The numbers just don’t work anymore. There are not enough workers to support today’s number of Social Security, Medicare and Medicaid beneficiaries.
In 1945, there were 41.9 workers per beneficiary. Today there is 2.8! And … it’s getting worse. According to data provided by the usdebtclock.org, the number of people receiving Federal benefits is rising by more than 6000 per day. More than half of the entire population is now receiving some form of benefit.
As the number of beneficiaries increases, more goes out and less money comes in. By 2035, it is estimated there will only be 2.2 workers per social security recipient. To say this rate is unsustainable would be an understatement. Social Security is already broke. Sure they say, there are reserves but guess what is being used as reserves? You guessed … Treasuries! Aka … more debt.
Those Treasuries earn interest but did you ever think who it is that pays the interest? You guessed it again … you do! U.S. Taxpayers pay interest on the reserves held in trust to fund Social Security. You can’t make this stuff up.
That’s why Alan Greenspan says you can’t fix the economy until you fix entitlements. That’s Fed Speak for – it’s hopeless. To be sure, there must be a serious round of benefit cutting in order to have any hope of managing the budget deficit and keeping the economy together.
Pension Funds Are Falling Short
Then there was this, on March 17, 2017 MarketWatch reported, Collapsing Pensions Will Fuel America’s Next Financial Crisis. “Cash-strapped pension funds could leave millions of Americans high and dry in the very near future.”
U.S. state and local pension funds are said to be $6 trillion in the hole. ZeroHedge reports that the top 25 corporate pension plans alone are underfunded by over $225 billion while companies in the S&P were underfunded by $375 billion.
Herein lies the problem: With Social Security in trouble and public and private pensions being underfunded, two of the legs of the retirement stool are in jeopardy. And, with the financial system more vulnerable than ever, retirees need to look to alternative investments.
Is a Portfolio Truly Safe or Balanced Without Gold and Silver?
It is imperative for investors today to understand the risky developments impacting our finances so they can be equipped to protect and grow their wealth in the face of these threats. As savers and investors work to preserve their hard earned wealth, alternative measures should be considered to hedge the inherent risks that have, unfortunately, befallen our financial system.