So yesterday I posted an article about how federal tax dollars are being spent on 4 primary things, one of which is social security. If you read that article and thought it was scary take a look at this one because this is going to greatly impact all of us.
http://online.wsj.com/article/SB10001424052748704073804576023890972991846.html
"This week's landmark tax deal sharply changes the financial outlook for Social Security. That has huge implications for your retirement. And most people don't have a clue what's coming.
The deal, by cutting payroll taxes for one year, weakens Social Security's funding. It puts those payroll taxes "in play" as a political football for the first time. And by freezing federal taxes at today's low rates, it will add at least $900 billion—and probably much more—to our spiraling national debt. That threatens the ultimate financial stability of the federal system.
Ten years ago, the national debt was about $3.5 trillion. By 2020, Congressional Budget Office calculations suggest it could be well over $20 trillion. No kidding."
I think this article answers yesterdays quesiton: maybe we should increase taxes because clearly our country is having a hard time saving. Check out these statistics from the article:
"According to the most recent survey by the Employee Benefits Research Institute, a think tank specializing in the topic, fewer than half of workers have even saved $25,000, and only a third have saved as much as $50,000. Forty-four percent have saved less than $10,000, and a quarter have basically saved nothing at all."
Clearly our federal government has a lot of figuring out to do, especially in terms of our national debt as well as the social security issue. One answer would be for citizens to have started to save 20 years ago, but clearly we're a little too late for that. Is there a realistic solution to this problem? I mean what would we do without social security? Who can honestly afford to pay more taxes? I personally have no idea what is realistic or not, any ideas?
This is the looming question for us all. Will there be an end to our rising deficit? Cutting things like social security and raising taxes would be such a bad situation for the psyche of Americans. It would be so tough for us to rebound from this huge hole that we have dug ourselves. No one can really afford to pay more in the way of taxes but it seems like this could be an inevitable step in the recovery of the government's losses. We need to be prepared to spend more of our dollars in order to help bail them out.
ReplyDeleteAnother good post. It seems as if our country is in a lose-lose situation. As you said, who can pay more taxes? Certainly not the majority of the U.S. population right now. It is just puzzling to me how the national debt has more than tripled since ten years ago. Were government officials thinking about these possibilities at all when they were cutting taxes and spending money they didn't have?
ReplyDeleteWhat I find particularly interesting, yet scary, about this article is the amount of money that American workers have saved versus the amount of money required for even a modest non-governmental annuity that a lot of times wouldn't even have inflation protection at that. The article said that less than half of workers have even saved $25,000; this would get them an annuity (with a 3% annual increase to help weaken the blow of inflation) paying around $1,400...A YEAR! That's about $27 a week. This is not even enough money for someone to buy groceries let alone pay for rent, medical bills, etc. If social security benefits were cut or ran out, I think there would be a lot of elderly people living on the streets of America. After reading this terrifying article, I am definitely going to start putting money aside for retirement as soon as I get my first job.
ReplyDeleteIf the goal of the government is to trudge down the path of equity then one has to realize that a large population of this country is aging and will soon be retired. If equity is the goal then the answer is wiser spending (I would suggest less on defense) since both medicaid and medicare seem to be more important from a citizen and from a public point of view but to also slowly raise taxes.
ReplyDeleteAs the article mentions that people are unaware of all the effects a cut in spending (social sec etc) will have and I feel that if people were more informed then they would be willing to pay a little 'premium' tax now to ensure they have enough to have a roof over their head and food on the table once they retire.
"I mean what would we do without social security?" This says a lot to me. We have become too dependent on the government to take care of us instead of taking care of ourselves. People count Social Security as part of their future earnings, and there is something wrong with that. There was a time and a place for social security, but both have long since passed. Society needs to be more accountable for its actions, and make more responsible choices. I am not in favor of raising taxes, but there does not seem to be any other way. There has to be a cut in spending as well, or the problem will just get worse. Government needs to be more responsible as well and say "no" much more than it currently does. I realize that won't get people re-elected, but too bad. No one said governing was easy. I dont have the answers, but the answer has to start by toning down societie's expectations. If you aren't a millionaire, you can't live like one. Even great nations have limitations, we just haven't accepted ours.
ReplyDeleteThis summer I interned at Raymond James. Clients were primarily investors who were looking at mutual funds, bonds and ETF's as a way to generate retirement income. When calculating how much money and savings their retirement goals would require, social security payments were rarely factored in. These factor payments are not enough to have a significant impact on anyone's portfolio much less actual retirement plans. Social security was not intended to pay for twenty five to thirty years of retirement like it does now since people are living longer. If social security were abolished, it could mean an incredible tax reduction and positive impact on the current national debt. My concerns would be how people with severe disabilities,or who were in poverty would be able to fund retirement.
ReplyDelete