Wednesday, June 29, 2016

Scathing New Report Shows Just How Bankrupt Social Security Really Is

By Simon Black

Last week, a group of analysts published an astonishing report about the future of Social Security in the United States, and their remarks were nothing short of damning.

According to their calculations, for example, these analysts claim that Social Security is already running a huge deficit to the tune of tens of billions of dollars each year.

In fact, this Social Security funding deficit has been taking place for several years now, and it’s actually accelerating. So the problem worsens each year.

According to the analysis, the astounding rise in Social Security recipients vastly outpaces any growth in tax revenue received into the program. And this trend will continue for decades.

The report goes on to describe Social Security’s two main trust funds, OASI (for ‘Old Age Survivors Insurance’) and DI (‘Disability Insurance’).

They tell us that DI actually went bust several months ago.

But rather than attack the root cause of the problem and restructure the program, Congress quietly slapped a band-aid on DI by simply diverting funds from OASI, just enough for DI to limp along for a few more years.

So in other words, they robbed from OASI to pay DI, and keep it afloat through the next presidential election. It’s incredibly short-sighted.

Among the other programs slammed in this report, the Hospital Insurance (HI) fund, one of Medicare’s major trust funds, is of particular concern.

Their brutal analysis shows HI is going to completely run out of money in 2028, just twelve years from now (when President Clinton finishes her third term).

2028 is actually two years earlier than they had originally projected.

And they project the entire Social Security program will be fully depleted six years later in 2034.

Like I said, this report is incredibly damning.

But it raises an important question-- just who are these crazy, fringe analysts predicting all of this doom and gloom?

After all, the political establishment has been telling everyone for years that Social Security is going to be just fine. And they seem to have a solid grip on the situation, right?

Well, the report was actually published by the Social Security Administration itself, signed by (among other cabinet officials) the Treasury Secretary of the United States of America.

It’s absolutely incredible. The government is publishing this data in black and white.

They’re telling anyone who’s willing to listen that Social Security has dug itself into an impossible hole.

More importantly, they’re telling us there’s a 0% chance that the government will be able to honor its existing commitments.

They’ll either have to radically raise taxes, or simply reduce (or eliminate) the Social Security benefits that they’ve been promising taxpayers for decades.

The younger you are, the steeper the price you’ll pay.

If you’re in your 60s, for example, you may likely see your benefits cut. If you’re in your 40s or 50s, you can count on it.

And if you’re in your 30s or younger, you can not only forget about Social Security, but you can expect to pay more and more taxes to bail out a program that won’t be there for you when it comes time for you to collect.

This is what happens when nations go bankrupt.

History is full of so many examples of dominant powers who think their wealth will last forever… and so they make far too many promises to far too many people for far too many years.

But eventually the reality of simple arithmetic catches up.

We’re seeing this now in the US, and we’ll continue to see this problem worsen in the coming years until it becomes a full-blown emergency and people cry out, “Why didn’t anyone see this coming?!?”

Here’s the good news: you have ample time to prepare, and there are plenty of solutions to fix this.

Don’t get me wrong-- I don’t mean “fix Social Security”. Oh no. That program is toast.

I’m talking about fixing this for yourself.

Retirement is one of those life events that is completely predictable. We know it’s going to happen.

And with a little bit of education, planning, discipline, and execution, we can vastly influence the outcome and prevent any major catastrophe from interfering with our goals.

You can dramatically boost your own nest egg, for example, and have much greater say over your retirement assets by setting up a structure like a solo 401(k) or a self-directed IRA.

It also makes sense to invest in your financial education; learning more about investing will clearly be beneficial in boosting your returns, and this can have a profound effect over time.

Especially if you’re younger, increasing your average return by just 1% over the course of 20-40 years can add up to hundreds of thousands of dollars in additional retirement savings.

You may also want to consider retiring abroad where you can live the lifestyle you’ve always wanted at a fraction of the price, and substantially stretch the time and value of your retirement savings.

Look, I’m convinced that Social Security will become a national emergency some day. Just remember that since its demise is conspicuously predictable, the impact on your life is completely preventable.

Simon Black is founder of


  1. So, when SS fails, your money will be "safe" in a solo 401k or self-directed IRA? Hahahahahaha!

  2. The fix is very easy: raise the contribution cap for wealthy individuals and Social Security is solvent again. QED!

    1. Very funny! Now back to the real world. No asset will be safe as long as the government and its cronies roam the earth, but at least a nominal 401K or IRA will at least divert their attention from wherever you stash your real savings.

    2. For Social Security solvent is measured over the 75 year window. Forget raising. Completely eliminating the cap according to SSA, solves about 40-70% of that current window. CBO is less optimistic. No raising the cap does not make SS solvent again.

  3. Years ago I entered into contract with the managers of the "Social Security" administration.

    If they fail upholding their end of the contract, they should be compelled to do so or go bankrupt and into receivership. If the administrators of the trust funds did inappropriate things with the money, such as give it to the US Federal Government, they should be put in a jail cell. (A "trust fund" is NOT the Government, they're two separate entities)

    But, regardless, the 12 privately owned banks that make up the "Federal Reserve System" can be required by a new law to simply print up any money needed.

    1. This is a true statement, Carl. Social Security will become just like purchasing food. The FED will continue to print more money, so you will always receive your check each month, and there will always be food to purchase in the supermarkets. However, when inflation goes-up 300% you won't be able to afford to buy anything.

    2. I think you really need to look at Flemming V Nestor because there is no contract and hasn't been one since 1960. The terms of the deal are simple. You contributed on the basis that future generations might contribute when you retire. Now you want to change the rules.

      Since SS does not serve all Americans, I think you will have a tough time selling America on the need to print money.

  4. I could be wrong but I think an IRA is a waste. The taxes on the money coming out of them ten years down the line will erase any earlier tax benefits.

  5. The US Government OWES $2.6TRILLION to Social Security.

  6. Social Security is the Private PROPERTY of the Workers that PAID for it.
    Social Security is a TONTINE, a TRUST FUND.. American workers pay into it their entire lives through payroll deductions. Social Security payments are supposed to come from that fund. So why is Social Security needing an increase in the debt ceiling? Where did our money go? Of course, this is a rhetorical question. Starting with the Clinton administration, the government "borrowed" the cash in the Social Security Trust Fund, replacing is with Treasury Bonds that the US Government is now unable to redeem. The implications are obvious. Because the US Government cannot redeem those Treasury Bonds in the Social Security Trust Fund, the US Government is already in default against the American workers. The American workers' money is gone. The US Government has effectively embezzled the retirement money of American workers. So, in borrowing money to replace the looted cash, the US Government is expecting future workers to pay for Social Security benefits that were already paid for once before, effectively double-billing We The People. To put it another way, the US Government just sold us an apple, but is forcing us to pay for two, and trying to look like this is wise fiscal management of the peoples' retirement funds!
    China and every other country should BEWARE ...... the American Government is a DEADBEAT.
    The American Government DOES NOT PAY IT'S DEBTS.
    Loan America money, you will NEVER get paid back.

    1. Yo, doc, the Supreme Court describes SS thusly in Fleming vs. Nestor (1960):

      "Social Security is not an insurance program at all. It is simply a payroll tax on one side and a welfare program on the other. Your Social Security benefits are always subject to the whim of 535 politicians in Washington."

      Do you feel cheated?

    2. Your the one that voted to enslave your kids tomorrow for a handout today. That's what social security was from the beginning. Let's stop the nonsense about it ever being a good idea. It was always a fleecing, some people are just mad that the jig is up and they don't get their turn in the pyramid scheme.

      By the way, where do you think the govt gets the money to pay their debts? You!

  7. The trust funds are already just Treasury bonds, kept afloat by the Fed.