Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Other Looming $7 Trillion Financial Crisis: Social Security

Politics / US Economy Mar 04, 2009 - 09:49 AM GMT

By: Money_and_Markets

Politics Best Financial Markets Analysis ArticleNilus Mattive writes: My new retirement report just went to press yesterday, so the material is fresh in my mind. And while I can't share the contents with you here in Money and Markets , there is one topic in that report that I want to talk about today.

It is a financial crisis that will affect nearly all of us in profound ways. And it's been pushed to the backburner given all the other financial shenanigans happening today.

I'm talking about Social Security, of course.

Let me tell you …

The Problems Go Back to the Beginning of the Program!

When Social Security was first instituted in 1935, it covered about half of the population. Many teachers, nurses, librarians, and other workers were excluded from coverage. What's more, the average life expectancy was about 60.

Today, Social Security covers virtually everyone. The average American is living to age 76.

And although the initial 1937 payroll tax rate of 2 percent (split between employer and employee) has risen to a combined 15.3 percent (including Medicare taxes), the system still isn't bringing in enough money to cover everyone.

Remember, Social Security is a “Pay-As-You-Go” system … meaning money comes in and goes out fluidly. That poses a big problem, especially with a huge number of baby boomers getting set to retire over the next decade.

A smaller pool of contributors paying for a larger and longer-living group of recipients is a recipe for disaster!

In fact, the program is expected to begin taking in less money than it pays out starting in 2017. That's just eight years from now!

And by 2041, Social Security will only be capable of paying out 78% of promised benefits.

As of right now, you can expect the system to continue paying out full benefits through 2041.

But that's only because Social Security will tap its “trust fund,” a bunch of IOUs from various government agencies that borrowed money back when the program was running a surplus.

President Obama has few options when it comes to Social Security fixes ...
President Obama has few options when it comes to Social Security fixes …

It's not like these other government agencies actually have the money on hand, either. So they'll borrow to pay back the money they owe Social Security.

By the way, we're talking about a $7 trillion shortfall!

In light of all the other bailouts and money pumping happening right now, you can see just how bad the situation really is.

How Might Washington Repair Social Security?

It's simple, really. There are only two ways to solve the Social Security crunch:

A. Pay out less benefits

B. Get more money into the system

So far, President Obama's stated preference is “B.”

Currently, a combined 12.4 percent of income — up to a $102,000 cap — is put in for Social Security.

In the past, Obama has said he is not in favor of removing this cap. Instead, he would like to enact an additional 2 percent — 4 percent tax on anyone earning more than $250,000.

Some insiders have suggested this plan, if passed, wouldn't take effect until ten years from now. And even if it took effect immediately, the Tax Policy Center estimates it would add $396 billion over 10 years.

In other words, it's a good start at best. More changes will be needed. And you can bet that lower benefits and higher taxes will both figure into the final solution.

In my opinion, that's all the more reason for you to save as much as you can for your own retirement AND to take advantage of as many tax-sheltered accounts as you can.

Best wishes,


P.S. Even though Social Security is in big trouble, I do not expect anyone nearing — or already in — retirement to be adversely affected.

In fact, I have found at least five ways for you to potentially boost your Social Security payments. All the details are in my retirement report that went to press yesterday.

If you didn't get your copy, click here to get your copy of “The Weiss Guide to Worry-Free Retirement Profits” immediately .

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in