Social Security. The Boomers are collecting. The Gen X-ers have been told it won't be there. The Gen Y-ers haven't even thought that far out... they are the voting block that never knew of the dangers of Communism. The USSR fell before they were even born. Think about it.
The generation caught between Boomer and Gen X is going to get pinched. Hard. Real hard. They are relying on the SSTF (Social Security Trust Fund) on being there for them. The Boomers were raised by those who lived thru the Great (first) Depression and they knew that one needed to plan for oneself, not rely on others, handouts, or the government to take care of them.
So now we're all vaguely aware of the fact that there are more people drawing out of Social Security than paying in. Basically there are going to be 4 people being paid for every 1 paying in. Mathematically, this doesn't work for long. But that's okay because we have been "saving" in that account for a long long time, right? Wrong. There is no actual "account" that holds all the funds that should have been set aside. That "account" in the sky is full of government IOUs and a little money in there. Kind of like what California is issuing instead of tax refunds now. It's all funny money.
So as I'm seeing now that our declining payrolls and rising unemployment is causing the SSTF (ADD moment: SSTF is not to be confused with SHTF though in this case it's a pretty close synonym!) to be seriously lacking on incoming funds to keep things going. Of course it is! That makes sense. When people are unemployed, they don't pay into the Social Security system. So, as the jobless rate rises, the Social Security incoming funds plummets.
For the first time, this past August (last month!) the US Treasury borrowed $6 billion due to the cash shortfall in Social Security. (This is done as selling T-Bills on the public market.)
A few snippets from ZeroHedge:
-The 2037 Future Value of the August deficit is -$17b based on a 4% return. What this means is that there will be a very significant revision in the 2037 drop-dead date. Based on current trends the go broke date is closer to 2025.
-This is not just a bad month. The net decline in the Funds assets for June/July/August comes to $7 billion. In 08 that period was in surplus by $5 billion, In 07 it was +$7b and in 06 it was +$13b.
-SS is the mother of all systemic risks. Even the debate on this topic brings risk. It will expose an additional $7 Trillion unfunded liability. Another reason for holders of dollars to worry.
Full article: ZeroHedge Writes about Social Security Busting Years Ahead of Schedule in " SSTF Shocker - $6B August Deficit"
( Bruce Kasting, ZeroHedge.com. Exerpts Retrieved on 9/9/09. Post: 09/08/2009 16:26 -0500)
Quick sumary:
2006 : 13 billion (surpulus) in Social Security Funds
2007 : 7 billion (surplus) in Social Security Funds
2008: 5 billion (surplus) in Social Security Funds
2009: -6 billion (DEFICIT) in Social Security as of August close.
Previously predicted that the SSTF would be 'broke' by 2037. Plenty of time to fix it.
The news above means that it needs to be amended to 'broke' by 2025.
That's okay, still time to get smart but we can keep kicking that can down the road for a bit more.
NO! Fix it now, because as the joblessness continues, it will get closer and closer... that 2037 to 2025 revision happened in 2 years. Remember, job loss continues for 9 months AFTER a real recover starts, according to all economists, folks! Another 1 year of this economic decline and increase in unemployment. I put forth that it will move to 2012-2015 according to my math. Disclaimer: I am not a mathemetician, an actuarial, or a CPA, but I am a thinker. If you have ever looked at how interest rates work, accruals, and amortizations, you will understand what I'm talking about.
If this is still unbelievable to you, just consider this: The government has been wrong wrong wrong on all of its financial predictions for the last 3 years straight. In the past 3 months alone, the fiscal deficit was revised upwards by 2 Trillion that, oops, they messed up.
TWO TRILLION underestimation in 3 months? This administration has only been in place for 9 months total. We still have another 3 months to go in this year. Congress is pooh-pooh-ing the Congressional Budget Office's estimations of the new "Healthcare Bill" as costing another 2 Trillion additional, and they haven't explained a way to fund it. We see them totally eff up Cash For Clunkers... (read just one article about this in the Chicago Tribune. There are thousands out there~) and we believe them?
So do you think that Social Security will be viable until 2037? 2025? 2015? What's your vote?
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