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Social Security Is BROKE, Literally

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posted on Sep, 8 2009 @ 10:15 PM
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From ZeroHedge.com


SSTF Shocker - $6B August Deficit



The Social Security Trust Fund reported an August net deficit of $5.865 Billion. This is the largest monthly deficit in nineteen years. Base on recent years data it was not surprising the Fund ran a deficit in August. But the magnitude of the shortfall was a surprise to me. This deficit is now the seventh in the past twelve months. That pace has never been seen before.

We deal with very big numbers these days. 100rds of billions and trillions are how we measure things. So a $6b monthly deficit for the Fund would appear to be a ho-hum. That is not correct. This is an important number.

The Actuarial analysis of the Fund is misdirected. Their focus is based on the future value. It should be focused on the here and now. In the June annual report the Trustees concluded that the Fund would be broke in 2037. This conclusion is so far into the future that it is easy for everyone involved to say, “this is a next year problem, health care comes first”. Stephen Goss the Fund’s head honcho said as much in a recent interview.

While there is a political case that we have to prioritize health care as an issue, it is wrong on a purely economic basis to ignore the exploding problems at the Fund. Every month that the status quo is allowed to continue makes the cost of the ‘fix’ that much larger. Based on the past twelve months performance I now estimate that the Net Present Value of future committed liabilities is in deficit by $7 trillion. To plug this sized hole would require a significant increase in payroll taxes. That isn’t going to happen. Raising payroll taxes by 4% would kill the economy. No White House economist would advocate that. The alternative of cutting benefits would be very unpopular. There are currently 52 million beneficiaries of the system. A lot of them vote. To shore up the fund would require across the board cuts greater than 20%. While that may not be a hardship for some it most certainly will be for others. The only way to address this inequity will be a means test.


Folks, just 2 months earlier, in JUNE the Trustees said SSTF was good until 2037, and that's when TSHTF. Well, it TWO MONTHS LATER and the SSTF had to BORROW almost SIX BILLION just to pay out the entitlements FOR THE MONTH OF AUGUST.

But you can bet that the $$ will still be taken out of your paycheck, even though it's pretty much a guarantee now that you will NEVER reap the benefits of that contribution.

THIS IS SO NOT GOOD that I am actually at a lack of words to describe it. This is beyond all of us being Scroomed.




posted on Sep, 8 2009 @ 10:24 PM
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Yes, Social Security is broke and don't expect it to improve with greedy politicians in charge from both sides of the aisle (in USA that is.)

The question is, how do you want to retire? Do you want to live lavishly or will you be self sufficient enough to require less money. Will you have the skills and knowledge to provide for yourself, or be dependent on the state?

Social Security was established in 1935 as a "supplement" to retirement income. It was never meant to be permanent nor as a replacement to one's own retirement income.

Only when greedy politicians decided they could tap into it and use it, did it become permanent. Now, they will print money and cause hyperinflation and an erosion of the dollar to fund it. But it will go bankrupt.

Provide for yourselves folks, it's the only way.

Bob
[site name & link removed]



[mod note]

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[edit on 12-9-2009 by 12m8keall2c]



posted on Sep, 8 2009 @ 10:26 PM
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Social Security could face a deficit within two years, according to U.S. Rep. Spencer Bachus who met with The Tuscaloosa News editorial board Tuesday.

“The situation is much worse than people realize, especially because of the problems brought on by the recession, near depression,” said Bachus, R-Vestavia Hills, in an interview with the Tuscaloosa News editorial board.

Bachus, the ranking member of the House Committee on Financial Services, said most people seem unaware of the impending crisis. He initially said Social Security could face "default" within two years, but his staff responded later saying the Congresssman intended to say "deficit."


www.tuscaloosanews.com...

Either way you look at, 2037 seems to be a miscalculated date.



posted on Sep, 8 2009 @ 10:26 PM
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Don't worry, the coming pandemic will ease the financial burden on the SSTF.

But seriously, the federal government has been robbing from the trust fund for decades now, treating it like a slush fund for all their shenanigans. Looks like we're about to see the SHTF at the SSTF.



posted on Sep, 8 2009 @ 10:27 PM
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I collect SSDI and have been worried as it is with my paranoia in losing it. Now if the banks refuse to accept these checks or reject deposits, that will be interesting, especially after the banks were bailed out. I really don't know how this will turn out, but I can't imagine they'll just ignore it and let it fail.

Senior citizens can riot in wheel chairs and protest in their cars as well. If that system fails, I would think the whole system will collapse.



posted on Sep, 8 2009 @ 10:30 PM
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Well, that is just great. I have signed up for SS to begin in January tho I will probably make to much money to get it. Just thought I needed to be on the roles.

How are they going to explain to us how we have put all this money in all the years of our life and they have nothing to show or return to us? It is not like we had a choice.



posted on Sep, 8 2009 @ 10:42 PM
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reply to post by liveandlearn
 


Thats the quewstion I will be asking im sure in 40 + years.. although it may be called something else with a *twist* by then



posted on Sep, 8 2009 @ 11:16 PM
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I guess thats why I keep on getting denied then.


And for all the naysayers who say that people dont need Social Security- let me tell you something.

There are people LIKE ME too sick to work, who has worked paying into the Social Security System- who DESERVE to get that money back-

All you anti-government assistant people make me sick. Talk to someone you know who has cancer, and ask them if they can go to work going through Chemotherapy- or while the metastatic cancer eats their brain. Ask them if they would prefer to take a job at walmart while they can barely stand all because they cant keep a job because they are too sick to stand- let alone work 8 hours a day. And keep on getting fired from their jobs because of thier illness.

Still Think social security will approve them? Not if they have a college education, not if theyre not diagnosed as dying by a medical doctor, not they have too much work experience, Not if your not a minority, Not if you actually made a hell of a salary before you got sick.

The system is broken I get that- but there are some people out there, like me, who deserve the right to receieve from that system- what they paid into it. At the end of the day, after I have been unable to work for 2 years, after I lost everything, and went through bankruptcy- I would still love a small check from the government to help pay for groceries. My life has become that.

Consider that next time you think you are self righteous in bashing programs like Social Security.



posted on Sep, 8 2009 @ 11:20 PM
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reply to post by GreenBicMan
 



Well, if it goes belly up for you...lucky you to find out now. You have enough time to make other investments (and it seems you have the savvy to do so). Fortunately, I have other investments as well, but could I make it through the remaining years with them, not likely. Course, I could die sooner than expected.



posted on Sep, 8 2009 @ 11:26 PM
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They were predicting back 3-4 years ago that social security was solvent to at least 2035. I guess that was a lie. It was in Oct. 2007 I believe when the first baby boomer received a social security check.

www.foxnews.com...


Social Security won't have enough money to pay promised benefits in 2041 but there is another crunch much, much sooner, the result of the the federal government relying on Social Security to pay for its annual spending.


Remember Al Gores lock box?

[edit on 8-9-2009 by cloakndagger]



posted on Sep, 8 2009 @ 11:51 PM
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A SUMMARY OF THE 2009 ANNUAL REPORTS


A MESSAGE TO THE PUBLIC:

Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes our 2009 Annual Reports.

The financial condition of the Social Security and Medicare programs remains challenging. Projected long run program costs are not sustainable under current program parameters. Social Security's annual surpluses of tax income over expenditures are expected to fall sharply this year and to stay about constant in 2010 because of the economic recession, and to rise only briefly before declining and turning to cash flow deficits beginning in 2016 that grow as the baby boom generation retires. The deficits will be made up by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about three fourths of scheduled benefits through 2083. Medicare's financial status is much worse. As was true in 2008, Medicare's Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures this year than it receives in taxes and other dedicated revenues. The difference will be made up by redeeming trust fund assets. Growing annual deficits are projected to exhaust HI reserves in 2017, after which the percentage of scheduled benefits payable from tax income would decline from 81 percent in 2017 to about 50 percent in 2035 and 30 percent in 2080. In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays for physician services and the prescription drug benefit will continue to require general revenue financing and charges on beneficiaries that grow substantially faster than the economy and beneficiary incomes over time.

The drawdown of Social Security and HI Trust Fund reserves and the general revenue transfers into SMI will result in mounting pressure on the Federal budget. In fact, pressure is already evident. For the third consecutive year, a "Medicare funding warning" is being triggered, signaling that non-dedicated sources of revenues—primarily general revenues—will soon account for more than 45 percent of Medicare's outlays. A Presidential proposal will be needed in response to the latest warning.

The financial challenges facing Social Security and especially Medicare need to be addressed soon. If action is taken sooner rather than later, more options will be available, with more time to phase in changes and for those affected to plan for changes.

Medicare

As we reported last year, Medicare's financial difficulties come sooner—and are much more severe—than those confronting Social Security. While both programs face demographic challenges, rapidly growing health care costs also affect Medicare. Underlying health care costs per enrollee are projected to rise faster than the earnings per worker on which payroll taxes and Social Security benefits are based. As a result, while Medicare's annual costs were 3.2 percent of Gross Domestic Product (GDP) in 2008, or about three quarters of Social Security's, they are projected to surpass Social Security expenditures in 2028 and reach 11.4 percent of GDP in 2083.

The projected 75-year actuarial deficit in the Hospital Insurance (HI) Trust Fund is now 3.88 percent of taxable payroll, up from 3.54 percent projected in last year's report. The fund again fails our test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures within 10 years—by 2012. The fund also continues to fail our long range test of close actuarial balance by a wide margin. The projected date of HI Trust Fund exhaustion is 2017, two years earlier than in last year's report, when dedicated revenues would be sufficient to pay 81 percent of HI costs. Projected HI dedicated revenues fall short of outlays by rapidly increasing margins in all future years. The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.

The projected exhaustion of the HI Trust Fund within the next eight years is an urgent concern. Congressional action will be necessary to ensure uninterrupted provision of HI services to beneficiaries. Correcting the financial imbalance for the HI Trust Fund—even in the short range alone—will require substantial changes to program income and/or expenditures.

Part B of the Supplementary Medical Insurance (SMI) Trust Fund, which pays doctors' bills and other outpatient expenses, and Part D, which pays for access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet next year's expected costs. However, expected steep cost increases will result in rapidly growing general revenue financing needs-projected to rise from 1.3 percent of GDP in 2008 to about 4.7 percent in 2083-as well as substantial increases over time in beneficiary premium charges.

It is expected that about one quarter of Part B enrollees will be subject to unusually large premium increases in the next two years. This occurs because it is projected that the other three-quarters of Part B enrollees will not be subject to premium increases in those years due to low projected Social Security benefit COLAs and a "hold-harmless" provision of current law that limits premium increases to the increase in Social Security benefits.

Social Security

The annual cost of Social Security benefits represented 4.4 percent of GDP in 2008 and is projected to increase to 6.2 percent of GDP in 2034, and then decline to about 5.8 percent of GDP by 2050 and remain at about that level. The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 2.00 percent of taxable payroll, up from 1.70 percent projected in last year's report. This increase is due primarily to the recession, slightly lower estimates for real GDP after the economy recovers in 2015, and faster reductions in mortality rates. Although the combined OASDI program passes our short-range test of financial adequacy, the Disability Insurance Trust Fund does not; DI program costs have exceeded tax revenue since 2005, and trust fund exhaustion is projected for 2020. In addition, OASDI continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2016, and will be sufficient to finance 76 percent of scheduled annual benefits in 2037, after the combined OASDI Trust Fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

Conclusion

The financial difficulties facing Social Security and Medicare pose serious challenges. For Social Security, the reform options are relatively well understood but the choices are difficult. Medicare is a bigger challenge. Its cost growth can be contained without sacrificing quality of care only if health care cost growth more generally is contained. But despite the difficulties—indeed, because of the difficulties—it is essential that action be taken soon, particularly to control health care costs.


There's more there, this is what was just published in June.

Someone needs to go back to school and learn basic math, since they just has to borrow almost $6 Billion last month



posted on Sep, 9 2009 @ 12:02 AM
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reply to post by redhatty
 


So essentially, baby boomers, who paid the most into the system, can't count on it to support them as promised. And most of our savings are in the market and that has gone to hell. Unless we are smart and get out before this brief recovery tanks, we essentially have no hope except living with family.

Not exactly how I planned to spend my final years.



posted on Sep, 9 2009 @ 12:05 AM
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I knew this was coming a long time ago. I have been working for over 20 years and I have been putting into this damn scheme. I have another 30 years at least to put into this crap and guess what it won't be there when I retire. I love how I am sheared for all these damn social programs for working 12 to 18 hour days and I'll not see a damn one of them.... Here You go I loose my job do You think I'll get welfare? Hell no I won't get crap because I have a car and a house I'll have to loose those first... So why on earth would I want to pay for something that I will never get?


And another point .... You know what really gets Me are these idiots asking for more social programs... The government has stole all the money and will either jack up taxes 100% or put the old people out in the street. I don't see how its fair because the older generation had a stronger dollar, housing BOOM, & less taxes and now these # heads want them to change the rules?



posted on Sep, 9 2009 @ 01:54 AM
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reply to post by liveandlearn
 


Here is the major f****** problem in my mind

Do you know how many credits you have to have to get full SS benefits?

I had to know this for my LHVAnnuity license, well of course I dont remember now lol, but it ends up you only having to work for like 15 years of your adult life, or something to that effect, NOW THAT IS REDIC

So like person X works for 30, and he is entitled to basically the same as other that worked for 30-10 years or something to that effect, as well as the richer you are, the less you get of course, which makes sense in a weird way I guess..lol

If someone could fill in my blanks..



posted on Sep, 9 2009 @ 12:18 PM
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As pathetic as it is for me to say this, I think most people in my generation (I'm 33, Viva La Gen X!) accepted (or at least recognized) way back in high school that we would most likely spend our lives paying into a program that we'd never see a dime in returns from when "our time" came. I say that's pathetic because it really is. I can only use 1990-1994 as an example of time frame, but when I was in high school during those years, the projected failure of SS was a hot topic. Clinton made saving Social Security a primary focus at that time. I clearly recall sitting in classes where the teachers would prod us into discussion of Social Security and sort of try to push us towards acceptance of our fate... working a lifetime paying into a system we'd lose before we were old enough to use it ourselves.

Considering how the only people really vocally pissed off about this theft seem to mostly be people aged 35 and up today, I'm guessing this carefully planned brain washing/conditioning exercise has continued since that time in our high schools.



posted on Sep, 9 2009 @ 12:46 PM
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Originally posted by GreenBicMan
Do you know how many credits you have to have to get full SS benefits?


Yes, it's 40 work credits


So like person X works for 30, and he is entitled to basically the same as other that worked for 30-10 years or something to that effect, as well as the richer you are, the less you get of course, which makes sense in a weird way I guess..lol

If someone could fill in my blanks..


The way SS payout is determined is from the last 10 years of work ONLY, so a person who only worked 15-20 yrs of their life, if those were not in the last 10 yrs before filing, would get the minimum payout possible (about $500 a month).

Regardless of how much you had paid in, your payout was only calculated by your last 10 working years.

Once you are age retired entitled, it matters little how much you have saved, unless it is over $1 Mill (then you get slightly smaller payout), what does matter is how much you made in the 10 yrs prior to being age-eligible.

Not that ANY of that is gonna matter now.

The more I see of what's happening, the more I realize that this push for .gov healthcare is nothing more than a way to suck more money out of us rocks so that they can keep funding programs that are broke & maybe the average J6P will never figure it all out



posted on Sep, 9 2009 @ 12:55 PM
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reply to post by redhatty
 


Are you 100% sure its only your last 10 years?

I remember you just have to work so many "credits" or quarters or something over the age of xx - but I could be way off too hah



posted on Sep, 9 2009 @ 01:05 PM
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reply to post by GreenBicMan
 


the annual statement I get from SSA says the 35 yrs I made the most when it shows me what I've made & what I can expect to collect.

Wonder if I'll ever see one of those again LOL

But people who actually work there say they really go by the last 10 yrs of work, so you tell me



posted on Sep, 9 2009 @ 02:17 PM
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I had heard or read something about about not discussing the amount I receive with others. I'm not so sure about the 10 year formula either.

It's my understanding SSDI is supposedly based on nearly the same formula as retirement. I doubt I'd be getting much more than I am at this point at retirement age.

I've also been led to believe that I would be expected to start paying back what I've received the past 5 or more years on SSDI when and if I do go back to work before retirement age.

I'd hate to think the formula would change my benefit amount based on the last 10 years if disabled prior to retirement age.

My opinion is the retirement support system has to change to minimize the costs seniors and the system have to pay on food shelter, medicine etc.

That could likely be retirement communities similar to some large shopping malls, so they wouldn't have to drive for most services. No doubt this is already being done in some areas such as Florida, but likely at a much higher cost.

Not to be compared to the movie; 'Logans Run' either.

Our current system is so wasteful, it's self defeating as if intentional.



posted on Sep, 9 2009 @ 02:45 PM
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reply to post by redhatty
 


fwd all checks to the GBM, you will be rewarded with enlightenment, I have been assured of this from prophet yawyeh



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