Official Geezer Guide » social security running out

Some New FACTS About Social Security — Will Social Security really be there when I need it?

Skip McGrath — Tue, 13 Sep 2011 16:31:36 +0000

Will Social Security be there when we need it?

This morning I read a report on new Social Security Statistics. The Department of Labor and the Social Security Trust Administration released figures that show that there are now only 1.75 people working full time for each person receiving Social Security

This is from Nilus Mattive at Weiss Research:

Fact #1. As recently as 2009, the Social Security Administration was predicting that the program would begin taking in less than it paid out in 2017.

Fact #2. Then, just one year later in 2010, the Social Security program took in less money than it paid out. (The first time since the 1980s.)

Fact #3. This annual shortfall was blamed on the poor economy — i.e. fewer employed people paying in and others choosing to retire early, thus increasing the amount of money being paid in benefits.

Fact #4. At the time, the Social Security Administration said it would only be a temporary slip and that a permanent state of deficits would actually begin in 2016. (Note revision from previous estimate.)

Fact #5. In 2011, the Congressional Budget Office came out and said that the Social Security program had already entered a permanent state of annual deficits. (Woops again.)

Source – Link to full story: http://www.moneyandmarkets.com at Money and Markets

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The politicians keep telling us that people on social security don’t have to worry that coming reforms will only affect the young. But with facts like these I am not so sure.

When Will Washington Stop Lying To Us?

Skip McGrath — Wed, 27 Jul 2011 18:44:48 +0000

That is not a political question. Both parties are lying to the people about the budget deficit and the debt cieling.

Big Lie Number 1: If we don’t pass the debt ceiling we will go into default

Default has nothing to do with the debt ceiling. The government would only default if they could not make interest payments on our debt in the form of treasury bonds and bills. Here is the math:

The government spends about $295 billion per month
The government takes in approximately $200 Billion in taxes every month
This leaves a monthly deficit of $95 billion per month
Interest payment on the debt is about $20 billion per moth
Social Security runs another $50 Billion per month and Medicare about $55 Billion
So far we are up to $125 Billion – and we still have $75 billion to work with.
Defense spending is about $50 –but could be cut by $10 if we only paid for the essentials
Then what is left would have to run the rest of the government.

So there is no default unless we decide not to pay the $20 billion per month on interest. If a politician says you won’t get your social security check he (or she) is lying. There is plenty of money to pay social security. Of course if the president though it was more important to pay for the EPA, Agricultural subsidies to farmers, The National Endowment for the Arts or National Public Radio –then he could make the choice to do that instead of sending us our social security checks. But if he did that I suspect seniors would march on Washington by the millions.

Yes, a lot of programs would be cut, employees furloughed and probably the parks and museums would close. But interest on the debt would be paid, social security checks would go out, soldiers and sailors would be paid, doctors would be paid by Medicare and the country would probably run just fine. So forget about default. Stress and inconvenience – yes. Default – No.

Big Lie Number 2: Both parties are coming up with plans to cut spending

This is an even bigger lie. Both parties claim to have plans to cut the deficit to offset the increase in the debt ceiling. That is total bull! When you look at both party’s plans there are no real cuts in spending –they are only cuts in the estimate of how much the deficit will grow. Currently the government projects the deficit will grow about $10 Trillion over the next ten years (that estimate is on the low side as some economists predict it will grow over $15 Trillion).

But when President Obama, Harry Reid or John Baynor speak about cuts they are talking about letting the deficit grow less. So if a $2 Trillion cut is announced as part of a deal, that meant the deficit will only grow to $8 Trillion instead of $10 Trillion. That is Washington’s idea of a cut.

Where are the real cuts? Between the last two censuses (2000 – 2010) the population of the United States grew slightly less than 7%. During that same period the number of US Government employees grew 19% and state government employment was up over 16%. So, bottom line, the government is growing much faster than the population.

Big Lie Number 3: If we raise taxes on oil companies, corporate jet owners and millionaires it will balance the budget.

This one is really cute. Lets take them one at a time:

Oil companies – When the Politicians talk about special breaks for oil companies they are speaking about the “depletion allowance.” This is a tax break to compensate the oil companies since they are losing their reserves as they pump. The allowance was put in place to give them an incentive to explore and drill new well to replace the oil that is depleted. If that deduction were taken away from the oil companies the total taxes collected over the next ten years would amount to about $40 billion. That’s over ten years. But our deficit just this year is over $1 Trillion.
Corporate jets – A few years ago when we were trying to recover from the recession that hit after 9/11, the congress passed and the president signed a bill that allowed corporate jet owners to accelerate their depreciation deduction. The reason for this was the corporate jet industry was in the toilet and unemployment in that industry was running over 25%.
The deductions worked. The corporate jet industry is now healthy and currently employs over 700,000 people between the manufacturers, sales, maintenance, fixed base operators, pilots and so on. So here we are in the middle of a recession and the president wants to raise a tax that will put people in the industry out of work. He wants to stick it to millionaires jet owners but in the process he will hit factory workers, pilots, food service, sales people and maintenance personnel. And worse – the total taxes saved will amount to less than $9 Billion over the next ten years.
Millionaires – The president keeps mentioning millionaires and billionaires paying more taxes. Well taxes are taken from income –not wealth. Most true millionaires and certainly billionaires actually make very little money from earned income. The number of people who make over $1 million in income in a given year is less than ten thousand.
You could raise the tax rate to 90% on all of those people and you would only take in an additional $10 to $12 billion a year. Besides, these are the people who invest in companies, create jobs and buy things that employ people. So with a recession on, lets hit them where it hurts – Right!

Remember the annual deficit for just this year is over $1 Trillion. If you add all three of these tax increases up, you get $25 billion is increased revenue. Even if you taxed everyone who made over $200,000 a year at 90% you would only bring in another $60 to $70 billion.

So now you know what is going on. It doesn’t matter if you are a Independent, a Democrat or a Republican we are all being lied to by both parties. The one thing Washington won’t do is actually cut actual spending.

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Inflation is Here – Food Storage Tips for Geezers

Skip McGrath — Fri, 19 Nov 2010 21:27:11 +0000

You are probably thinking “If inflation is here, why didn’t we get an inflation adjustment on Social Security this year?” Well there are a couple of reasons. First of all the SSA doesn’t include food and energy in their calculations –and of course those are what’s going up. Who ever said our government was honest?

The other reason is the soft economy. Despite rising prices it is difficult to raise prices in a slow economy, so stores are having sales and making do with smaller margins.

What we have seen so far is nothing, however. Remember the Jimmy Carter days. This looks like it could be a repeat. Rising prices in a slow economy had a name –they called it Stagflation. If you look at underlying material prices you can get some ideas of what is coming.

Industrial materials prices (copper, steel, zinc, etc.) are up 29% since July (See chart below)
Cotton prices at the mill are up 90% to an all-time high. This will soon be reflected in clothing prices.
Corn prices are up 30% in the past year. Corn is used in the manufacture of thousands of industrial, food and consumer products.
Oil is now around $82 a barrel. That is up from the mid-60′s a few months ago. I have seen several credible forecasts that predict it will be over $150 barrel within the next year.
The US Dollar has rallied a bit in the past week or so, but the long term trend is still down. A falling dollar makes imported products more expensive. Before long all those dollar stores who import cheap Chinese junk will have to start calling themselves Two-Dollar Stores.

Basic materials prices since July 2010

As seniors most of us are on a fixed income so inflation becomes a cruel tax. And food price increases will affect all of us. So what to do? One thing you can do is store food. So here are some food storage tips:

Do not store metal cans on metal shelves. Metals can react with each other and affect the integrity of the can
Always check the expiration date and arrange your foods by expiration date so you are eating the oldest ones first
You can store grains, flour and rice a few months beyond the expiration date if you are very careful.

Place the bags of rice and grains in your freezer for a couple of days. This will usually kill any vermin or eggs.
Keep them in their original bags and place the bags in Ziploc bags and squeeze out as much air as possible. Now place the Ziploc bags in sealed 5 gallon buckets (you can get these at Ace Hardware or get them from most bakers who give them away freely).
Before you seal the bucket sprinkle 1/2 a cup of Kosher salt in the bottom to soak up any moisture.
Another thing you can do is put a small piece of dry ice in the bucket just before sealing. As dry ice melts it gives off carbon dioxide that can kill any little critters that are in the bucket.
You can also purchase food-safe oxygen absorbers [Bj5] available from food storage supply stores online.

Almost everyone our age knows how to can. So buy any fresh vegetables or fruit you can find (Costco and Sam’s Club are great places to buy good quality fruit and vegetables in large quantities) and start canning. This is a great activity to do with friends, family and neighbors. My late Grandmother used to have canning parties. Everyone would bring something different and then they would trade with each other so everyone had a nice variety.
If corn and grain prices continue to rise then meat prices will follow. Meat prices are already up this year but that could only be the beginning. I was talking with my butcher and he told me his meat suppliers are predicting increases of 50% or more in the coming year. The solution to this is a freezer if you live in an area with stable power. But if you live anywhere that storms can knock out power for days at a time, you will want a generator or just store dried or cured meats.

So those are my tips. If you want really good detailed information, here is a free eBook you can download: Prudent Storage Facts Version 4.0

The other thing you can do is convert some of your savings to silver and gold. There is nothing that makes the price of gold and silver rise faster than inflation and a falling dollar. Gold and silver are going through a normal price correction now, so there will be some good buying opportunities in the weeks ahead.

If any of you have ideas and suggestions on food storage, please leave a comment.

Will Social Security Last Through Your Retirement? Will Your Benefits be Reduced?

Skip McGrath — Tue, 19 May 2009 17:25:24 +0000

Here is a great article from Nilus Mattive from Money and Markets that sets out the current and long-term problems with Social Security. We Geezers will probably be OK, but a generational war could be brewing. I shared this article with my two sons (age 25 and 30) They both said: (A) They don’t think they will even see social security, and (B) They have no desire to pay for it. With baby-boomers retiring at the rate of 14,000 per day and soon to increase to over 20,000 per day, this could become a critical issue over the next 5 to 10 years.

Social Security Situation Worsening; What to Do?
by Nilus Mattive

We got lots of disturbing news from Washington last week. But the latest updates on Social Security and Medicare really got my blood boiling.

It is now estimated that both programs’ trust funds will run out sooner than previously expected. In the case of Medicare, the date is 2017 rather than 2019. For Social Security, it’s 2037 rather than the previous estimate of 2041.

Both programs are suffering because of the recession. The simple explanation is that fewer jobs mean less money getting paid into the systems. That creates a bigger drain on the programs’ current resources.

But it merely highlights the larger issue, one that has been there since the very beginning of Social Security.

The Problems with Pay-As-You-Go …

It’s interesting – and very instructive – to look at the history of the U.S. Social Security system.

The program’s first payment reportedly went to Ernest Ackerman. He retired a day after the program began, and contributed a whopping nickel. His lump sum payout? Seventeen cents. Not a bad return for good ol’, Ernie!

Ernest Ackerman put in one nickel to Social Security, retired a day later, and got back a $0.17 lump sum payment. Need I say more?

Meanwhile, the first person to receive a monthly payment from Social Security was Ida May Fuller. During the late 1930s, she contributed $24.75 into the system. Her initial monthly check was $22.54, so by her second check, she had more than recouped her entire investment!

And get this: She lived to be 100 years old, collecting $22,888.92 out of the system over her lifetime!

Sure, it’s an extreme example. But it demonstrates the real problem with Social Security … the problem that has existed since day one … and the problem that is only worsening as more and more people live to Ida-May-Fuller-like ages …

Social Security’s pay-as-you-go structure means a never-ending game of catch up.

When Social Security was first instituted in 1935, it covered about half of the population. Many teachers, nurses, librarians, and other workers were excluded from coverage. What’s more, the average life expectancy was about 60.

Today, Social Security covers virtually everyone. The average American is living to age 76.

And to accommodate this widening gap of money coming in and money going out, the initial 1937 payroll tax rate of 2 percent (split between employer and employee) has already risen to a combined 15.3 percent (including Medicare taxes).

Yet, I’m sure it will absolutely have to go much higher if the system is to survive!

Reason: Based on the newest projection, Social Security will begin collecting less money than it pays out in 2016.

Odds are also extremely good that the current cap on the amount of a salary that is subject to Social Security taxes ($106,800 in 2009) will have to be raised or completely eliminated.

And all of this begs additional questions …

Will Social Security Benefits Be Reduced? Or At Least Taxed?

Should You Start Taking Payments As Soon As Possible?

I believe Washington’s preferred solution will be getting more money into the system. But I would not completely rule out some tinkering on the payout side, either.

Taxing benefits at the Federal level has been one idea bandied about. That would be a slightly less obvious way of reducing future recipients’ payments.

Continuing to bump up the age at which benefits begin is another, and by the time I retire, I’m sure the age will have increased substantially.

But I would say that if you are near – or already in – retirement, you shouldn’t worry too much about your payments.

In fact, despite Social Security’s problems, I still suggest you consider delaying your benefits as long as possible. Sounds counter intuitive, I know.

After all, the conventional wisdom is to just start collecting as soon as you can. This is both because of the aforementioned problems – i.e. “catch as catch can” – and because it is commonly believed that the system is designed to work out the same no matter when you begin collecting.

But let me explain my logic here …

I think near-term Social Security recipients have little to worry about. Everyone else? I shudder to think …

First, it would be political suicide for anyone in Washington to mess with near-term benefits. Instead, the preference will remain – as it always has – kicking the buck further on down the line. Can it continue this way forever? No. But for longer than it probably should.

Second, there are also logistical problems with changing soon-to-be-retirees’ benefits. After all, the government uses formulas to calculate benefits at age 60 and 62 for each recipient. They are unlikely to retool the entire process overnight.

Third, it’s true that the system is designed to pay out the same in total benefits no matter when you start collecting. But the calculations are obviously based on averages and you are anything but average!

It’s important to look at your individual situation before you just accept the conventional wisdom. Sure, if you need the money to live on then just take it. But if you can delay taking your benefits, it might be worth your while, especially if you have “longevity genes” in your family.

After all, the Social Security Administration will raise your future payments for every month that you delay. Annually, that will amount to an 8 percent increase (plus any cost-of-living adjustments).

So the longer you delay taking benefits, the bigger your monthly benefit.

The math differs for every person, but consider someone who’s age 66 and has the choice of collecting $2,000 a month for the next 12 months or an additional $160 every month starting a year from now (i.e. the 8 percent annual increase for delaying benefits).

The $24,000 upfront seems like the better option. Especially since it takes 12 ½ YEARS of payments to make up for that missed $24,000.

Yet according to government statistics, the average American at age 66 will live another 17 ½ years.

In other words, you stand a very good chance of collecting at least another five years worth of those extra $160-a-month payments. That comes out to another $9,600 in your pocket!

So yes, Social Security is riddled with problems. And yes, it may not be around – or paying out nearly what it will hand near-term retirees – by the time I’m collecting my checks.

We will also all face higher taxes in the near future if the system is to be “saved.”

But there are still plenty of things that you can do to get more of your money back out of the system. Don’t feel guilty about it. Don’t worry about it. Just educate yourself on all the options and possibilities and take advantage of every little advantage you can.

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This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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A lot of people are buying up Potassium Iodine tablets due to the Japanese Radiation scare. It is pretty unlikely that the radiation will arrive here in dangerous amounts, but if we ever have our own nuclear plant disaster it would be good to have these on hand –and they are pretty cheap insurance. Although most drug stores are out, Amazon has a pretty good supply of Potassium plus Iodine 180 tabs that sell for only $11.99 bottle.

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