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 ...
Government screws up everything
Compare your medicare cost to what you’d pay on the open market at that age.
however infact we DID indeed pay in....for me, it was well over 40 yrs...husband the same....
I worked at nonprofit hospitals without defined pensions so SS is IT for me...that and whatever I saved....
“give everybody whatever they paid in plus their employers contributions.”
So rack up the debt a 10s of trillions more to pay for this socialist entitlement scam?
Medicare for all of them....
I feel the same way about banking/checking accounts. Why can't people without money in their account write checks, when plenty of people have money just setting in their accounts doing nothing?
There'd be a huge cost to the government up front, but it'd keep the cancer from growing further. And when you think about the gargantuan spending bills that have been passed lately, this large bill would actually accomplish something by keeping the debt from growing for more generations.
That is why the holder of the funds must invest wisely so that your investment grows. Most people that have money in banks with guaranteed interest always get more out than they put in. Government does not invest wisely, in fact they don't invest at all. Maybe SS should be converted to a credit card and use the same collection agency as real cards do.
And if they refuse to eat cake, then what? We have a very different population than we did during the depression.
Have you compared the amount being paid out in government pensions to SS payouts? Might be interesting to know.
What has to be done is to reduce Health Care Costs from 20% of GDP down to where it’s supposed to be, 5%. The only way to do that is destroy the Medical Cartels and Health Insurance Cartels by Anti-Trust to force the costs down by say 80% or more. Then you have saved Medicare and SS.
Of course about 2 Million plus people in Health Care will lose their jobs. But no one wants to do that, so a collapse of the system is going to come.
20% of GDP for Health Care is not sustainable.
Good one. I can see Jessie Watters asking that to people-on-the-street on his show, and them stopping to think ...
Ping
Why must everything constantly cost more? Maybe because our money system is fake and unconstitutional which no one seems to care about. After WW II prices remained constant for several years, why was that?
“””Most people have not paid in what they get out,”””
You need to consider this.
If the average worker had been able to put the Social Security Tax into a private account that invested in Treasury Bonds, then today the average worker would hundreds of thousands of dollars in their private account earning what they now receive from SS.
And when that average worker dies, the principal in that private account would go to the worker’s heirs.
For the government pensions it’s easy to calculate. It’s 1% for each year of service against an average of youtube high 3 salaries. So a 40 year career will get you a 40% salary pension. The old fed pensions and many state pension now are way overly generous.
Social security is a BS scam. Someone who pays in half as much gets 80% of the benefit. The third bend point is 15$. To understand how SS funnel monies to lower payed people you have to understand the bend points.
Means test payouts. That’s about the only way I can think of it being ‘saved’
``````````````````````````````````
Up yours!
give everybody whatever they paid in plus their employers contributions
````````````````````````````````````````
Plus 5 0 years worth of interest.
I’m sure you’re correct.
So many of us old folks are running up big bucks in medical bills.
Covid didn’t kill enough of us.
One would like to think so, but it wouldn’t help.
Any excess beyond each year’s Social Security deficit would be spent immediately. This would give Congress a shot in the arm to spend even more money they don’t have and never will.
The ONLY thing that can truly save the program is to gradually transition to a public/private insurance annuity program. People should be given the choice between having their contributions and those from their employer invested on their behalf in assets that grow in value and produce income, or leave them in the 1940s relic to be spent on current beneficiaries with no guarantee of any payout .
I have my daughter enrolled in a policy with New York Life that has paid out a 5.5+% rate of return every year for 170 years. It’s essentially what Social Security would be if it wasn’t designed and run by chimpanzees.
She’s on track to having over a million dollars at age 60, just from this one investment vehicle. And at whatever age she passes away, she will leave the remainder of her accumulated dividends plus substantial death benefit to her heirs.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.