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Monday, June 11, 2018

Is the Financial Game Over in America and Elsewhere?

Poor Man Survival
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   Upon returning from my most recent trip, I had a discussion with a fellow from Britain who like myself, is a collector of oddities and a supporter of Trump and of Brexit as is most of his circle of friends who despite massive stong-arm style persuasion from the establishment to remain a part of the European Union, they want nothing to do with it and are vehemently against the uncontrolled immigration of Muslims into their country who are getting massive amounts of free money and health care benefits even though just like in this country, the veterans are being ignored in favored of these illegals!
In Great Britain at least dental care is included but the Muslims have overwhelmed the system to the point where no one is getting timely care and the same is happening in so-called ‘sanctuary cities’ and just as resentment is growing against Muslims who are raping women throughout Europe and committing other crimes [a major reason why Merkel, the PM in Germany has lost support and why vigilante groups are rising up against these migrants]…he wants nothing to do with remaining in the Union or letting in more illegal immigrants and has recently moved his family further away from London and its Muslim mayor.

Meanwhile, the bankers and elites continue their march toward ruination of America as well on other fronts…
   The respective Boards of Trustees for Medicare and Social Security released their annual reports for 2018.
As usual, the numbers are pretty gruesome… and the reports plainly stated what we’ve been talking about for years: the trust funds for both Social Security and Medicare are going to run out of money.
In the case of Medicare, the Trustees project that its largest trust fund will be fully depleted in 2026, just eight years away. In the context of retirement, that’s right around the corner.
For Social Security, the Trustee report stated that the program will spend more money on benefits in 2018 than it will generate in income and tax revenue.
So this year will be the first time Social Security has run a deficit since 1982.
But it gets worse. Because according to the Trustees’ projections, the program will continue running larger and larger deficits until it too becomes fully depleted in 2034.
After that, recipients can expect at least a 25% cut in the benefits that they were promised and worked their entire lives to receive.
Again, these numbers come directly from the Trustees of Social Security and Medicare (which includes the US Treasury Secretary).
The reports were so dire that mainstream publications picked them up almost immediately.
Curiously, though, a number of newspapers tried to play down the bad news, dismissively telling their readers that Social Security and Medicare are just fine, and that those sobering projections don’t matter.
These are common refrains. They’ll state, for example, that there’s nothing to worry about because the government will step in and bail out the programs.
Is that so? Well, who is going to bail out the government?
According to the Treasury Department’s annual financial report, Uncle Sam is already insolvent to the tune of $20.4 trillion.
And those numbers are only getting worse too. Treasury’s own projections show annual budget deficits in excess of $1 trillion starting in 2020.
Simply put, a short-term fix of Social Security and Medicare would cost trillions of dollars. And that would just be a down payment on the long-term costs of fixing the programs.
The federal government simply doesn’t have that kind of money. Not even close.
So the expectation that some politician is going to come riding in on a white horse with checkbook in hand is ludicrous.
A second commonly held myth is that these Social Security and Medicare projections are irrelevant because they “have a history of being wrong.”
That’s completely untrue.
35 years ago, the Social Security annual report from 1983 projected that the program’s cost would exceed its income and tax revenue in… 2020.
The current report states that this is going to happen in 2018.
That’s only a two year difference from what they projected over three decades ago. So they pretty much nailed it.
More importantly, though, we’re not even talking about long-range projections, which typically look 50-75 years into the future. We’re talking about EIGHT years from now.
But even if you take a longer-term view, the data is still grim.
Social Security and Medicare provide benefits to people based primarily on tax revenue generated by those who are currently in the work force.
Essentially the programs require a certain number of workers paying into the system for every single retiree drawing benefits. They call this the worker-to-retiree ratio.
In order for this delicate balance to work, population growth has to remain fairly stable. Major swings in population growth throw everything out of whack.
The critical problem is that both fertility rates and population growth (which takes into consideration immigration and mortality) have been declining.
The US fertility rate has been on a general downward trend since 1990, and in steep decline since 2007.
And overall population growth rates for the past several years have been the lowest in more than five decades.
This contrasts with the years immediately following World War II, in which there was an explosion in population growth.
Those are the folks who are currently receiving Social Security and Medicare benefits.
But due to the declines in population growth, there are no longer enough workers paying into the system (even with unemployment at multi-decade lows) to support the programs’ current recipients.
The end result is what we’re talking about today: Social Security and Medicare can’t generate enough revenue to support their costs and will thus soon deplete their cash reserves.
The government is trying to put a brave face on this, telling us that the alarming drop in the national fertility rate is only temporary, even though it’s been falling steadily for three decades.
But they insist it will reverse soon.
Frankly, it doesn’t seem sensible to plan one’s retirement based the ability of these bureaucrats to accurately predict how much sex people are going to be having in the coming years.
Instead, let’s look at the big picture: Social Security and Medicare are both perennially mismanaged with a history of gridlock and inaction.
And the people who are responsible for overseeing these trust funds have clearly stated that the programs will run out of money and be unable to pay the benefits that have been promised.
What sane person would possibly put all of his/her retirement eggs in that basket?
There are clearly better ways.
One approach is to establish more robust retirement plans (like a solo 401(k) or self-directed IRA) and start maximizing your contributions.
These types of structures allow you to direct your capital to potentially more lucrative investments that go beyond mainstream stocks and bonds. Plus, in many respects, they can be cheaper to maintain.
This is important, because if you can squeeze out an extra 1% per year between cost savings and better investment returns, it can add up to hundreds of thousands of dollars in additional retirement savings when compounded over several decades.
Regardless of what happens (or doesn’t happen) with Social Security in the future, it’s hard to imagine you’ll be worse off for doing this.
Because... If you live, work, bank, invest, own a business, and hold your assets all in just one country, you are putting all of your eggs in one basket.
You’re making a high-stakes bet that everything is going to be ok in that one country — forever.
All it would take is for the economy to tank, a natural disaster to hit, or the political system to go into turmoil and you could lose everything—your money, your assets, and possibly even your freedom.

This article originally appeared on the Sovereign Man blog, here
 Bruce the Poor Man
NOTE:  Perhaps Preppers will have the self fulfilling prophecy a dystopian world where everything falls apart and the government is no longer able to pull another rabbit out of the hat.  
Dystopia is after all the belief hat when the lights go out and disaster strikes, neighbors often become our enemies [if weve stockpiled food and ammo and they have not]they will visit you armed with a shotgun vs. The contents of their freezer so you can have a BBQ before it all spoilsat least that is the narrative or predatory belief most of us have come to believe [perhaps it is the result of those zombie movies]YET, disaster recovery usually works best when we work together vs. Relying on the government.  Disasters, whether man-made or natural seem to part of the natural order of the universe, the flow of life.  It is up to us as to how we respond to those ebbs and flows.  Cooperate and live or die.
Be sure to label your containers clearly so that children and guests will know that these are your first aid kits. For the plastic containers, you could just use a label maker to put some sticky labels on the containers. With the bags, you might go so far as to sew on a red cross patch. If you have a military style first aid bag, you could secure that patch with a little velcro.
First and foremost, being grateful—not just for possessions, but also for the people, places and simple pleasures in life—is good for the soul. But an attitude of gratitude is also a proven antidote to impulse purchasing because it creates a sense of abundance within the individual. When you’re feeling full of gratitude, you’re less likely to subconsciously try to fill emotional holes by treating yourself with gifts and accumulating more stuff.
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1 comment:

Larry said...

You hit the key element-INSOLVENT. There are no more rabbits left in the hat and the average citizen does not have a clue and time is rapidly running out...thanks for sharing as I know your posts are getting fewer! Sounds like your studies are going well!