News From The Social Security Ponzi Scheme: There isn’t enough cash coming in to pay retirees

[SirLinksALot]

SOURCE: FORBES

URL: https://www.forbes.com/sites/baldwin/201https://www.forbes.com/sites/baldwin/2017/07/13/news-from-the-social-security-ponzi-scheme/#4d7be1c735a17/07/13/news-from-the-social-security-ponzi-scheme/#4d7be1c735a1

by William Baldwin


The government is out today with its annual update of Social Security’s sick finances:

--The system is $12.5 trillion under water, up from $11.4 trillion a year ago.

--Absent law changes, checks to retirees will have to be chopped 23% beginning in 2035.

--To fix just the retirement pay program, Congress could kick up the payroll tax by 2.8 percentage points. Fixing Medicare’s disastrous finances would be in addition.

--The retirement operation is running an $86 billion annual deficit. That’s the difference between the money coming in from Social Security’s share of payroll taxes (12.4% of covered payroll) and the money going out in monthly checks and in overhead.

Ponzi? That’s too kind an interpretation. A Ponzi scheme has old investors being paid off with money raised from new ones. In this case there isn’t enough cash coming in from new players to pay off the old ones. The $86 billion shortfall is being covered in traditional federal fashion, by drawing on general tax revenues and by printing money.

The trustees of the Social Security system put the grim news in as positive light as they can. They cheerily note that “asset reserves” grew from $2,813 billion at the end of 2015 to $2,848 billion at the end of 2016.

But these “reserves” are not a pile of saved capital in the form of stocks, bonds and mortgages. Rather, they are a bookkeeping entry in which the government borrows money from the government, and the government pretends to have “income” by collecting interest from…the government.

(Excerpt) Read more at above link ...

[Joe Wooten]

[Weird Tolkienish Figure]

Geezers will have to get a haircut as far as I'm concerned.

[Wingnut]

I'm gettin mine.  What ever happens after that so sad.   Like they say in French: "say levee".

[Bigun]

You beat me to it!

ALL Ponzi schemes eventually meet the same end!  Even the ones run by government!
 

[Hondo69]

The government is out today with its annual update of Social Security’s sick finances:

--The system is $12.5 trillion under water, up from $11.4 trillion a year ago.

--Absent law changes, checks to retirees will have to be chopped 23% beginning in 2035.

Alright, stop right there.  Can I translate that for you? 

We're losing money faster than we can count it and 20 years from now we might have to change our ways.

[Jazzhead]

This shouldn't be a surprise to anyone.  Nor should it be a surprise that politicians for years have just kicked the can.   What's coming is a generational battle between young and old -  taxes will need to be raised or benefits cut.

But there IS still time to fix things.  A big help would be suspending or trimming cost of living adjustments.   Another thing that would help would be to eliminate the taxable wage base so earnings above the ceiling (something in the order of $120,000 or so these days) are subject to FICA. 

It is especially important to fix Social Security because most of us don't have private pensions anymore.  401(k) plans help build savings, but not income security.   To have a comfortable retirement, you need both.   

[rodamala]

This shouldn't be a surprise to anyone.  Nor should it be a surprise that politicians for years have just kicked the can.   What's coming is a generational battle between young and old -  taxes will need to be raised or benefits cut.

But there IS still time to fix things.  A big help would be suspending or trimming cost of living adjustments.   Another thing that would help would be to eliminate the taxable wage base so earnings above the ceiling (something in the order of $120,000 or so these days) are subject to FICA. 

It is especially important to fix Social Security because most of us don't have private pensions anymore.  401(k) plans help build savings, but not income security.   To have a comfortable retirement, you need both.

Where in the constitution does it say you get to retire?

[Axeslinger]

Where in the constitution does it say you get to retire?

@rodamala
Right next to the part where it says the government needs to bail out the insurance companies under the guise of "providing" health care for all.

Duh!

[InHeavenThereIsNoBeer]

Once upon a time there were people who were fiscally irresponsible who wouldn't save for retirement and ended up destitute.  The fix was obvious enough, we'd force everyone to save so there would be money when they needed it.  While it goes against every libertarian bone in my body, it does seem a reasonable approach to "solve" the "problem".

And then we gave the money, other people's money,  to the least fiscally responsible people ever to walk the earth for safe keeping.

[RoosGirl]

That is just about the time that I am supposed to be able to start collecting *my* money that I was *forced* to pay.  But I have guessed for a very long time that I won't receive a dime of *my* money back.  I will go further to predict that by 2030 my private IRAs and ROTHs will be confiscated if I don't somehow figure out a way to hide it from them.

[IsailedawayfromFR]

That is just about the time that I am supposed to be able to start collecting *my* money that I was *forced* to pay.  But I have guessed for a very long time that I won't receive a dime of *my* money back.  I will go further to predict that by 2030 my private IRAs and ROTHs will be confiscated if I don't somehow figure out a way to hide it from them.

You can't hide it in a 401k, IRA or Roth.

All you can do is to distance your money from them by getting out of these and pay the taxes.  When the feds come to confiscate, they will look first at 401ks and IRAs as in their mind the money is considered to be theirs as no taxes have been yet paid on them.  The prize for them is huge, as there is $25 trillion in these accounts.

[Jazzhead]

That is just about the time that I am supposed to be able to start collecting *my* money that I was *forced* to pay.  But I have guessed for a very long time that I won't receive a dime of *my* money back.

Your current payroll taxes go to pay the benefits of current seniors.   Your children will be paying for yours.  SS is a defined benefit system.  If the federal government were a private company subject to ERISA,  cats would be in jail. 

I will go further to predict that by 2030 my private IRAs and ROTHs will be confiscated if I don't somehow figure out a way to hide it from them.

Now that's being silly.  Your 401(k) account is subject to fiduciary and legal protections that make sure that you'll get the fruits of your investments.   Pay some attention and build your wealth. 

[Joe Wooten]

Your current payroll taxes go to pay the benefits of current seniors.   Your children will be paying for yours.

No they won't, not enough of them to make a difference without paying 20% or better rates. That would cause a rebellion.

[Smokin Joe]

This, while largely due to mismanagement and looting, is also a side effect of the War on the Middle Class being waged via Obamacare.
If you Welfared along, you didn't pay much in but collect anyway.

If you had enough left to save some before, the ACA eats it.

(If you didn't, you likely aren't making enough to contribute much to Social Security.)

If neither tax bothers you, you likely have enough money you don't need Social Security or insurance, or are exempt from the programs.

Expect a serious inflation cycle coming up, and invest accordingly.

[Joe Wooten]

A couple of ways to save some of the money:

1) If you paid nothing in, you get nothing, period.
2) If you are not a citizen, you get nothing, period, even if you paid SS taxes.
3) Get rid of the medicare prescription drug benefit. It costs more and more every year and has greatly exceeded the max spending predicted back when it was passed during GW Bush 1st term.

[RoosGirl]

Your current payroll taxes go to pay the benefits of current seniors.   Your children will be paying for yours.  SS is a defined benefit system.  If the federal government were a private company subject to ERISA,  cats would be in jail. 

Now that's being silly.  Your 401(k) account is subject to fiduciary and legal protections that make sure that you'll get the fruits of your investments.   Pay some attention and build your wealth.

I have one child, will he be paying my or my husband's SS?

I don't have a 401k any longer, it was rolled into an IRA and I am quite pleased with the person who is managing it for me.  But, I am not so delusional to not to think that FedGov would love to get its nasty little fingers into it.  I was half joking about figuring out where to hide it, the second I hear any rumblings about it being taken I will pay the upfront taxes/penalties and pull it all.

[Oceander]

Your current payroll taxes go to pay the benefits of current seniors.   Your children will be paying for yours.  SS is a defined benefit system.  If the federal government were a private company subject to ERISA,  cats would be in jail. 

Now that's being silly.  Your 401(k) account is subject to fiduciary and legal protections that make sure that you'll get the fruits of your investments.   Pay some attention and build your wealth. 

Don't be silly.  The Obama admin ran several proposals up the flagpole to essentially nationalize 401(k)s and other private retirement arrangements. 

[RoosGirl]

Don't be silly.  The Obama admin ran several proposals up the flagpole to essentially nationalize 401(k)s and other private retirement arrangements.

I thought I remembered that.  And you can bet as things get more desperate on the SS front they won't just be making proposals.

[rodamala]

I will go further to predict that by 2030 my private IRAs and ROTHs will be confiscated...

2030 is generous...  i say 2020 after the Rats are fully back in power.

P.s.  "don't be silly".

[InHeavenThereIsNoBeer]

That is just about the time that I am supposed to be able to start collecting *my* money that I was *forced* to pay.  But I have guessed for a very long time that I won't receive a dime of *my* money back.  I will go further to predict that by 2030 my private IRAs and ROTHs will be confiscated if I don't somehow figure out a way to hide it from them.

Sounds like you're just about my age (29, but not for the first time).  I don't think they'll be able to come after ours directly, I think they're going to implement means testing -- we saved for retirement, therefore we don't "need" SSI.  That's a whole lot easier to get away with (and it's "for the children"[TM]). 

Next, and this is kind of a wild guess, they'll take away the pretax status on anything that is not invested in T-bills.  They don't want to kill off private savings plans (because they want to tax the gains, which are generally better than if people just put money in the bank), but at some point they're going to find it getting harder to borrow money, so they'll need an "incentive" for people to buy T-bills.

[Actually, raising/eliminating the "contribution" limit seems like the obvious next step, so obvious that I can't figure out why they haven't done it yet].

[RoosGirl]

2030 is generous...  i say 2020 after the Rats are fully back in power.

P.s.  "don't be silly".

Well, I did say *by* 2030, so if it is 2020 I would still be correct. :)   I hope I'm wrong.

[RoosGirl]

Sounds like you're just about my age (29, but not for the first time).  I don't think they'll be able to come after ours directly, I think they're going to implement means testing -- we saved for retirement, therefore we don't "need" SSI.  That's a whole lot easier to get away with (and it's "for the children"[TM]). 

Next, and this is kind of a wild guess, they'll take away the pretax status on anything that is not invested in T-bills.  They don't want to kill off private savings plans (because they want to tax the gains, which are generally better than if people just put money in the bank), but at some point they're going to find it getting harder to borrow money, so they'll need an "incentive" for people to buy T-bills.

[Actually, raising/eliminating the "contribution" limit seems like the obvious next step, so obvious that I can't figure out why they haven't done it yet].

Haha, definitely not the first time.

Years ago I told the person that handles our IRAs for us that I would continue to pay into SS my entire working life knowing I would never receive a dime back IF anyone under 18 never had to pay into it.  And I would.  I would hate it, but if it would get a multitude of generations, including my son, out from under that nonsense I would do it.

I have no doubt that whatever further scheme they come up with it will screw things up even more than they already are.  It makes me insanely mad.

[starstruck]

Between my SS, my wife's SS and our IRA we are getting more than we spend. I try to hit the sweet spot on IRA withdrawals so that I pay a minimum in Income Taxes. I have built up a nice amount of non-taxable savings that way. If they reduce SS payments I can tap that. If they come after the IRA I want the least amount I can in there.

[goatprairie]

Geezers will have to get a haircut as far as I'm concerned.

I just got one last month....I didn't get them all cut, just one hair...didn't have enough money to get them all cut at the same time.