Fed Is Systematically Destroying Social Security And The Retirement Plans Of Millions

The Fed Is Systematically Destroying Social Security And The Retirement Plans Of Millions



Right now, approximately 56 million Americans are collecting Social Security benefits. By 2035, that number is projected to grow to a whopping 91 million. By law, the Social Security trust fund must be invested in U.S. government securities. But thanks to the low interest rate policies of the Federal Reserve, the average interest rate on those securities just keeps dropping and dropping.

The trustees of the Social Security system had projected that the Social Security trust fund would be completely gone by 2033, but because of the Fed policy of keeping interest rates exceptionally low for the foreseeable future it is now being projected by some analysts that Social Security will be bankrupt by 2023. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years. Yes, you read that correctly. The collapse of Social Security is inevitable, and the foolish policies of the Federal Reserve are going to make that collapse happen much more rapidly.

http://www.zerohedge.com/contribute...ocial-security-and-retirement-plans-millions?

 

If any of the money were actually invested, you might have a point. But since all current payments are being handed right back out++ to current recipients ... you don't... It's a revolving door right now, a revolving door with more money going out than what's coming in.

 

"Invested"? There is no trust fund, the money was transferred to the general fund by buying treasuries. Any SSI money being paid back, with interest, comes from income taxes.

 

There are a few simple things that can be done to make SS sustainable. They are just not popular ideas like raising the eligible age to receive SS, but there is a simple path forward.

http://www.huffingtonpost.com/2012/08/19/social-security-fixes_n_1808499.html


Medicare on the other hand, and HC costs in general are the 8000 lbs. gorilla in the room!

 

Do you think seniors should be worried more about COLA and how it is tied to CPI calculations?

 

In other words, tax the "rich" (those that make over $110K) more, pay everyone less, especially the "rich" (those that made over $42K).

Contrary to popular belief, SSI wasn't designed as a retirement plan, yet how many think that, so have only that income during retirement? Maybe the best fix is to tell people how little they will get on SSI, so they start saving on their own.

No problem, that was fixed by the "Affordable Care Act".

 

I personally see no reason for a cap on SS, the net result of the SSWB is that the tax is flat up to the threshold, but when we include the upper deciles it's highly regressive. Flat taxes themselves are regressive by nature since income has more utility the less of it you have, couple that with the fact that much of the income earned at the top is made via rents and or other nonproductive activities and it's even less justifiable.

I agree with this to some extent, people ought to be incentivized to save on their own, but folks in general are myopic and many (especially those who lived during the depression) lack faith in financial institutions to provide for them if they forgo spending for saving. The money collected for SS could act as a massive store of reserves, garner unthinkable amounts of interest and provide much needed stability if only we could get bureaucrats to keep their hands out of the cookie jar.

Sarcasm detected! Pimptight is right though, HC costs are massive, I'm skeptical as well if the ACA is going to do anything to alleviate that. So far as I understand much of the costs are administrative in nature, which some folks like to attribute to each insurance company having their own forms and procedures, the same can be said however for dealing with medicare/medicaid, so I'm unsure how any type of single payer type scheme alleviates that.

 

One think about the ACA I find interesting is that the Administration argued in court that they went with insurance companies to handle administration due to it's inherent efficiencies compared to government.

 

Bit ironic isn't it since that was supposed to be one of the boons of single payer systems? I am frankly miffed that there hasn't been some push for standardization amongst private insurers.

 

Is there no cap on payouts as well? If not, its not a "retirement plan" is just another form of welfare.

Rents? Or just huge leverage? A good number of the top 1% are actors, sports figures, class action lawyers, and other positions that collect a little from many.

The problem is interest in what? The politicians "invested" the SSI / Medicare surplus in the safest investment around, T-Bills. Even with that huge influx of cash, instead of paying off the debt, the politicians increase spending to meet, and exceed income (like those that funded atheir lifestyle by re-fi'ing their home). Instead of cutting spending to match income, politicians say they want to tax the 1% (they really won't, that is where their contributions come from).

During the healthcare debate, I looked for the reason we pay twice what EU and Canada pay. Admin was part, but nowhere near enough, add in malpractice, not enough.

I came to the conclusion it was the total isolation between cost to the consumer and price. The consumer knows only their out of pocket, not what their employer pays. Insurance companies, by regulation, are allowed to keep a fixed percent of their income, so there is the incentive for them to collude with medical providers to raise prices. The states cooperate, by limiting the number of insurance companies, which limits competition (I suspect the medical and insurance providers "invest" heavily in politicians).

 

Don't think that was ever disputed.

Yup, rents or activities that are less productive. Why should investments receive preferential treatment vs. productive activity?

Huh? I'm talking about the stuff you earn on investments and deposit accounts.

The "lock box" is and always was a myth, SS works like an annuity, I'd rather see it work like an savings account that can't be borrowed against.

There are other factors, we tend to provide and execute more services than either of the NHS or Canada, trouble is there is no relationship between the number of procedures performed and better health outcomes.

I don't disagree with this, consumer are alienated from the price of the services they receive, if we paid for more services out of pocket like with do with virtually everything else it'd help to drive down costs. My only concern is that consumers in this arena are largely uninformed and could easily be lead astray. I think things like WebMD and other web services are helping to chip away at the information gap, but it'll always persist to some extent. Another aspect is that there is an explicit entry barrier for doctors, the AMA actively seeks to prevent new entry... why wouldn't they, it's pure self interest for them. I'm certainly not saying it's all bad and that no regulatory body should exist, I just think it'd be work taking a look at how effective of a quality control it is.

 

And guess what? When all those old people can't provide for themselves, they will become dependant on the government.

 

Why is no one talking about a means test?
A fire insurance company would go broke if it paid claims to everyone, regardless of whether they had a fire. If you're going to get old age, survivors, or disability INSURANCE, shouldn't you prove you need it?

 

The reality is that there is no completely accurate way to make an accurate determination. It is similar to many diagnostic tests in medicine. Reducing the likilihood of giving assistance to people who do not absolutely need it will also deny assistance to other people that do need it. One needs to look at a statistical curve to make the best determination of what the criteria should be.

 

My point is government will only put SSI & Medicare overages into T-Bills, which transfers that money into the government general fund. Interest earned on the overages are paid by tax dollars (or this years overages).

This extra money has allowed government to grow huge in the non-entitlement areas (entitlement is less than $2T of the near $4T budget).

There is no source of funding for future entitlements except for current taxes (income and payroll), and borrowing. Our "retirement" will be paid for by our kids and grandkids, after the gooberment takes their admin fees out.

What would be the cost of auto ownership if your company paid for your car in the same way it pays for health care?

You buy a car at a fixed price - no matter what car. Gas, tires, etc. costs a $10 copay, as does any maintenance.

It would take no time at all before car prices soared out of sight, and we would all be talking about runaway costs.

 

That is because politicians have created the impression that SSI is your retirement plan, and the Medicare your health insurance?

Just part of that long list of false senses of security.

 

There was a long term plan to deal with SS that began in 1986 when Reagan signed an SS tax increase and was picked up again in the 1990s with tax increases and fiscal retraints that were working very well. By 2010 the national debt would have been mostly paid off so the government would be in good fiscal shape when SS began redeeming its Treasuries.
Then Bush got elected and the republicans tossed the whole thing out the window, cutting taxes and spending like lunatics even though everyone knew this SS thing was coming. They primed the pump for a fiscal disaster. All that was needed to push it over the edge was an economic recession.

So, unless you just crawled out from under a rock, going into a panic about the current fiscal state of the US is a completely disingenuous position for a conservative.

 

You mean the tax cut that reduced overall revenues by 8.9 billion dollars was a fix to SS?

 

why should utility affect the government's claim on my money ?

that is more an issue with the granting of government privilege than tax rates.

so, let them voluntarily invest is a government run savings program. They will not "lack faith" any longer.

 

If we work based on the assumption that taxes are going to exist (and they are), then taxing those monies that will have the least negative impact on the economy as a whole is the thing to do.

Be that as it may (and I tend to agree), I see no straightforward path to address that problem that's politically realistic, so this is a next best option.

So Uncle Sam being at the helm is going to inspire faith? Odd comment coming from you. Regardless, that's basically what I've endorsed.

 

upholding liberty and equality under the law is the thing to do.

Isn't Uncle Sam at the helm of the SS program, the one you just endorsed because it doesn't create a lack of faith ? Are you retracting your position ?

 

What definition of equality shall we use?

Now you're taking my words out of context. I said the folks lack faith because of financial and economic woes they've endured (I specifically referred to the Great Depression), and said that a state ran organization helped to alleviate those fears. I didn't say at all if that was a rational thought process or that's it's the best way to accomplish the stated goal.

I do support a social safety net for the elderly, I don't like SS in its current incarnation but also realize the political realities associated with changing it.

 

equal measure of commodity.

So why do you want the gov at the helm of SS but not a voluntary program, especially when it is so good at alleviating fears ?

Well, we could just lie, right up to the point where the rug gets pulled completely out from under them.

 

So nominal terms? You're begging for a regressive solution that has a greater impact on the poor, hard to call anything like that equal.

I have no problem with a partial privatization and securitization of savings accounts within SS, we'd just get a better ROI if those funds were lumped together not to mention it'd help restore faith in the US as a borrower since we'd have a huge amount of liquid capital on hand.

That seems to be what both sides of the aisle are opting for.

 

Thats the same tired answers - increase the payroll tax, increase the cap, cut benefits on current retirees.

Paul Ryan's plan is much better. If people want to opt out of SS then a portion of their payroll tax goes into a govt managed savings plan. The remainder of their payroll tax still goes to SS.