraction of this figure.
Apparently, politicians who were trying to score political points with their corporate donors and wealthy constituents are partly to blame:
The root of this financial quagmire, it seems, lies in the mismanagement of funds by politicians who, instead of safeguarding the money poured into these programs, have effectively replaced it with IOUs… that are as substantial as the proverbial bag of sand in place of treasure.
This means that some of the hard-earned dollars that hard-working Americans are contributing might have been replaced by the equivalent of worthless slips of paper.
The solutions being proposed by lawmakers and think tanks to recover from this massive shortfall leave a lot to be desired.
The best “solutions” just delay the inevitable
One proposed solution was to roll back certain tax incentives to save Social Security, but that is just shorthand for raising taxes (or robbing Peter to pay Paul).
The Peterson Foundation listed a handful of other proposals that boil down to raising taxes, recalculating benefits, or delaying benefits:
- Eliminate taxable maximum (all income would be taxed)
- Increase payroll tax by 1% (from 12.4% to 13.4%)
- Subject cafeteria plans to payroll tax (which are intended to provide tax breaks)
- Cover newly-hired government employees (who can opt-out of the tax)
- Grow initial benefits with prices instead of wages (another way to increase taxes)
- Raise full retirement age to 69 (accounting for longer lifespans)
- Reduce initial benefits for high earners
- Calculate cost of living adjustment using chained CPI (accounts for all urban consumers, by accounting for substituted goods and services)
- Expand earning years included for benefits calculation from 35 to 40
None of these ideas appear to solve the underlying fiscal problems with the Trust, and look like they would only “kick the can down the road.”
It’s also quite odd that none of the proposed solutions address the problem of politicians “borrowing from” Social Security to fulfill political favors.
If that leaves you with the feeling that things aren’t “quite right,” you’re not alone.
Protect your financial future from the next economic crisis
In addition to the potential for an enormous retirement crisis at Social Security, this recent Brownstone article summarized another way your “nest egg” could be put in jeopardy:
It’s official: the Department of Treasury is now issuing debt at pandemic levels.
Or as Balaji Srinivasan puts it: “The economy isn’t real. It’s propped up by debt. They will fake it till they break it.”
Srinivasan has a point. If we take a look at this very disturbing page (14) on the Treasury Department’s report of the federal government’s financial position and condition. Pay attention to the lines I’ve indicated with red boxes:
Notice the following areas I indicated, from top to bottom:
- The Treasury borrowed $760 billion more than their own forecasts predicted
- We spent over $2 trillion in debt service payments in 2023
- Even though the federal government’s budget deficit was “only” $1.7 trillion, the national debt grew by twice as much, $3.4 trillion!
Peter St. Onge even thinks everything is heading in the wrong direction:
Every fiscal trend is in the wrong direction. We’re already at a $2 trillion deficit, it will soar by trillions when recession hits.
At this point there is nothing standing between us and fiscal collapse. The only question is when.
Thankfully, anyone who has some of their assets in gold could be enjoying the benefits of a more stable retirement portfolio right now, according to recent article:
Gold prices scaled to another record high Monday, propelled by U.S. interest rate cut expectations and the metal’s appeal as a safe haven asset.
“I think it’s a really exciting moment for gold,” said Joseph Cavatoni, market strategist at the World Gold Council, told CNBC on Monday.
In fact, the price of gold has soared more than 15% since October of last year. You can see the current interactive prices on most precious metals including gold, here.
That’s because physical precious metals like gold have historically provided a hedge against economic turmoil. That means having some of your assets in precious metals could stabilize your retirement savings, even if Social Security doesn’t recover fully.
With global instability increasing and election uncertainties on the horizon, protecting your retirement savings is more important than ever. And this is why you should consider diversifying into a physical gold IRA. Because they offer an easy and tax-deferred way to safeguard your savings using tangible assets. To learn more, click here to get your FREE info kit on Gold IRAs from Birch Gold Group.
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Social Security is not an insurance program. A Social Security “account” bears no legal resemblance whatsoever to a bank checking or saving account. Social Security bestows no contractual rights or any other type of property right on workers.
In other words, Social Security as it is currently structured has nothing to do with legally enforceable promises or guarantees. There is no “trust fund” as that term is commonly understood, no funded segregated accounts, no IOUs or bonds stored in some lockbox, or anywhere else for that matter. Social Security is neither solvent nor bankrupt.
In Flemming v. Nestor, 363 U.S. 603 (1960), the U.S. Supreme Court set the record straight. Social Security is actually nothing more than an umbrella term for two schemes that are legally unrelated: a taxation scheme and a welfare scheme.
Workers and their families have no legal claim, grounded in the Fifth Amendment or elsewhere, on the FICA tax payments that they make into the U.S. Treasury, or that are made on their behalf. Those funds are gone, commingled with the general assets of the U.S. government and fully available for purposes unrelated to Social Security. Being mere welfare recipients—not creditors or holders of equitable property rights—workers have hopes or expectations of future benefits, but no enforceable rights to them.
Nestor stood on the shoulders of a previous case, Helvering v. Davis, 301 U.S. 619 (1937). In Davis, the Court had confirmed that Social Security is not an insurance program. During the Helvering oral arguments, the Chief Justice had anticipated Nestor when he speculated from the bench that Congress would have the authority to abolish the welfare component while keeping the taxation component in place.
Thus, it is inappropriate either for the left to call Social Security “solvent” or for the right to call it “bankrupt.” A welfare program funded by general tax revenues cannot go bankrupt because its sponsor is a governmental entity with the power to tax and print money, not to mention reduce or eliminate altogether future benefits. The terms “solvency” and “bankruptcy” are appropriately applied to human beings, corporations, trusts, and the like. But not to Social Security. Social Security is not an entity.
Not legally enforceable ,YET.
But, … but, … I “paid in”!
I’m “owed”!
Karl Denninger disagrees, in part….
Again, for those who aren’t paying attention: Social Security is not the major issue. Yes, it is running a cash deficit, but last year’s was small and a couple of years ago it actually ran a small fiscal surplus. It will continue being mildly in the hole for a few years but as the older Boomers die off that will cease. We could, for instance, bump the tax rate by 1% or raise the cap by a few tens of thousands, neither of which will destroy people’s personal budgets, and it will be fine.
What won’t cease is the Medicare and Medicaid problem. Medicare and Medicaid (CMS) is only 20% funded with tax receipts. Medicaid has no tax-based funding whatsoever; it is a pure giveaway. Medicare was funded with the presumption of about 3% of GDP being medical care with a 2.x% tax from the first dollar on earnings and in that regard it was reasonably well-based. However, due to rampant uncharged and unprosecuted felony misconduct, including price-fixing which is criminally illegal at a federal and many if not most-states level, it now consumes 20% — or roughly five times as much of the economy while the tax rate has not gone up at all, say much less by a factor of five.
Medicare and Medicaid as they are today in a few years will not exist either because they’re chopped up or because they blow up the budget and none of it exists.
http://market-ticker.org/akcs-www?post=251063
Not the first time I have read that on Social Security.
Medicare seems to be the problem.
cumulative average healthcare spending over the last year of life in the U.S. Panel A shows that of the $80,000 incurred over the last year, 66% is paid by Medicare (available to almost everyone 65 or older), 9% by Medicaid (available subject to means-testing, that is, having limited financial resources), 2% by other government programs, 8% by private insurers, and 12% ($9,500) out-of-pocket by households themselves.
Hey, AlGore was going to put SS in a “lockbox”. And gie the key to The Hillderybest.
Where did our money go? LOL. Israel, the Ukraine, and every OTHER country on earth.
American taxpayers money SHOULD be used for AMERICANS.
Where did our money go?
Politicians and their families and friends pockets!
Maybe just don’t take it in the first place.
Personally I don’t think this will happen, but a lot of people believe that most of the vaxxed will be “naturally” culled in the next year or three. (Most of them thought it would already have happened, so there’s that.)
If so, does that save social security for the pure bloods?
No, this vaxx wasn’t quite deadly enough, which is why they need disease X.
Where did the money go? The sons of bitches spent it to keep themselves in office. Any ex Congress man or Senator should be held accountable for going along with that spending. (Except Ron Paul)
The best analogy is from Dumb and Dumber. When the mobsters want their money they produce a bag of IOU’s. “Careful, don’t lose that one. That’s worth a lot, it’s for a Lamborghini.”
Your “money” was ALWAYS a figment of your imagination! EVERYONE on this planet lives or dies by the Grace and Sufferance of God alone. Money is what you use to blind yourself to this universal Truth.
The higher gold goes the easier it is for it to go higher. If it cost a dollar and went up a dollar it doubled, tough to do. If it cost 2k and went up a dollar that’s negligible. Easier. Yay. Still can’t eat it.