Are you depending on Social Security and Medicare for your retirement?
You might want to rethink that plan. These unconstitutional government programs are going broke even faster than expected.
For the first time since 1982, Social Security will have to dip into its $3 trillion trust fund in order to cover benefits this year.
In other words, the programโs expenses will exceed its revenue. Analysts knew this was going to happen, but it happened three years earlier than they projected just last year.
Social Security has dipped into the trust fund before, but analysts project this is the beginning of a long-term trend with no sign of reversal.
According to the annual report recently released by Social Security and Medicare trustees, the trust fund will completely run out of money in 2034. According toย theย Wall Street Journal, โSocial Security will no longer be able to pay its full scheduled benefits unless Congress takes action to shore up the programโs finances. Without any changes, recipients then would receive only about three-quarters of their scheduled benefits from incoming tax revenues.โ
And if youโre counting on Medicare to take care of your healthcare needs, that doesnโt look like a very good plan either. The trustees project its hospital insurance fund will run out of money in 2026 โ three years earlier than last yearโs report.
Both Medicare and Social Security suffer from the same fundamental economic problem. As the WSJ put it, โThe nationโs aging population is boosting the costs of Social Security and Medicare, while revenue gains lag due to slower growth in the economy and the labor force.โ
In other words, the program spends more money than it takes in.
Of course, this is what eventually happens with every Ponzi scheme. And make no mistake, both of these programs are quintessential Ponzi schemes. They depend on current contributors to pay the obligations to those who got into the scheme earlier. This works fine until the number of new people coming into the scheme starts to taper off. If you read between the lines of the WSJ description of Social Security, itโs obvious that itโs a failing Ponzi scheme.
The Social Security program works by using payroll taxes paid by workers and employers to pay for retireesโ benefits. What is left over is invested in the trust fund. Interest earned is reinvested in the fund. Over time, the trust fund has grown to nearly $3 trillion. But long-running demographic trends threaten its finances. Last year, there were 2.8 workers for every Social Security recipient, down from 3.3 in 2007.โ
If you go back to 1995, there were 4.9 workers for every retiree.
The mainstream will tell you not to worry. The government will fix everything. Treasury Secretary Steve Mnuchin said the Trump administrationโs tax cuts and reductions in regulation will boost economic growth and generate new income for these programs.
Thatโs great โ if you really believe the government that created this mess will actually fix it. Weโve already explained why theย tax cuts wonโt generate the promised economic growth.
And yet, millions of Americans are depending on Social Security to fund their retirement. According to data recently released by Northwestern Mutual, one-third of Americans have less than $5,000 in retirement savings.ย
Twenty-one percent โ nearly a quarter of Americans โ have a retirement savings of zero. Thirty-three percent of Baby Boomersย โ the generation now entering into retirement years โ have on average between 0 and $25,000 saved up.ย According to a Gallup poll, a majority of current retirees โ 58% โ say they rely on Social Security to get by. For millions of Americans,ย their golden years may well turn into a retirement nightmare.
If your retirement plan includes Social Security, you probably need to consider a new plan.
This article was originally published at SchiffGold.
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