Bad Investment

August 16, 2012

Turns out Social Security may not only be an unwise investment for new and future retirees, it may not be an investment at all. A recent Associated Press report noted that today’s new retirees are part of the first generation that has paid more into the Social Security system than they will actually receive after retirement.

One such example from a 2011 Urban Institute study was given in the AP article:

“A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85 …”

Though Medicare has come back into the spotlight with the media attention toward Mitt Romney’s new VP pick and his now infamous proposal of remaking the single-payer healthcare system into a “premium support” system (something Romney also supports), reform of the other big entitlement elephant in the room, Social Security, has rarely been discussed since the failed attempts by the last presidential administration to partially “privatize” it.

Perhaps Social Security reform deserves new attention. After all, the program’s own trustees state in their latest annual report that after 2033, “tax income would be sufficient to pay only about three-quarters of scheduled benefits…”  At that point, one could just as well literally hide their money under their mattress and guarantee a more secure retirement. Assuming they remember where they hid it, they at least would not lose any of their money. Not to even mention the problem of inflation.

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Outcry from the ‘Entitled’

October 27, 2010

Part of a report on the French parliament’s decision to up their retirement age in order to address budgetary problems:

In an attempt to revive a protest movement that has lost momentum, unions plan a new nationwide day of street demonstrations and strikes Thursday that are expected to cause travel problems. France’s civil aviation authority says Thursday’s strikes mean airlines must cancel a third of their flights at Charles de Gaulle, Paris’ main airport, and half their flights at the smaller Orly airport south of the capital. Airlines generally try to spare long-haul flights in such cancellations. A two-week train strike has been tapering off, and only a small number of trains were to be canceled Thursday … Striking dock workers have exacerbated the fuel shortages. Oil tankers are lined up in the Mediterranean as far as the eye can see off the port of Marseille, waiting to unload. The Normandy port of Le Havre faces a similar situation.

[picapp align=”left” wrap=”true” link=”term=france+retirement+age&iid=9988247″ src=”″ width=”234″ height=”155″ /]All of this is over a decision to raise the retirement age from 60 to 62. Perhaps a disturbing effect of an engrained entitlement culture?

If (and that’s a big “if”) American politicians attempt to meaningfully address our country’s looming debt problem by tackling our entitlement programs, Social Security and Medicare, will the opposition behave just as childish? There’s something ironic about acting immature about retirement benefits.

France Tackles Retirement Age

June 22, 2010

The government in France is actually making a sensible move to improve their finances. They’re targeting their pension system by raising the retirement age to 62.

Naturally, the socialists and unions are decrying the move. But, fortunately for the financial strength of that country, more sane minds have apparently prevailed.

Now, if only the United States could learn from this move and, barring real and comprehensive reform, at least seek to raise the Social Security retirement age. But that’s not likely given the outcry politicians would likely here.

Meanwhile, our country’s fiscal health continues to be threatened by our bloated entitlement programs.

Projected Spending

May 24, 2010

Here is a graphic from the Congressional Budget Office showing what areas are estimated to make up the bulk of federal spending 10 years from now:

Note the amount entitlement spending will make up — proof that the answer to fixing our budgetary issues is not just to cut earmarks. Reining in deficit spending is going to require looking at popular programs like Medicare and Social Security.

Pay as You Go … on Some Things

February 15, 2010

Much has been made about a new rule signed into law called “paygo.” It is seen as a way to rein in federal spending and will require that any spending increases be paid for (read: cut somewhere else or raise taxes).

At first, it sounds good. The problem, as this short ABC News story notes, is that the rule would exempt “Most other benefit programs, including Medicaid, Social Security and food stamps ….”

This chart on federal spending demonstrates the bulk of the federal budget that Medicaid and Social Security make up:

It’s hard to control spending when you exempt such large portions of the budget. Not only that, but the same bill also included an increase in the federal debt limit.

* A graphic showing President Obama’s latest budget by department/office was included in this previous post.

The Biggest Ponzi Scheme

March 25, 2009