I Stand Corrected!
Some of my readers pointed out, kindly but sternly, that I am living in the past in a way I hadn’t considered.
Muchas gracias, crew, for demonstrating vividly that I can be at least as dense as the next racist, homophobic, intolerant, Neanderthal, semi-literate redneck. (I am always fascinated by how quickly the Uber Left can come up with attacks that all good Statists adopt immediately, baying for what we thought was our 100% American red blood over what we consider traditional values.)
The cream of the jest is that Little Mrs. “I’m So Prepared” missed what we call “a real sitter” in the professional (Duplicate) Bridge world, something so “obvious” that a tyro shouldn’t overlook it. This is very good for my character, and not only am I ‘fessing up to the entire readership but I am truly grateful for the very kind correction. Real friends tell us when we’re wrong or have overlooked an important factor, and I sure was and did.
Let us get into the twenty-first century and consider the issue of when to begin drawing Social Security. I’m not making an excuse, but I had to make my decision in 2004, prior to the time when I realized the economy was going off the rails pretty permanently. I was thinking in terms of relative stability, low interest rates, and a very bad example set me by my mother, who took it into her head after her third bout with cancer that she was going to die young and was determined to recover some of what she had paid into the Social Security “trust fund.” Mother worked before we were born and Daddy was in the Navy and gone a lot, but other than that she worked only on contract after we were grown. At 62, Mother signed up at a time when she had no need for the money. In due course my father died, leaving Mother quite well off, but she made some spectacularly bad decisions, and the time came when she regretted bitterly what she had done. She lived to be eighty, and for the last several years even an additional $700/month would have been very comforting.
If we look at it in classic terms of amortizing, my decision was an excellent one at the time. (I really do feel so dumb!) I worked the figures out, and if I lived ten more years, until 2014, I would be far better off to take twenty-one hundred dollars two years later than fifteen hundred at the time. That was a good wager actuarially in ’04, but that, as we frequently say, was then. This is now, and it is high time to consider the probable future of Social Security, the declining dollar, the near certainty of rampant inflation, and a lot of factors we all expect to change both America and Social Security, probably in no more than the next eighteen months.
Social Security slipped over into the red this winter, six years ahead of schedule, due primarily to the decrease in tax revenues which were down over 17% the last time I looked.
The brouhaha over Obama “care” has brought the nonexistence of a valid Social Security “trust fund” to the attention of far more Americans, along with just how much Medicare and Medicaid are racking up deficits. It is now quite widely-known that the “non-negotiable” IOUs in the putative SS “trust fund” have no value at all, and that the 40 to 1 ratio between those paying taxes and those receiving checks is approaching 2:1 and expected to go negative in this decade. The thousands of dollars you have “invested” in a government pension have been embezzled from the very start, the “fund” is a chimera, and even politicians finally realize that the problem is serious. Consequently, Congress has lascivious eyes turned towards your private pension plans (IRA and 401(K) in particular), planning on looting some twelve trillion dollars–for which they will give you a “Guaranteed Retirement Account” backed by the “full faith and credit” of the US government. Feel free to laugh hysterically–at least, if you are already retired. There are plans for cutting increases, lengthening the time until SS can be initiated, and raising expenses and reducing services for mandatory Medicare. The most outrageous facet of all is the idea of levying an additional tax upon the more successful by “means testing.” The redistribute-the-wealth crowd intends to determine what means are “sufficient” for you and erase any pretense that SS taxes are a way of accumulating value which will be returned to you when you are too old to work. I have a very small pension from the Army which a grateful Congress CUT by 1/3 a couple of years after John died, demonstrating that no government promise is to be relied upon.
What’s the age requirement up to now, for most middle-aged and younger people? 67 1/2, or more? If the COLA increases remain frozen after three years, as they well might, the premiums and surcharges go up, the minimum age is raised, and “means testing” is initiated, no matter what happens to the economy it sounds like an excellent idea to run the numbers for your particular circumstances. One of the more appalling features of Obama “Care” is that it grants the government direct access to your personal bank accounts, and I can envision retroactive taxes or cuts being removed without your permission or even knowledge.
What I think particularly idiotic of me was not considering the value of money now compared to what I anticipate it to be in the future. It seems quite dim-witted to have made a deliberate policy of turning Federal Reserve Notes into items with intrinsic value at flank speed myself, but to have failed to consider that many of you have anticipated income which might well be worth more to you now than it will be in 2015. It would be advisable to consult a financial planner, and my first thought is to ask Gary North, since I have had some interesting experiences with interviewing and engaging financial experts after I was widowed. Those I am acquainted with tend to be a very sanguine bunch when recommending investments and anticipating brilliant success, but at least some of them jump ship without notice after sticking your nest egg in an arrangement that carried a hefty penalty to AIG–which I had never heard of, back then–for early withdrawal. It took me over two weeks to find out where my funds had gone, between two mergers, a sale, and four changes in account managers! (I was a lot more naive in 2004.)
I have yet another sin to atone for. I attributed something to Bill Bonner yesterday that was actually written by Taipan Daily’s Editor Justice Litle, another of my favorites and part of the home team. Justice wrote,
“No Money, No Problem
This reality is brought to mind by three alarming observations:
Many baby boomers (i.e. the bulk of U.S. consumers) have little or no savings.
They do not seem to care about this.
Rather than save, they have decided to spend what little they have left.
Every year, the Employee Benefit Research Institute issues its “Retirement Confidence Survey.” This survey measures the attitudes and financial positions of American workers in relation to retirement.
According to the survey’s findings released earlier this month, “the percentage of American workers with virtually no retirement savings grew for the third straight year.”
A whopping 43% of workers surveyed had less than $10,000 saved for retirement. A full 27% had less than $1,000 put aside.
Ah, but maybe home equity and defined benefit pension plans will save the day? Not when great swathes of homeowners are “underwater” or “upside down” on their mortgages. Not when pension shortfalls, both public and private, are the next multi-trillion-dollar time bomb waiting to explode.”
If you do not read TD I recommend it highly; if you drop an e- to firstname.lastname@example.org probably some genial soul will start sending it to you. Justice is wise far beyond his roughly thirty years, as knowledgeable as one would expect of an Editor for Agora, and an excellent writer. He is also, in my opinion, an absolute darling, but that probably doesn’t count as a professional qualification. Forgive me, Justice. Does it help any that I attributed your words to the Big Boss?
Adam Hopkins (who handles getting my articles on W&G) asked me to check my source, and I was doubly humiliated when I discovered my statistics were off, as well, a faux pas in my profession so serious I may not recover for a year…and I have to admit to yet another error. Adam requested that I tell you that “Lights Out” is available to read on the Internet and the author styles himself “HalfFast.” (No comment.) William Forstchen is the author of the superb One Second After, which I wrote as “The Day After.” I have been a big fan of Forstchen’s for years, and think One Second After is an important work…no explanation.
Thanks for keeping me straight, Adam, and I’ll be scrupulously careful from now on instead of relying on my usually good memory for figures and authors.
No excuses, Shooters. You have a right to expect the very best analysis and most punctiliously correct statistics, and I dropped the ball into my idea of the Grand Canyon. I let both of us down, and I am deeply embarrassed and determined not to make another mistake, ever again.
April 2, 2010