Posted on 01/13/2023 9:58:29 AM PST by SeekAndFind
Social Security Trust Funds have squandered billions of dollars on an antiquated investment policy.
That loss tells us a lot about the financial crisis coming to Social Security.
In 2019, Social Security lost roughly $1 billion because the system invests the excess reserves on exactly the wrong minute of the year. Any other day or any minute early in the day, saves the program money.
It is 2023, and the beat goes on. Over the course of 2022, Social Security redeemed more than $100 billion in high-yield debt, and lost nearly $5 billion in interest earnings in the process. The program just gave it away.
Here is the problem: Social Security generally needs cash to pay its bills in the back half of the year. Unfortunately, the program locks up all its loose cash on June 30. So, starting July 1, the program needs to redeem bonds, and the Treasury Department picks the wrong bonds for redemption based on a policy that literally dates back to the era of black-and-white TV.
To illustrate, in November, Social Security needed extra cash to pay the bills, and redeemed nearly $100 billion in bonds at par, which earned 4 percent interest. At the same time, it kept bonds that pay less than 1 percent on the books. Given the process, the program lost nearly $2 billion in interest.
For those so inclined to look at the loss in terms of math: 95.7B * (4-.075) * 7/12 months = a lot of money that has been simply thrown away. This is not terribly different from someone spending $1,000 on ATM fees.
This underlying problem was identified more than 20 years ago. Yet, nothing has been done about it since then. The solution is not terribly difficult.
(Excerpt) Read more at americanthinker.com ...
It’s not a matter of thinking you “paid in”. Your attitude is infuriating. I can run my total amount withheld on the Social Security site. I can assure you it is far from money “I think I put in”. Additionally, my regular tax burden over the years has been very high.
You seem to want a system that rapes net taxpayers twice, that happen to also be able to put money aside with what is left after all the “thinking I paid in”.
Don’t blame me for pointing out you got had by the government..
Or...’No ticky... no laundry’.
Too many people accessing the money and not enough people putting money IN!
So you didn’t save anything or pay anything into Social Security? Good luck to you. At least you fit right in with “you will own nothing and be happy”.
Also, let's clarify what you mean by "people that have enough money". That is also a dangerous slippy slope. How much money to you think is "enough."
If somebody had a million dollars in their 401k, would you say that they "had enough money" and thus don't need Social Security?
What is that number?
Congrats on totally missing my point.
Most people have not paid in what they get out, that’s why it’s collapsing. On this one thing I think people should only get what they need. There’s no reason for you to have both a good 401k and get government welfare cheese like SS at the same time.
The American Institute for Economic Research (AIER) has an article entitled “A Way Out” that details an excellent way to transfer out of Social Security. This proposal protects current recipients while enabling younger people to fund their own accounts. The government needs to stay out of the way on this issue and many others.
Stop paying all welfare and put the funds into SS for the people who paid in not the freeloaders.
Portnoy001
Since Jan 7, 2023
They call it “the third rail of politics” for good reason.
Exactly.
We are punishing the ants and rewarding the grasshoppers.
OMG, the lack of understanding on this is EPIC.
What does it take for people to understand that you CANNOT think of ANY bonds held by Social Security as assets. They are just line items of money the Federal Government DOES NOT HAVE, and NEVER WILL. Even if the “money” to pay this off gets printed, it will devalue the currency to the point where the loss of real private wealth outweighs any “gain” on paper from “balancing the books.”
Interest on all of those bonds is simply more debt piled on the the National Debt pile. Picking a bond to redeem with a 1% rather than a 4% rate only quadruples the rate of Social Security debt piling on the National Debt.
That is literally ALL IT DOES. There is no money, or any other type of revenue producing asset anywhere near the Social Security Ponzi scheme.
All of these moronic discussions of “fixes” is just rearranging deck chairs on the Titanic.
Damn straight. If we can give away all this money to Ukraine, we can damn well pay Americans what they've paid into the system.
How very communist of you.
“From each according to his ability, to each according to his needs”
That is exactly what you are advocating!
Can you explain why it’s ok to cap (means test) payment in and not out? Do you agree with that part too?
A 20% import tariff that goes directly to SS fund would fix the problem
There is no “trust fund”.
My Grandma use to say,” everyone wants to take more out of the pot, than they put in.”.
If you’re holding a bond paying 1% it is significantly down in price and if you redeemed it now would face a priciple loss. You need to look at total return, not just yield.
I don’t agree with any of it! That is the whole point.
The only thing I know is I should at least get back the huge amount of money I have put into it with interest. Otherwise it was all just theft.
I would have preferred it had never been created in the first place, and I had been able to invest that money, just like I did everything else.
Just have a welfare program for those that don’t save, because that is essentially what it is for many people.
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