Social Security Is Already Bankrupt
We have heard for decades how Washington will make Social Security live up to its
name as a permanent tool for wealth building for Americans as they approach their golden years. Are such promises realistic, when you consider wealth building for your retirement? With all its good intentions, it seems that the Social Security system has been built on wrong assumptions and premises that will inevitably lead to its collapse. Now in its 75th year, we can see that this Government program for wealth building is in serious trouble. We have to ask ourselves: Is Social Security already bankrupt?
When the Baby Boomers joined the workforce, it was a great injection of productive activity into the economy. It easily supported those who were already on Social Security. There were 16 workers for every retiree -- meaning that there was plenty of money flowing into the system to sustain the older generation.
All that has changed. Today, about two workers pay for the benefits of every one retiree. Although Congress has tinkered with the system over the years by raising taxes and the retirement age, this ratio puts the credibility of the entire system into question. For the first time in 30 years, we are paying less into the system than is going out of it. The same is going to happen in 2011 -- and by 2015 we can expect this to be a permanent annual occurrence.
What is the Federal Government doing about this? Let's take a look at the history of the program. Over the years, the Social Security Administration had annual surpluses due to the large number of workers paying into the system and fewer retirees that received benefits. These surpluses were "moved" by the U.S. Treasury to shore up other Federal programs to make their deficits appear lower. The Treasury essentially gave the Social Security administration "IOU's" to cover the borrowed money. Now that the Baby Boomers are beginning to retire, these IOU's are due to be paid back to the Social Security administration to write checks to retirees.
Here's the bad news:
With a National Debt heading toward $14 Trillion, there are no funds to honor these IOU's!
Analysts believe that Social Security will be bankrupt in 2037.
Social Security is a system that has been built without a solid financial foundation and has become a deceptive array of mirrors or a house of cards. What we are witnessing is the slow demise Social Security system.
If the Federal Government prints money to cover the debt owed to the Social Security Administration, not only will the money paid to retirees be worth less, our entire money supply will be diluted. Hyperinflation is a very real possibility if the spending habits of the Federal Government do not change. With inflation/hyperinflation, every American is going to pay higher prices for all goods and services.
Unless the Federal Government stops its spending spree, it could take a wheelbarrow full of dollars to pay for a loaf of bread. Social Security will no longer be available as a cornerstone wealth building tool.
Social Security Is Already Bankrupt
By: Bettina Romberg
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