Posted on 12/08/2012 4:42:06 AM PST by IbJensen
Have you noticed, your Social Security check is now referred to as a "Federal Benefit Payment"?
The government is now referring to our Social Security checks as a “Federal Benefit Payment.”This isn’t a benefit – its earned income!
Not only did we all contribute to Social Security but our employers did too.
It totaled 15% of our income before taxes. If you averaged $30K per year over your working life, that's close to $180,000 invested in Social Security.
If you calculate the future value of your monthly investment in social security ($375/month, including both your and your employer’s contributions) at a meager 1% interest rate compounded monthly, after 40 years of working you'd have more than $1.3+ million dollars saved! This is your personal investment.
Upon retirement, if you took out only 3% per year, you'd receive $39,318 per year, or $3,277 per month.
That’s almost three times more than today’s average Social Security benefit of $1,230 per month, according to the Social Security Administration (Google it - it’s a fact).
And your retirement fund would last more than 33 years (until you're 98 if you retire at age 65)! I can only imagine how much better most average-income people could live in retirement if our government had just invested our money in low-risk interest-earning accounts.
Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did. They took our money and used it elsewhere. They “forgot” that it was OUR money they were taking. They didn’t have a referendum to ask us if we wanted to lend the money to them.
And they didn’t pay interest on the debt they assumed. And recently, they’ve told us that the money won’t support us for very much longer. But is it our fault they misused our investments?
And now, to add insult to injury, they’re calling it a “benefit,” as if we never worked to earn every penny of it. Just because they “borrowed” the money, doesn't mean that our investments were a charity! Let’s take a stand.
We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government –
Find a way to keep Social Security and Medicare going, for the sake of that 92% of our population who need it.
Then call it what it is: Our Earned Retirement Income.
It was never legally your money after they took it. We have an empty bag of IOUs that cannot and will not be paid.
My advice: as soon as you qualify, sign up. You may hope to get more by waiting. You might just get means-tested out of the benefit or get a reduced benefit.
Plan like you won’t see any SS.
Consider retiring overseas, where you can live well on less as they implode our system here.
trek you nailed it.
“SS is a pay as you go program”
Not so. In fiscal year 2012, which just ended for the Fed, just the interest on the debt + entitlements cost $253 billion more than they took in revenues. That does not include national defense, White House electric bill, or any other item we squander additional money on in DC.
The Federal Reserve Bank stepped in, created money as a computer entry, circumvented the legitimate Treasury auction process to purchase 90% of newly offered Treasury debt.
Yes, they are making up money out of thin air to enable the wanton spending in Washington DC... and of course crucial things, like the $100 million they just loaned Brazil to build an aquarium...
Nobody up there is paying as they go. It is history’s most colossal Ponzi scheme and it will not end well.
My short list of advice... prepare now to have options later.
1. Open a bank account overseas in a different currency: Australian, Canadian, Swiss, Norwegian. Move money now before the government decides it belongs to them. Be sure to report under FATCA regulations to be legal.
2. Buy gold. Store it here. Store it overseas.
3. Hedge the system to be prepared for the worst case scenario. I fear we will see it in our lifetimes.
4. Decide whether you would like to spend the next depression years here in misery, or overseas, plotting your return.
5. Do not count on the government, do not count on any candidate, do not count on any party, to rescue you.
6. Pray.
Consider retiring overseas, where you can live well on less as they implode our system here
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What happens when a country (say Philippines/Mexico) that says you must show you are self sufficient to ‘relocate’ there figures your SS Payment isn’t a reliable source of future income? <: <:
If you qualify, you become entitled to it under current law just as with unemployment insurance, Medicare, Medicaid, food stamps, etc., etc. That's why we call what we have created a welfare state. That's our major problem.
“What happens when a country (say Philippines/Mexico) that says you must show you are self sufficient to ‘relocate’ there figures your SS Payment isn’t a reliable source of future income? <: <:”
Answer #1 It would seem to me to be wise to prepare now, before that eventuality.
Answer #2 Prepare now to not rely on SS.
Look toward Chile, Ecuador, Panama, Philippines, Mexico, Thailand, Indonesia. There are many others.
When politicians started referring to the “trust” fund in the “lockbox” I knew we had lost all touch with reality. That’s at least twenty years ago.
SS is a pay as you go program. It has been running in the red since 2010, but the shortfall is made up by redeeming some of the IOUs in the SSTF, which contains $2.6 trillion in non-market, interest bearing T-bills.
Source: CBO “Combined OASDI Trust Funds; January 2011 Baseline” 26 Jan 2011. Note: See “Primary Surplus” line (which is negative, indicating a deficit)
Matters are even worse than this chart shows. In December, Congress passed a Social Security tax reduction. Workers are temporarily paying 2 percentage points less, from 6.2 percent to 4.2 percent, in Social Security payroll taxes this calendar year. Since the government is making up the shortfall out of general revenues, CBO’s deficit projections for the trust funds do not include that. But CBO’s figures predict that the “payroll tax holiday” will cost the government’s general fund $85 billion in this fiscal year and $29 billion in fiscal year 2012 (which starts Oct.1, 2011.) Since every dollar of that will have to be borrowed, the combined effect of the ” tax holiday” and the annual deficits will amount to a $130 billion addition to the federal deficit in the current fiscal year, and $59 billion in fiscal 2012.
Social Security has passed a tipping point. For years it generated more revenue than it consumed, holding down the overall federal deficit and allowing Congress to spend more freely for other things. But those days are gone. Rather than lessening the federal deficit, Social Security has at last — as long predicted — become a drag on the government’s overall finances.
As recently as October, CBO was projecting that it would be 2016 before outlays regularly exceed revenues. But Social Security’s fiscal troubles are more severe than was thought, and the latest projections show the permanent deficits started several years ahead of earlier predictions.
Don’t be confused by the fact that the trust funds are projected to continue growing for several more years. That’s because Treasury must still credit interest payments to the funds on the borrowings from earlier years. But unless taxes are increased or other spending is cut severely, the government will have to borrow from the public to pay the interest that it owes to the trust funds.
And don’t be misled by those who say the system can pay full benefits until about 2037 without making any changes to the law. That’s true, but does not change the fact that Social Security taxes no longer cover those benefits. The government is now borrowing money to pay them, and will do so every year for the foreseeable future. And keep in mind, if nothing is done, when those trust funds are exhausted, benefits would have to be cut by 22 percent in 2037, and more each year after that, according to the most recent report of the system’s trustees. By 2084, the system will generate only enough revenue to pay for 75 percent of promised benefit levels.
"As bad as that is, however, Social Security's problems are trivial compared to Medicare's. Its trustees also issued a report this week. On page 69 we see that just part A of that program, which pays for hospital care, has an unfunded liability of $36.4 trillion in perpetuity. The payroll tax rate would have to rise by 6.5% immediately to cover that shortfall or 2.8% of GDP forever. Thus every taxpayer would face a 28% increase in their income taxes if general revenues were used to pay future Medicare part A benefits that have been promised over and above revenues from the Medicare tax.
But this is just the beginning of Medicare's problems, because it also has two other programs: part B, which covers doctor's visits, and part D, which pays for prescription drugs.
The unfunded portion of Medicare part B is already covered by general revenues under current law. The present value of that is $37 trillion or 2.8% of GDP in perpetuity according to the trustees report (p. 111). The unfunded portion of Medicare part D, which was rammed into law by George W. Bush and a Republican Congress in 2003, is also covered by general revenues under current law and has a present value of $15.5 trillion or 1.2% of GDP forever (p. 127).
To summarize, we see that taxpayers are on the hook for Social Security and Medicare by these amounts: Social Security, 1.3% of GDP; Medicare part A, 2.8% of GDP; Medicare part B, 2.8% of GDP; and Medicare part D, 1.2% of GDP. This adds up to 8.1% of GDP. Thus federal income taxes for every taxpayer would have to rise by roughly 81% to pay all of the benefits promised by these programs under current law over and above the payroll tax.
Both GB and trek comments were great! The education I get on this site is why I love FR.
They deal mostly with leases.
“SS is a pay as you go program. It has been running in the red since 2010, but the shortfall is made up by redeeming some of the IOUs “
We can call it that, but since the Government takes the money coming in, spends it, and gives the SS accounts an IOU, it is simply a fiction. There is no lockbox.
Future payments are based entirely on the Government’s decision to pay or not to pay in the future.
The system is DYSFUNCTIONAL and CORRUPT. Where do the assets for the IOUs come from? The assets are unicorns. DC can confiscate every bit of private wealth and income in perpetuity and STILL NEVER reach entitlement solvency. Hang’em high. It’s a fools game.
Didn’t LBJ’s huge increase in ‘welfare’ coincide with the Democrats stealing the funds in the Social Security?
The ‘transfer of wealth’ goes back a long, long time.
The feds sold most of the land they could ~ there are vast tracts of nothingness ~ doesn’t mean it won’t be worth something some day ~
I completely agree—it’s an entitlement. The courts have ruled the same way. It’s just that some on this forum refuse to acknowledge this, because they are emotionally invested in this particular entitlement.
Why in flying Hades would anyone want to be a government employee? I guess if you lack self-respect and initiative, it might hold some slight shred of attraction...
It is that by law. The IOU is a non-maerket, interest bearing T-bill. The USG has the same obligation to redeem it as it does a T-bill held by the Chinese. The SSTF is part of the national debt just like the publicly held debt. The SSTF, the HI Trust Fund, the Federal Government Employee's trust fund, etc. are held in the "Intragovernmental Holdings" portion of the national debt.
By law, SS can only pay out in benefits the amount it has in assets, whether it is in revenue or in the SSTF. When the SSTF cashes in all of its T-bills to make up the shortfalls, benefits must be reduced to the revenue coming in.
There is no lockbox<
Technically, there is. It is called the SSTF. The T-bills in it, just like the T-bills owned by China, are backed by the full faith and credit of the USG to honor them. The reality is that SS is unsustainable due to actuarial reasons--not whether the SSTF contains real assets or not. Given the demographics of an aging society, SS cannot keep providing benefits unless payroll taxes are increased and/or benefits reduced.
Future payments are based entirely on the Government’s decision to pay or not to pay in the future.
It will be based on the government's ability to pay the benefits as outlined in the law that set up SS. It is a pay as you go system and the benefits are tied to revenue collected.
Note: This lockbox crap was started by Al Gore and other know-nothings. Whether there was/is a "lockbox," SS is unsustainable as currently structured.
The real problem with SS now is that the USG must borrow money to redeem the "IOUs" in the SSTF. If the SSTF had been allowed to invest the "surplus" in other kinds of securities other than T-bills, it would be a different story. SS has been a cash cow for the politicians who can use this money without raising taxes. Now SS is a black hole that is sucking money out of the budget and increasing our publicly-held debt.
The "assets" for the "IOUs" come from the same place as those backing up the T-bills held by the Chinese, i.e., from the full faith and credit of the USG to honor them.
When it comes to similar jobs with a federal agency, e.g. HHS, USDA, Commerce ~ you'd probably need private sector employment in related fields first, and before that you'd probably need to work for the state or a school
If you're happy to get a job and sit there 40 to 50 years in the same position ~ maybe putting red flags on highway warning sign machines, that's different.
BTW, others who've had federal, state or local government employment experience have reminded me over the years many times that for the most part it's useless to discuss the reality of government employment with shopkeepers and guys with fast food franchises ~ they just don't know except when the Board of Health comes around to shut them down, or the weights and measures guys want to check their scales. Still, i try. Spent decades explaining to them and their cousins in the private sector in almost every industry in existence how to properly pay postage on bulk, presort and special rate mail ~ and why. They all want to know why ~ it's like they've never run a business ~ got that feeling once when the entire General Motors Board of Directors called me regarding some high ticket advertising matter ~ like none of them had ever run a business. As it turned out they were doing it badly!
BTW, if you want to have regular employment as a nuclear physicist, you really do need to get a job with a government somewhere. I hear they are hiring in Iran for example.
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