Why The System Is Failing And What It Means To You

Where’s the outrage over the social security surplus?  You know what I mean.  The money that we have all paid in to the System that is supposed to be set aside for our ‘old age’.  It is gone.  It has been embezzled. It’s been misappropriated.  Oh shooooot, let’s be forthright, it’s been ‘borrowed’ (stolen) by our politicians to pay for their drunken spending spree.  In any event, we can all agree, it simply isn’t there any more.      

Why are we continually deluded with fictitious numbers suggesting our day of reckoning, when social security is insolvent, is some point way into the future, like 2042 or later?  Life expectancy of the social security system is based on one ridiculous assumption after another.  Why isn’t anyone loudly exposing the fraudulent funding of our national retirement program that affects nearly every living soul in this country to one degree or another?

Where’s the debate over the social security funding, exposing it for what it really is?  A Ponzi scheme, no less vile than the kind that con artists and Enron and WorldCom executives are sent to prison for.

The ugly, ugly truth is that ‘the emperor has no clothes’.  We have spent the social security surplus needed to keep the fund solvent.  The money is simply not there.  It’s gone, caput, finito.  And our government keeps right on doing it, year after year after year.

We all know our pay-as-you go system, with present workers paying the benefits of the beneficiaries, is dependant upon a higher ratio of workers to retirees.  It has been steadily declining and is currently at a ratio of 3:1 and projected to decline to 2:1 as our younger workers retire.  Unless money is put aside, this produces a huge deficit, causing more money to be paid out than taken in.  Our government estimates that we will begin taking in less money than we pay out in 2018.  Others estimate that if ‘private accounts’ became a reality this trend could speed up to as early as next year.

This didn’t have to happen. This doesn’t have to KEEP HAPPENING year after year. Since the mid 80’s social security has accumulated a surplus of well over 1.6 trillion.  Instead of being funded and set aside (as the government requires of all private pensions), this surplus was and continues to be SPENT by our government on general operations.  Sure, the social security fund was issued an IOU with interest, but it’s worthless.  Deadbeat Uncle Sam can’t afford to pay it back.  The money simply isn’t there.  Furthermore, budget constraints almost guarantee that it will NEVER be there. 

At this point, our choices are limited and all very painful.  We can either reduce benefits by changing the terms of our contract with current and future retirees, print bunches of money (thereby making future benefits and all existing money in circulation worth less), or increase taxes to astronomical levels and collapse the economy.  Any rational person could conceive of nothing less unless our economy explodes with tremendous unprecedented growth and we drastically alter the complexion of our country by encouraging a massive inflow of immigrants.  All scenarios are extremely unlikely.

So why does our government suggest 2042 is the point when social security will begin to have difficulties?  Why aren’t we facing up to the REALITY that our fund in its present form starts to collapse in 2018 or sooner?  And why in the world are we considering diverting critical funding from social security to private accounts at a time when the fund faces insolvency?  Establishing private accounts under a balanced budget would be a worthwhile endeavor.  However, given our present circumstances, it’s an absurd choice.  It would be like pouring fuel onto a fire to put it out.  Instead of correcting a fraudulent breech of fiduciary responsibility, we are contemplating exasperating it. 

Why aren’t we discussing options for funding our upcoming liability and dispensing with the absurd practice of stealing funds from social security to fund our excessive spending? Our government must learn to live within its means in the same manner that every private citizen is expected to. 

When ordinary folks overspend they end up in bankruptcy or become destitute, with very little sympathy.  “I told you so” and “he or she had it coming,” are the often-repeated words of condemnation.

When our financially illiterate Uncle Sam continually over indulges, he just borrows by creating mythical IOUs, which accumulate and accumulate until the day of final reckoning can no longer be deferred.  Then we all pay the ultimate price.

Like an overly indulgent parent with a spoiled child, we have no one to blame but ourselves.  When we continually fail to address the problem it is only worsened and the ultimate solution made that much more difficult.  Eventually the problem becomes out of control, with catastrophic consequences to our economy and way of life.

Before it is too late, our spoiled handicapped Uncle needs a good spanking, followed by a lesson in fiduciary ethics and basic economics.  Then he needs to be tethered on a very short leash to prevent another drunken relapse into further stupidity. 

What does all this mean to you?  Everything, if you are counting on your Uncle Sam to fund your retirement.  It means you need to find your own source of income to support yourself without working. Social security’s future is bleak.  I would assume that whatever will eventually remain of the system will only supplement your income. 

By the way, Medicare is in even worse condition.  Your required contributions will steadily increase, as your benefits continually decline. 

You might want to remind your government representatives of their responsibility to properly allocate your retirement funding into your retirement account, rather than into general revenues where it will most assuredly be squandered, as it has been thus far.  Good luck with that. 

The ‘bottom line’ is this. You should treat whatever is left of the Social Security and Medicare systems as a ‘bonus’ in your financial planning, rather than an integral part.   You will need to become self-sufficient.  Plan accordingly.