Posted on 10/18/2013 9:41:16 AM PDT by Kaslin
I have written numerous times about pension problems in the US. Let's cross the Atlantic and take a peek at the setup in Spain, then let's compare the two setups.
Via translation from Libre Mercado, please consider The Chart That Will Shake Future Pensioners.
Workers vs. Pensioners
Given that eight million people age 65 and 16.7 million workers cannot sustain the current pension, imagine what will happen in the coming decades as the differential goes back even closer.
Pensions today promise Social Security payments of 100% of the average wage in the last 25 years for those with 37 years of Social Security contributions. Such payments are absolutely unsustainable. The relative income of pensioners relative to the average income of the society will sink (without massive tax looting of active workers).
Immigration could partially alleviate the problem, making the demographic transition somewhat smoother, but if new rights accrue to future pensions, immigration only delays the problem. In any case, it might be a good idea to allow free immigration to Spain in exchange for not accrue rights to Social Security.
The most important practical advice to draw from the above chart is simple: save and invest. If you trust your retirement to politicians, you will end up poor and feeling cheated.
Total Annual Cost of Social Security 1967-Present
Social Security Beneficiaries vs. Total Non-Farm Employment
Ratio of Workers to Social Security Beneficiaries
Social Security Benefits Analysis
The system is currently running a deficit. Trends say that deficit is going to worsen with each passing year unless benefits are cut and/or taxes are hiked.
The next chart is courtesy of Reader Tim Wallace in a January 11, post.
Social Security Burden on Non-Farm Workers
Social Security Cliff Reading
Tip of the Iceberg
Unfortunately, Social Security is just a tip of the unsustainable payout promises problem. Public union pensions are trillions of dollars underfunded and several cities in California have gone bankrupt over those promises.
Detroit went bankrupt for the same reason as did Central Falls, Rhode Island (see Central Falls Set to File Bankruptcy Exit Plan; 50% Pension Reductions, 40% Slash in Police and Fire Budgets Coming Up).
Zombified Cities
Vallejo Round Two
Vallejo, California went bankrupt about two years ago and is headed there again because it did not shed pension promises in bankruptcy: Vallejo, Mired in Pension Debt Again; Lesson for Stockton and Detroit - Shed Those Pension Obligations Now!
As I said in the above link, Stockton and Detroit have a choice. They can cut pensions now, or cut them later in a second bankruptcy, just like Vallejo will.
Pension Promises Not Sacrosanct
Yet people keep emailing me that pension are guaranteed by law. Tell that to residents of Central Falls. Their pensions were cut 50% in bankruptcy.
Here's reality: haircuts are coming. Unions need to negotiate benefit cuts now, in a sensible manner (with the highest beneficiaries taking the biggest cuts). The alternative is across the board benefit cuts à la Central Falls.
Meanwhile please consider the solid advice from Libre Mercado:
"The most important practical advice to draw from the above chart is simple: save and invest. If you trust your retirement to politicians [or promises], you will end up poor and feeling cheated."
Yet every year they sent an invoice to my house with my name on it detailing every year that I paid into it and telling me the amount. This year I reached my full retirement age and started taking the amount they say I earned. Since I feel no shame, I will not be returning it.
My husband did 2 tours in Vietnam and he volunteered for both of them
That was exactly what President Bush wanted, but he was ridiculed by the left and by some in here.
I believe that there is a great number of people drawing SS, disability, etc., that either paid in nothing at all or the bare minimum, (worked for a few hours per year for as little as 10 years). Therefore, the solution should be that we should either get rid of SS, or save it for the people who paid in their entire life: 30 or more years, full time. If people want disability, they can buy insurance.
I had a conversation with a 69 year old who believes that there is a savings account in her name that has been accumulating high rates of interest.
I will take mine in the form of American Gold Eagles and happily disappear into the Idaho wilderness. Who is John Galt?
“Save and invest” in assets that are expensive and difficult to confiscate.
Please give your husband a big “Welcome Home” hug.
I volunteered for Vietnam too, but for a single year. Though I remember a door gunner for the Blue Ghost CO (F Troop 8th Air Cavalry). He wanted the war to go on forever. He loved his flying gig that much.
‘Wonder whatever became of him.
Invest in goods, not politician’s promises.
Buy a house: Rent it, the asset will make you money, and hold most of its value.
Buy stock: As the money inflates, the value in dollars will increase.
Buy Gold: As the money inflates, the value in dollars will increase.
Buy farmland: Rent it, the asset will make you money and hold most of its value.
Diversify: Politicians are unlikely to break all their promises at once. As they move up on breaking one or the other, you can decrease your holdings in one type of asset and increase your holdings in another.
SS is to some extent an insurance program.
My cousin gets payments. She is disabled, and was covered by it for that reason. She is in an assisted living situation, and has been since she was about 30.
Part of the problem is the government doesn’t invest the money wisely. Example: All the bureaucrats in the Department of Agriculture don’t increase productivity by a penny.
get all you get. before the well runs dry.
It really is sad, and tragic for our nation.
Free Republic, and American, "ain't what it used to be." The only real threads that inspire me these days are the ones about Jesus Christ.
There are many Freepers who believe in Him, and we are discovering that the world is growing darker, just as He predicted.
I remember when the threads were full of the American spirit, and of hope.
Today, the threads are full of anger that goes off in a direction that is completely irrational or on a cause that is completely un-winnable politically.
I was in the military 21 years, but I never was an advocate of suicide missions unless the cause itself could be advanced, and I still am not. Today, we have Freepers who advocated (and went on) missions to cut our own belly, and then they rail against those who watched us do it.
There are too many Freepers who are living themselves in poverty or near poverty, and nobody listens.
There are too many Freepers who want "their" government program, but will scream at other spending - NOT because it is bad for the country, but because they see it as threatening their spending.
Now, I can apply that standard to myself (and I must if I am to remain honest before Christ), but here is the difference. I ACKNOWLEDGE and I say here, that my military pension is on the table towards Cola reform or other solutions (in the spirit of Simpson-Bowles) towards solving our fiscal death spiral.
I have found that 99.9% of Freepers, sadly, never, ever say the same thing about their Social Security, Medicare, or whatever else.
I DO distinguish between earned and unearned Entitlements. Earned are Social Security, Medicare, Govt pensions, and military pensions. They contributed and earned them.
Unearned are SS Disability (which is helping to bankrupting the SS system), TANF welfare, EBT Food Stamps, Unemployment (sorry, it is unearned after a few weeks), Section 8 housing, and these:
Universal Program for Subsidized Phones for Low Income (ObamaPhones), Medicaid, Unemployment Asistance, EITC, Foster Care Title IV, Old Age Assistance, AFDC, General Assistance Cash, Assets for Independence, General Assistance to Native Americans, SCHiP State Supplemental Health Insurance Program, Consolidated Health Centers, Consolidated Community Health, Maternal and Child Health Assistance Fund, Healthy Start, School Lunch, Job Assistance, Job Training, Minority Job Assistance, Job Relocation, Woman Infants and Children's Program, Nutrition for the Elderly, Summer Program, Summer Jobs Program, Minority Summer Jobs, Hispanic Jobs Program, African-American Jobs Program, Commodity Supplemental Food Program, Special Milk Program, Needy Families, Farmer's Market Nutrition Program, Public Housing, Low Income Energy Assistance, Migrant Education, Title One Grants to Local Education Authorities, Education for Homeless Children and Youth, Even Start, Job Corps, Social Security Disability, Social Security for Refugees, Social Security for Humanitarian Cases, Social Security for Asylum, Health Marriage and Responsible Fatherhood Grants, TANF Child Care, Empowerment Zones for Minority Communities, Urban Development Action Grants, and Family Planning (abortion).
Freepers better wake up. It is all coming down, and soon.
Your only hope is Christ.
Amen to that.
Oh by the way, when I was in my 20's, 30's and 40's I was also fighting against SS. I have other assets and have prepared (prepped) for my family. If the well runs dry it is a good thing I live by the lake.
Great,.
We’ll just devalue the currency by 50% while giving them a 25% increase over 10 years, and we’ll have solved that problem...
or not
Well, not so fast. As part of that deal Reagan and Tip O’neil implemented to “save” social security, the congress critters raised the social securtiy taxes so that the baby boomers could be covered when they reached retirement age.
So for years, an excess was paid into social security and non-negotiable government bonds were purchased as an investment. It’s part of the national debt.
True there’s no specific account with your name on it, but still it did not all go to support granny and the parents, some was put aside for the future retirement problem posed by the boomers.
As far as pensions in general, lots of people in banking found out during the Clinton era financial closings/crisis, that when your company goes bankrupt, your pension is all gone too. Company benefits are not guaranteed-the bond holders come first.
However, if you are a union workers such as the UAW, you might have a president step in and ignore the law, and save your pension to the detriment of the bond holders(which impacts other people’s pensions, since lots of those bonds were held by pension funds other than UAW).
Even if there’s no “cut” in benefits, the government is making sure that the purchasing power of social security will be reduced to the point where it will just be a spit in the “basket” compared to what that basket used to hold since helicopter Ben started printing money hand over fist.
Worse than a 25% haircut for sure.
Stupid much?
Government confiscates hundreds of thousands from people's incomes over their employment histories and you suggest they should just roll over and forget about it?
Tell ya what Mr. pilot, I actually wish government would tell everyone tomorrow they're no longer going to get any of the money back which was confiscated from them by threat of imprisonment and death.
What a sight that would be..
like the boomers haven't shelled out enough money and enough years already......WE are not posing any problems....the problems were heaped upon us...
instead of reducing payments to seniors by just a tiny amount back in the early 80's, instead the workers got to pay more and more, including ever increasing medicare taxes, AND told that they had to work even longer....BS...
SS started out miniscule...then it changed to be a huge bite out or our paychecks....wasn't it like 0.5% when it started?...and now its just under 8%...
which all means is that there are people collecting now that paid hardly anything....not to mention the billions thrown out to "disabled" people with the bad knees.....etc....not to mention the new immigrants who just happend to have lost their BC but swear they are over age 62...I know this happens...
multiply that my millions....there you are...
and disability....I work in a hospital and the number of younger people....younger than me for sure....on "disability" is astounding....it stinks.....everyone not in a wheelchair or blind or with some calamtous injury should be required to do some kind of work....
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