Is Social Security Really Just A Ponzi Scheme?

September 20, 2011

There’s been a lot of talk over the last several years and most recently by a Presidential candidates about whether Social Security is nothing but a Ponzi scheme. Well folks, Social Security is not a Ponzi scheme. It may feel like one. But it’s not.

Here’s why…

A Ponzi scheme is investment fraud knowingly perpetrated so that early investors are paid off with money from later investors. This is done specifically to encourage more investors to take part. (Remember: If it’s too good to be true, it probably is.) Of course, the scheme’s perpetrators keep a lot of the money for themselves. Social Security lacks both the fraudulent intent and profit-making motive of a Ponzi scheme.

How was Social Security Supposed to be Funded?

Designed as a pay as you go system, the system was never designed with the idea of creating an individual savings account for each working adult. Social Security is a pool of money held in trust that pays benefits to our retired workers that have met set eligibility requirements. So, although the payment formula allows for payments based upon contribution levels, we are not necessarily supposed to be getting back the same dollar amount that we paid into Social Security. Further, the working public and their employers are supposed to be carrying the tax burden for the country’s qualified Social Security recipients. Like it or not, the Social Security system is as designed

Jane Nowak is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA, Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles quoted and published on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC

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Your #Retirement May Not Be Permanent

September 14, 2011

Your #Retirement May Not Be Permanent @SecondAct
http://ow.ly/6khLY #Boomers may need a bridge job -figuratively- to make ends meet


Social Security – Going Broke or Not?

September 13, 2011

Social Security: NOT Going Broke @cbsmoneywatch @jillonmoney
http://ow.ly/6kg1Y A different outlook for your Soc Sec?

As much negative  information that’s flying around about Social Security, here’s an interview with Mark Miller who has a different perspective on what the financial status of  Social Security is today. I’m frankly wondering out loud if I’m being swept up in the media hype or if what I’m reading about the financial status of the program long term isn’t  true.

But, as Mr. Miller calmly mentions in this interview. the Baby Boomer wave was already figured into Social Security forecasts. I too find it very difficult to believe that the Federal government geeks somewhere in the last 65 years haven’t  forecasted for the Baby Boomer retirement tsunami. (Okay, for those of you out there saying that the Federal government geeks can’t even do a budget or properly forecast for potential saving from our new health care law, admittedly maybe I should be more skeptical. But, that being said…) 

Once more folks get back to work and we don’t have to (double) dip into the  Social Security Trust Fund, perhaps the stories about impending Social Security insolvency will abate.  The proof will be if their are steps that our Congress has to take over the next couple of years to keep Social Security comfortably solvent.

One thing I’ll tell you is for sure.  Our #1 sacred cow,  aka Social Security isn’t going on the grill anytime soon. That’s one thing that you can take to the bank.

 Jane Nowak  is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA,  Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently been quoted in articles and had articles published on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC


Social Security – Living With or Without It

September 8, 2011

Is It Time to Just Live With It or Just Live Without It?  

There certainly is a lot of ongoing press about the state of our Social Security System. And, just like that old joke about one’s spouse, I think with a couple of tweaks,  it’s safe to say the same thing about Social Security. “We can’t live with (funding) it, but, we can’t live without it (retirees and near-retirees).’  In this month’s newsletter I’m sharing a brief  history of Social Security System, its funding mandate and my conclusions about one of America’s favorite ‘sacred cows’ -Social Security.

 A Brief History of Social Security
Social Security as we now know it emerged as a part of Franklin Roosevelt’s New Deal  programs of the 1930’s. The post-depression days of the 1930’s were very tough for most Americans. In fact, more that 50% of our ‘older’ population lived in poverty. In order to take care of our older citizens, Social Security was signed into law on  August 14, 1935. Originally enacted as a system that was not meant to be permanent (sound familiar?),  for many retired Americans, Social Security has become their largest source of income. In fact, 48% of Americans currently receiving Social Security benefits would be below the poverty level without their monthly check from Social Security.

Current day Social Security benefits and benefit coverages have evolved a lot over the last 70 years. Initially benefits did not extend equally to all citizens. Many workers were excluded from the system due to race, gender and/or job title. Simply put, benefits did not extend equally to all citizens. 

  • A 1939 change in the law added survivors’ benefits and benefits for the retiree’s spouse and children.
  • By 1950, Social Security laws expanded coverage to all non-government workers, including the self-employed.
  • 1956 saw the expansion of the program to provide monthly cash benefits for disabled workers and their dependents who have paid into the system, and met minimum work requirements.
  • Medicare and Medicaid were established in 1965 under a Social Security reform law.
  • In 1983 that civilian federal workers—such as the President of the United States and your Congressional Representatives—were eligible for Social Security benefits.
  • 1970’s cost of living adjustments (COLAs) were added to Social Security payments

How was Social Security Supposed to be Funded?
Designed as a pay as you go system, the system was not designed with the idea of creating an individual savings account for each working adult. It is a pool of money held in trust that pays benefits to our retired workers that have met set eligibility requirements. So, although the payment formula allows for payments based upon contribution levels,  we are not necessarily supposed to be getting back the dollar amount that we paid into Social Security. Further, the working public and their employers are supposed to be carrying the tax burden for the country’s qualified Social Security recipients.

Conclusions
With our country wallowing in a tremendous amount of debt, large numbers of unemployed workers, many underemployed workers, an ever more vocal group opposing any tax increases and the looming retirements of the Baby Ka-Boomers, many American citizens are plainly fearful of losing or never receiving their Social Security benefits.
While there aren’t any easy answers, I believe that there definitely are  government solutions for keeping Social Security practical well past 2035. (2035 is the alleged year that naysayers tell us that Social Security is supposed to be out of money.) But, because our government coffers are weighed down by crushing debt, our legislators have clung to their political planks cheering themselves for failing to compromise and our electorate is (understandably)not fond of paying more taxes, some compromises will need to be made (i.e remove the cap for OASDI ‘taxation’ limits, .raise retirement ages, lower benefit payments).
Most importantly, I think that we as a people need to begin to come up with more of our own answers. We should re-assume more of the responsibility for taking care of our elders and ourselves as we age.  Regardless of what we’d like to believe, governments can’t be all things to all people.
After all,  Social Security was initiated in the 30’s because over 50% of ‘older’ Americans were below the poverty level. Now 75 years later, 48% of Social Security recipients would be below the poverty level without their monthly Social Security check. Clearly, we as a people have lived through some of the most prosperous years that our nation has ever experienced. Yet, we have not done better job saving for our financial futures. We have come to rely way too heavily on what was meant to be a ‘temporary solution’. Over the decades, our ‘temporary solution’ has become our very own beloved  and very necessary ‘sacred cow’ known as Social Security.

 

Jane Nowak  is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA,  Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently been quoted in and had articles published     on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC


Baby Boomers:Is Our Health Care Still in “Critical” Condition?

August 20, 2010

 

As I become increasingly familiar with the Baby Boomer demographics, I have become proportionately concerned about the status of Medicare here in the USA. While the spotlight is firmly focused on Social Security, I think that we just may be fiddling while Rome burns.

Yes, Social Security definitely has its issues. But, what about the cost of health care? Historically health care costs go up at a rate greater than the rate of inflation. Digest these facts about the financial condition of health care in the USA:

  • Current health care spending is 6.8% of a family’s household expenditures
  • Current health care spending for those over age 65 is 12.6% of household expenditures 
  • Employer health benefit costs are expected to rise 9% in 2010
  • Employer health benefit costs are expected to rise  8.9% on 2011
  • The typical employees’ wages will not be keeping up with the cost of health care
  • Employers are increasingly passing a greater share of health care costs to employees
  • Companies that are going through bankruptcy are terminating health benefit plans for existing employees

Something’s got to give. As the Baby Boomers age and health care costs continue to rise at a rate greater than inflation, we circle back to the same old question.  How are we going to pay for Baby Boomer health care?

I guess that is some of what Health Care Reform is supposed to do.  No wonder there was so much talk about what type of health care costs to fund! And that discussion about end of life health care, -the truth is that ‘the system’ may not be able to afford our ever-increasing longevity.

 No matter what is acknowledged publicly, those who crafted our Health Care Reform bill had to discuss when to ‘pull the plug’ on seniors and their end of life health care funding.

Jane Nowak is a Financial Planner with Kring Financial Management located in Atlanta, Ga. Jane’s practice focuses on Women’s Retirement Planning and Financial Planning for Women. Her articles have been published on line at NASDAQ, Financial Planning Association and Womenetics.com. Follow Jane on Twitter at: http://twitter.com/moneygal2020


It’s Never Too Late to Put Your Retirement Savings World in Order

June 16, 2010

Do the current economy, saving for retirement, not saving for retirement and the never-ending litany of financial ‘to-dos’ have you turned upside down? Are you part of the 52% of Americans who have not saved or are not currently saving for their retirement?

If you answered ‘yes’ to either or both questions, you are in luck. Now is always a good time to pick yourself up and begin putting your financial world in order. Currently, many Americans are going through an economic rebuilding of their personal economies. They are in the same situation (or a more challenging one) than the one that you’re in. So, you are definitely not alone.

The good news is that financial planning is a process. I liken it to a turtle’s race. You know that no matter what your financial challenges are -slow and steady wins the race. Many of us get knocked down or knocked back several times during our financial lives. No matter. Figure out where you are and begin or begin again. Remember to always keep going forward. Run the entire race with your eye on the goal. That is what’s important.

Some of the financial basics are:

Budget

  • Live within your means –If you can’t pay for it, don’t buy it
  • Have a written household budget
  • Stick to your written household budget
  • Pay off your credit cards ‘in full’ every month (See bullet #1)

Begin saving and keep saving

  • Set aside 3 to 6 months of savings for your rainy day(s)
  • Invest money using a 401(k), 403(b), IRA, Roth IRA, SEP etc.
    • If available, invest enough to get your full employer match
    • Raise your savings rate every year by at least 1%

It’s okay not to know

  • Know what you don’t know
    • No matter where you are with your financial life, when needed seek the advice of professionals 

It is never too late to add some (more) gold to your golden years. And, with ‘all things financial’, now is always the best time to start.

Jane Nowak is a Financial Planner with Kring Financial Management located in Atlanta, Ga. Jane’s practice focuses on Women’s Retirement Planning and Financial Planning for Women. Her articles have been published on line at NASDAQ, Financial Planning Association and Womenetics.com. Follow Jane on Twitter at: http://twitter.com/moneygal2020


How to plan ahead for a long term care need | RetirementRevised

June 15, 2010

via How to plan ahead for a long term care need | RetirementRevised.


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