America’s 60-Year-Olds Are Staring at Financial Peril

[dagger1]

Sure seems like there is zero resistance to that approach. Gov't runs deficit. Sells bonds to finance it. The Fed prints electronic money to buy 90% of those bonds.

I’ve always wondered why the federal government (and the federal reserve),which has the ability to print money, needs to “borrow” money by selling bonds….. Deep banking has always been a mystery to me…

 

[PigsDad]

I’ve always wondered why the federal government (and the federal reserve),which has the ability to print money, needs to “borrow” money by selling bonds….. Deep banking has always been a mystery to me…

The Fed doesn't have the ability to just "print money". However, they do have the ability to manipulate the money supply via various monetary policies, such as the Federal Reserve interest rate, etc. It is the borrowing and issuing of T-bills that is closest to "printing money".

Kurt

 

[AlmostRetired]

Anyone that is eligible to vote should not whine about SS or Medicare. Here is what we all allow the people who call SS and Medicare entitlement programs get. They make decisions that impact everyone but themselves. Raise your hand if you would give up your retirement entitlements for theirs.

Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member's retirement annuity may not exceed 80 percent of his or her final salary." Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector.

U.S. senators, on the other hand, serve six-year terms and would be able to collect pensions after one full term.


As far as medical Premium plan rates vary depending on an individual's age, tobacco usage, dependents and where they live, according to a 2017 Congressional Research Service report. The federal government contributes up to "72% of the weighted average" of all premium plans, "not to exceed 75% of any given plan’s premium," according to the report.

 

[joestein]

Anyone that is eligible to vote should not whine about SS or Medicare. Here is what we all allow the people who call SS and Medicare entitlement programs get. They make decisions that impact everyone but themselves. Raise your hand if you would give up your retirement entitlements for theirs.

Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member's retirement annuity may not exceed 80 percent of his or her final salary." Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector.

U.S. senators, on the other hand, serve six-year terms and would be able to collect pensions after one full term.


As far as medical Premium plan rates vary depending on an individual's age, tobacco usage, dependents and where they live, according to a 2017 Congressional Research Service report. The federal government contributes up to "72% of the weighted average" of all premium plans, "not to exceed 75% of any given plan’s premium," according to the report.

Congressional pensions are accrued the same as any federal employee.

 

[Timeshare Von]

Cars do last a LOT longer nowadays. I still drive a 2007 Ford, bought new.

Agreed! I bought a certified used Santa Fe nearly 10 years ago with just 24k miles on it. It currently has 226k on it . . . and running (and looking) great! I will drive it until it dies and then replace it. That's what we also did with my DH's van. Bought a Pontiac Montana new in 2003 and drove it to 186k miles, when it died in Dec 2019. Replaced it with another certified used Dodge Caravan in January 2020 (just before the pandemic and stupid high car prices) . . . and have never looked back.

 

[TolmiePeak]

Anyone that is eligible to vote should not whine about SS or Medicare. Here is what we all allow the people who call SS and Medicare entitlement programs get. They make decisions that impact everyone but themselves. Raise your hand if you would give up your retirement entitlements for theirs.

Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member's retirement annuity may not exceed 80 percent of his or her final salary." Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector.

U.S. senators, on the other hand, serve six-year terms and would be able to collect pensions after one full term.


As far as medical Premium plan rates vary depending on an individual's age, tobacco usage, dependents and where they live, according to a 2017 Congressional Research Service report. The federal government contributes up to "72% of the weighted average" of all premium plans, "not to exceed 75% of any given plan’s premium," according to the report.\

Our social security will be seeing a reduced payment when funds run out in a few years.

 

[rapmarks]

"Fix" is a funny way to spell "kneecapped the system, which is what put us into this position in the first place."



There's actually plenty people can do -- if they know it's coming early enough in life to create a financial "plan B."

The people who are in deep denial about this problem think there's an easy fix that we can conjure into existence any time we want. That isn't going to happen because there simply isn't enough money. Nobody in government has taken this problem seriously since 2000 -- and even that was late in the game to shore up the system.

So the only "fix" is at the individual level. We're in a "The Ant and the Grasshopper" fable. But this fable has a lousy ending where the Grasshopper eats pet food in the dark because the Grasshopper can't afford to feed itself or keep the lights on.

No duh! By nothing we can do I mean our elected officials will not take action, by the way, my social security has finally reached $800 due to inflation. And that is $800 for the year, not the month or the week.but if retirees take a 25% hit, they are going to need more social programs. Who pays for that? The savers.

 

[AlmostRetired]

Congressional pensions are accrued the same as any federal employee.

So I think what you are saying without explicitly saying is they should go after the entitlement program of all Federal Employees which is significantly more impactful then then just themselves. They won't because it includes themselves. I am not for impacting anyone's retirement
but if one is going talk about doing it for someone else, they should not exclude themselves.

 

[ScoopKona]

I’ve always wondered why the federal government (and the federal reserve),which has the ability to print money, needs to “borrow” money by selling bonds….. Deep banking has always been a mystery to me…

Because despite what most people think, the Federal Reserve doesn't use a "printing press goes brrrrrrrrr" solution for monetary policy. If they did, a Slurpee would cost $100.

Anyone that is eligible to vote should not whine about SS or Medicare. Here is what we all allow the people who call SS and Medicare entitlement programs get. They make decisions that impact everyone but themselves. Raise your hand if you would give up your retirement entitlements for theirs.

And let's say everyone votes the way you want. What then? What can be done in five years to inject $14 trillion into the OAS trust fund? (DI isn't in any danger of depleting.) That's $42,000 from every man, woman and child in this country -- including the illegal aliens. And then while we're at it, let's find another $100K each for the national debt. These problems go way beyond political bumper-sticker solutions.

I'm all for removing the income cap and for means testing. But at this point, it would buy us a few months. These fixes needed to be applied decades ago when there were considerably more workers and considerably fewer retirees. What would help right now? Deep cuts to benefits. Anyone volunteering for that to happen? Didn't think so.

 

[Big Matt]

I turn off my collision avoidance systems because they have almost caused me to have accidents several times. I've always been an attentive driver and have good reflexes so I prefer to control the car myself. I also see a lot of unsafe drivers who think the car can drive itself so they text or are inattentive.

My car hit the brakes in the middle of a four way intersection where I had a green light. That feature has been turned off ever since.

 

[AlmostRetired]

Because despite what most people think, the Federal Reserve doesn't use a "printing press goes brrrrrrrrr" solution for monetary policy. If they did, a Slurpee would cost $100.



And let's say everyone votes the way you want. What then? What can be done in five years to inject $14 trillion into the OAS trust fund? (DI isn't in any danger of depleting.) That's $42,000 from every man, woman and child in this country -- including the illegal aliens. And then while we're at it, let's find another $100K each for the national debt. These problems go way beyond political bumper-sticker solutions.

I'm all for removing the income cap and for means testing. But at this point, it would buy us a few months. These fixes needed to be applied decades ago when there were considerably more workers and considerably fewer retirees. What would help right now? Deep cuts to benefits. Anyone volunteering for that to happen? Didn't think so.

I did not say how anyone should vote. I said stop whining and vote. Can we agree on this. Farmers are subsidized, oil companies are subsidized, banks where subsidized, home owners are subsidized allowing interest deduction on mortgages.... I can go on and on and on.
So now how do you think we should address the problem without trying to single out any source out.

 

[ScoopKona]

I did not say how anyone should vote. I said stop whining and vote. Can we agree on this. Farmers are subsidized, oil companies are subsidized, banks where subsidized, home owners are subsidized allowing interest deduction on mortgages.... I can go on and on and on.
So now how do you think we should address the problem without trying to single any source out.

Nothing is going to happen. The deadline will pass. The automatic cuts will happen. And then the blame-game begins. (Even though all it takes is having read a newspaper every day to know why we're in this mess.) If something was going to be done about this problem, it would have happened already. Nobody has taken the problem seriously since 2000.

I've already done everything I'm going to do about Social Security. I got in front of it so that it doesn't affect me. I assume that by the time I'm allowed to draw, it won't amount to beer money. If it's more than that, great. But I've metaphorically kissed Social Security goodbye. I think the trustees are fools for assuming that workers will continue to put up with a system which won't be there when they need it. People will do everything possible to side-hustle so they aren't kicking money into FICA. That will make the benefit cuts even deeper.

We need a combination of two things:

1) More workers making more money so they contribute more into the OAS fund. Removing the income cap would also help -- but not nearly as much as most people seem to think. There just aren't all that many billionaires. And they make their money though investments, not salary.

2) Lower benefits so the fund is running at least net-zero -- which would require 20%-ish cuts, either through age requirements, means-testing or across the board cuts. (Big benefits cuts today to avoid even larger benefits cuts later.)

This requires a better electorate than this country currently has.

 

[Superchief]

My car hit the brakes in the middle of a four way intersection where I had a green light. That feature has been turned off ever since.

I had a rental car in Phoenix that slammed on my brakes as I was driving through the rental car garage with no other cars around. I'm glad it didn't happen somewhere more dangerous.

 

[Ralph Sir Edward]

The Fed doesn't have the ability to just "print money". However, they do have the ability to manipulate the money supply via various monetary policies, such as the Federal Reserve interest rate, etc. It is the borrowing and issuing of T-bills that is closest to "printing money".

Kurt

The Fed prints money indirectly. They buy bonds with money they just make up "out of the air". The people who have the bonds now have money, which they can use to do other investments.

So the US government prints bonds, gives them to the Fed, and the Fed gives them money created new, on the fly. The money is ones and zeros, not physical bills, but then again, doesn't almost all the money you get comes as ones and zeros? (Bank balances, checks you write, credit cards charges and payments, ect.)

 

[AlmostRetired]

Nothing is going to happen. The deadline will pass. The automatic cuts will happen. And then the blame-game begins. (Even though all it takes is having read a newspaper every day to know why we're in this mess.) If something was going to be done about this problem, it would have happened already. Nobody has taken the problem seriously since 2000.

I've already done everything I'm going to do about Social Security. I got in front of it so that it doesn't affect me. I assume that by the time I'm allowed to draw, it won't amount to beer money. If it's more than that, great. But I've metaphorically kissed Social Security goodbye. I think the trustees are fools for assuming that workers will continue to put up with a system which won't be there when they need it. People will do everything possible to side-hustle so they aren't kicking money into FICA. That will make the benefit cuts even deeper.

We need a combination of two things:

1) More workers making more money so they contribute more into the OAS fund. Removing the income cap would also help -- but not nearly as much as most people seem to think. There just aren't all that many billionaires. And they make their money though investments, not salary.

2) Lower benefits so the fund is running at least net-zero -- which would require 20%-ish cuts, either through age requirements, means-testing or across the board cuts. (Big benefits cuts today to avoid even larger benefits cuts later.)

This requires a better electorate than this country currently has.

If there are going to be cuts to SS there should be cuts that impact the people making the decisions and subsidies across the board. This is my only point. I am prepared for a 22% cut though I hope it doesn't happen. My employer and I paid a million into SS and Medicare. Give me 2% interest plus my principle and let's call it a day. With that money I will opt out.

 

[ScoopKona]

1) If there are going to be cuts to SS there should be cuts that impact the people making the decisions and subsidies across the board. This is my only point. I am prepared for a 22% cut though I hope it doesn't happen. My employer and I paid a million into SS and Medicare. 2) Give me 2% interest plus my principle and let's call it a day. With that money I will opt out.

[Numbers added for clarity.]

1) Isn't going to happen.

2) Isn't an option.

I came to the conclusion that the powers that be are going to let average people twist in the wind -- roughly 30 years ago. So I have comported myself accordingly. That's why I don't pay into the system now. The system as set up is little more than a generational ponzi scheme. There's one chair left and the music has almost stopped.

It's better to not need that chair.

 

[Tia]

I know several people that moved to positions in the Federal Government, if they work the last 5 years there they can keep their Federal Health Insurance Plan, so they can retire early.

 

[joestein]

So I think what you are saying without explicitly saying is they should go after the entitlement program of all Federal Employees which is significantly more impactful then then just themselves. They won't because it includes themselves. I am not for impacting anyone's retirement
but if one is going talk about doing it for someone else, they should not exclude themselves.

I am just pointing out that congress doesn't have some sort of special mega-pension. They accrue at the same levels as any federal employee. Yet, so many people think that they have some special plan. Of course, the vast majority of people in this country know more about what Kim Kardashian is wearing than any impactful fiscal matters.

 

[TolmiePeak]

The Fed prints money indirectly. They buy bonds with money they just make up "out of the air". The people who have the bonds now have money, which they can use to do other investments.

They have done that in the past. At least now they are reducing their balance sheet.

 

[AlmostRetired]

I am just pointing out that congress doesn't have some sort of special mega-pension. They accrue at the same levels as any federal employee. Yet, so many people think that they have some special plan. Of course, the vast majority of people in this country know more about what Kim Kardashian is wearing than any impactful fiscal matters.

Pension is based on accrue and some length of final years salary. Two factors. You are correct, the accrue is the same with one important fact left unsaid. Congress sets their own salary. How many federal employees decide their own salary? When two major factors determine your pension and you and you alone set a major factor, seems like a special plan to me.

 

[joestein]

Pension is based on accrue and some length of final years salary. Two factors. You are correct, the accrue is the same with one important fact left unsaid. Congress sets their own salary. How many federal employees decide their own salary? When two major factors determine your pension and you and you alone set a major factor, seems like a special plan to me.

Except their salary is $174K/yr. I would say that is a pretty low salary for their position.

 

[keno999]

Except their salary is $174K/yr. I would say that is a pretty low salary for their position.

They're real money comes from "other sources"

 

[TolmiePeak]

They're real money comes from "other sources"

None of which is counted towards their pension. The real money is made by the lobbyists.

 

[Superchief]

Pension is based on accrue and some length of final years salary. Two factors. You are correct, the accrue is the same with one important fact left unsaid. Congress sets their own salary. How many federal employees decide their own salary? When two major factors determine your pension and you and you alone set a major factor, seems like a special plan to me.

Congressmen also have the ability to get rich from insider trading. Most are millionaires by the time they leave office. My biggest beef with their pension system is that we have to follow rules that they make, but they can live by different rules.

 

[ScoopKona]

They're real money comes from "other sources"

Their real money comes from having almost no expenses. It's simple to get ahead as a Senator when cost of living is close to zero, and income is $175K. Their time in Washington is nearly all on the taxpayer's dime. Their home office is, too. And all they have to do is find some minor reason for their travel to be "official business" and they can vacation for free. Even easier for Presidents, who have absolutely zero expenses and $400K per year.


Besides, most people don't run for national office unless they're already wealthy. I'm not suggesting that there isn't plenty of corruption inside the beltway. But it's possible to leave the house or senate as a straight-arrow, and still be wealthy thanks to basic compound interest.