Let’s define what Social Security is supposed to be according to the American Heritage Dictionary. Social Security is a government program that assists persons faced with unemployment, disability, or aging. Social Security is financed by the assessment of employers and employees. Social Security is economic assistance and a system whereby the state either through general or specific taxation provides various benefits to help ensure the well-being of its citizens.
Well, that clears it up for me. Clear as mud? I thought Social Security benefits were earned through years of paying social security taxes. Social Security to me is not a gift; it is an earned entitlement that most Americans pay throughout their working career as a tax so that later on in life they get some of those benefits back as income. Well, I guess this thinking is erroneous. According to the recent Social Security Board of Trustees Annual Report, this Social Security Trust Fund will be depleted by 2033. This is one year earlier than expected. Another great money management job by the good ole US Government and Department of the Treasury.
Social Security Trust Fund will be insolvent sooner than expected by 2033
Last year the Annual Report from the Social Security Trust Fund stated the fund was supposed to run out in 2034. The new report moves up the insolvency of the Social Security Trust Fund to 2033. Total costs for the program began exceeding total income, or payroll taxes, this year in 2023. I have a funny feeling that with a recession approaching and out-of-control spending still happening, it may be 2030 or sooner for insolvency. There will be more government ridiculous behavior over the next few years as we tiptoe around other financial land mines.
The Social Security Trust Fund is invested in Treasury Bonds
According to Investopedia, Social Security trust funds are accounts managed by the US Treasury. The funds take in Social Security payroll taxes from workers and their employers and pay out benefits to Social Security recipients. They invest any surplus in Special issue US Government debt securities. Yes, ladies and gentlemen, there is no cash sitting in an account for future use. The Social Security Trust Fund is full of Treasury bonds. We are now seeing banks go belly up because higher rates mean lower bond prices and huge losses when realized. So if the Social Security Trust Fund is invested in Treasuries at lower rates, what do toy think is happening to those investments inside of the Trust Fund? The bonds are bleeding more money quickly, that’s what is happening!
Beneficiaries of Social Security will be a big benefit cut
Social Security makes up over 60% of the income of elderly beneficiaries. A third of them rely on the program for 90% or more of their income. Due to government mismanagement, all beneficiaries will face a 20 percent across-the-board benefit cut with insolvency in 2033. Was this the intent of the program when it was established in 1935? The original Social Security Act of 1935 has been turned into another political mockery. It’s turned into another result of government mismanagement and corruption. We haven’t even mentioned that Medicare is on pace to run out in 2031.
It is hard to believe that the government will keep its promises. The “Big Three” of Social Security, Medicare, and Medicaid comprise almost half of the federal spending. The remainder is taken up by the military (12%), other mandatory spending like unemployment compensation, federal employees’ retirement benefits, and SNAP benefits (14%), and interest on the national debt (8%), leaving only the remaining 15% for non-military discretionary spendings such as transportation, education, and housing. The solution here from our political leaders is to keep kicking the can down the road and print trillions more. We all know that printing more money is not a solution.
The US Treasury manages the accounts of the Social Security Trust Fund. Janet Yellen is the current US Treasury Secretary. Everything she has ever said always ends up being wrong. Look at this list of former US Treasury Secretaries since 1971 when our dollar was taken off the gold standard and all kinds of trouble has broken loose with our money. Former US treasury Secretaries include John Connally, George Shultz, William Simon, Michael Blumenthal, William Miller, Donald Reagan, James Baker, Peter McPherson, Nicholas Brady, Lloyd Bentsen, Frank Newman, Robert Rubin, Lawrence Summers, Paul O’Neill, Kenneth Dam, John Snow, Robert Kimmitt, Henry Paulson, Stuart Levy, Timothy Geithner, Neal Wolin, Jack Lew, Adam Szubin, Steven Mnuchin, Andy Baukol, and now Janet Yellen.
What a list of Central Bank cronies. This is just a group of political hacks that knew how to print fake money and invest it in fake government bonds and give press conferences. Our politicians and bankers are excellent at destroying any semblance of order when it comes to fiscal policy, sound money, money management, or investment. You are wasting your time if you’re counting on the government to keep its promises.
I don’t care if it’s Social Security, Medicare, or just the simple governance of our banks. They will all mess it up and ultimately be wrong because it’s not what is good for each American; it is all about what is good for them in power and how they can continue to enrich themselves. This continued bad government leadership, management, and governance will lead directly to a financial system meltdown. It would be a good idea to think of a backup plan that relies on the promises of no government. A great contingency plan for your money right now more than ever is physical gold. Gold is the master store of value. Paper currencies will continue to be devalued. Politicians and bankers will continue to be destructive when it comes to our money. Remember they want our money to run their system.