A Scary Look At Social Security
The spectacle of the dual failures of Abenomics in Japan and the public employee pensions in Detroit should have you poopin' in ur pants right about now. If not, then, you are not paying enough attention. Many who are expecting a government check to financially ameliorate retirement expenses may not get them. So, pay attention unless you plan to spend your old age living in a cardboard box behind the grocery store.
Please, Save For Retirement Starting Right Now
There are many great articles right here on TMF to get you started. There are many scary surveys, such as many boomers have saved less than $25,000 for their retirement, which is on the visible horizon (including mine, and I am at the tale-end of the boomer generation). OK, this is about 1 year of livings expenses, maybe 2 with SSI and a bit of frugality. Then what?
Is It A Ponzi Scheme?
It sure as heck resembles one, but many writers point out that technically no, since all are required to put into the kitty. But maybe it really is. See, Ponzi schemes usually collapse because they run out of gullible “investors” to pay those getting payouts. SSI is running out of “investors”, not because they caught on to the scheme, but because the number of workers are declining due to demographics, and the number of takers are growing. Different reason, but same end effect.
Detroit? Japan? Who Cares
You should. You are probably waving off the above view of doom 'n gloom, thinking aw, p'shaw, Uncle Sam won't let me down. Do not be so sure. The denizens of both places had the exact same attitude until recently. Now, they may not get as much as they were expecting. In both cases, the affliction is the same: increasing number of takers getting increasingly larger checks, and a shrinking pool of workers putting into the kitty. Just like SSI.
The recipients in both places are worried, and so should you unless you do not need SSI.
The Dirty Little Secret Of SSI
Your paycheck shows SSI being deducted as an item separate from federal income tax. Every year, they send you a summary sheet showing how much you put in and how much you will get back when it is your turn. They are trying to make you believe that your SSI is being put into a piggy bank with your name on it, from which you will take out when you retire.
Nothing could be further from the truth.
The money you pay in today rattles around the Treasury for 12-18 months before it is paid out to a current recipient. When you retire, your check will come from the paycheck of current workers at that time. The money you pay in to SSI right now is gone with the wind.
A Word To The Wise Is Sufficient?
I hope that, at this point, I do not have to hit you over the head with a Twinkie to make my point, particularly in regards as to what is happening in Japan and Detroit with the failure of their retirement systems, and how it foretells what might happen to SSI.