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From the monthly archives: October, 2010

We are pleased to present below all posts archived in 'October, 2010'. If you still can't find what you are looking for, try using the search box.

Retired and Bankrupt

As the great recession drags on it’s clear that the average American’s dream of retirement may be just that…a dream. Far from the fiscal hawks’ mythology of “greedy geezers”  living high on the government hog or cow,  or whatever farm analogy you prefer, it’s clear that a growing number of seniors are facing frightening fiscal futures. There have been a number of stories recently highlighting the realities facing today’s retirees. USA Today wrote:
The ranks of older bankruptcy filers also have been swelling rapidly. From 1991 to 2007, bankruptcy filings by those 65 and older increased by 150%, while filings in the 75-to-84 age group soared 433%, according to the Consumer Bankruptcy Project. Older Americans are staggering under debt because of a variety of problems — from unexpected job losses late in life and underemployment to overwhelming medical bills and providing financial help to their children and grandchildren, analysts say. Making the issue even more serious: They have little time to climb out of debt, says Matthew Beatman, bankruptcy lawyer at Zeisler & Zeisler in Bridgeport, Conn.
A University of Michigan Law School study examined why Americans over 65 are the fastest growing demographic of bankruptcy filers and reports that seniors blame credit card debt.
And though older bankruptcy filers blame credit cards for their debt, they're not the underlying cause of their problems. Much of the credit card debt resulted from attempts to supplement lost income. "When people in their 50s are laid off after they have been at the same company for 25 to 30 years, they find things have changed," says Brian Grogg, a credit counselor at GreenPath Debt Solution in Farmington Hills, Mich. "They need to know more about computers. They find it harder to get a job."  And seniors who rely on Social Security are finding it insufficient. There will be no increase in retirement benefits  in 2011 for the second year in a row. -- USA Today
As we’ve reported here before, we can not afford to ignore the growing Retirement Income Deficit facing millions of Americans. Yet, that’s exactly what’s happening  in Washington in the rush to balance the federal books on the backs of programs like Social Security and Medicare.

All Tricks & No Treats from the Fiscal Commission

Washington could have an especially frightening “treat” for Americans this Halloween. The President’s Fiscal Commission and deficit-hawks in Congress have a terrifying new plan for America’s workers, requiring them to stay on the job until 70 years old before qualifying for full Social Security benefits.  Be afraid…be very afraid…

Social Security Sense and Nonsense

We don't often employ the "cut and paste" style of blogging here but sometimes there's a piece so good...it just doesn't need any additional context or clarification.  This is one of those posts.  Consider adding this wonderful Social Security post from Paul N. Van de Water from the Center on Budget and Policy Priorities to your must-read, must-forward list for the week!
In a new paper, I’ve tried to correct some of the misinformation that critics of Social Security have been spreading about the program. Here are the facts.  Social Security is a well-run, fiscally responsible program.  People earn retirement, survivors, and disability benefits by making payroll tax contributions during their working years.  Those taxes and other revenues are deposited in the Social Security trust funds, and all benefits and administrative expenses are paid out of the trust funds.  The amount that Social Security can spend is limited by its payroll tax income plus the balance in the trust funds. The Social Security trustees — the official body charged with evaluating the program’s long-term finances — project that Social Security can pay 100 percent of promised benefits through 2037 and about three-quarters of scheduled benefits after that, even if Congress makes no changes in the program.  Relatively modest changes would put the program on a sound financial footing for 75 years and beyond. Nonetheless, some critics are attempting to undermine confidence in Social Security with wild and blatantly false accusations.  They allege that the trust funds have been “raided” or disparage the trust funds as “funny money” or mere “IOUs.”  Some even label Social Security a “Ponzi scheme” after the notorious 1920s swindler Charles Ponzi.  All of these claims are nonsense. Every year since 1984, Social Security has collected more in payroll taxes and other income than it pays in benefits and other expenses.  (The authors of the 1983 Social Security reform law did this on purpose in order to help pre-fund some of the costs of the baby boomers’ retirement.)  These surpluses are invested in U.S. Treasury securities that are every bit as sound as the U.S. government securities held by investors around the globe; investors regard these securities as among the world’s very safest investments. Investing the trust funds in Treasury securities is perfectly appropriate.  The federal government borrows funds from Social Security to help finance its ongoing operations in the same way that consumers and businesses borrow money deposited in a bank to finance their spending.  In neither case does this represent a “raid” on the funds.  The bank depositor will get his or her money back when needed, and so will the Social Security trust funds. As far back as 1938, independent advisors to Social Security firmly endorsed the investment of Social Security surpluses in Treasury securities, saying that it does “not involve any misuse of these moneys or endanger the safety of these funds.” Moreover, Social Security is the “polar opposite of a Ponzi scheme,” says the man who quite literally wrote the book about Ponzi’s famous scam, Boston University professor Mitchell Zuckoff.  The Social Security Administration’s historian has a piece on this topic as well. Unlike the frauds of Ponzi — and, more recently, Bernard Madoff — Social Security does not promise unrealistically large financial returns and does not require unsustainable increases in the number of participants to remain solvent.  Instead, for the past 75 years it has provided a foundation that workers can build on for retirement as well as social insurance protection to families whose breadwinner dies and workers who become disabled.

More About Paul N. Van de Water

Paul N. Van de Water is a Senior Fellow at the Center on Budget and Policy Priorities, where he specializes in Medicare, Social Security, and health coverage issues.

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