History Lesson on Your Social Security

History Lesson on Your Social Security

Just in case some young people (& some older ones) didn't know this. It's easy to

check out, if you don't believe it. Be sure and show it to your family and friends. They need a little history lesson on what's what and it doesn't matter whether you are Democrat or Republican. Facts are Facts.

Social Security Cards up until the 1980s expressly stated the number and card were not to be used for identification purposes. Since nearly everyone in the United States now has a number, it became convenient to use it anyway and the message, NOT FOR IDENTIFICATION, was removed.

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the Program would be

Completely voluntary, No longer Voluntary

2.) That the participants would only have to pay

1% of the first $1,400 of their annual Incomes into the Program,

Now 7.65% on the first $90,000

3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year, No longer tax deductible

4.) That the money the participants put into the independent 'Trust Fund' rather than into the

general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and, Under Johnson the money was moved to

The General Fund and Spent

5.) That the annuity payments to the retirees would never

be taxed as income. Under Clinton & Gore Up to 85% of your Social Security can be Taxed

Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are getting taxed on 85% of the money we paid to the Federal government to 'put away' -- you may be interested in the following:

Q: Which Political Party took Social Security from the independent 'Trust Fund' and put it into the general fund so that Congress could spend it?

A: It was Lyndon Johnson and the democratically controlled House and Senate.

Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?

A: The Democratic Party.

Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the 'tie-breaking' deciding vote as President of the Senate, while he was Vice President of the US

Q: Which Political Party decided to start giving annuity payments to immigrants?

AND MY FAVORITE: 

A: That's right!

Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!

Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away! 

HEY, HANDOUTS ARE TOXIC TO ADULTS: Especially young adults

HEY, HANDOUTS ARE TOXIC TO ADULTS: Especially young adults 

This is written not from a place of judgment, but instead to address a problem based on an immense body of work that has brought great clarity to an issue facing the entire nation. The financial support we are offering adults is toxic. We are hurting them, we are hurting ourselves, and until we realize it’s not money that people need long term, everyone involved will feel the pain.

Think back to when you were taught to ride a bicycle without training wheels. Who was more scared? You or your parents?

The idea of letting go of a toddler rocketing across concrete with little protection is terrifying. If we let go, she will fall — she will bleed. If we don’t, she will never learn to ride the most elementary transportation device since feet. Once we let go, and she falls and bleeds, she will quickly learn that balance and control equal the absence of pain.

At that moment, everyone moves on with their life.

Assuming adults can ride their bike without training wheels, what was the primary element in their initial bike-riding achievement? It was others willingness to remove themselves from the situation, with the disturbing knowledge the absence would result in pain.

If we are still supporting adults, the absence of that support will lead to their success — even financial support. We have to remove our self from the situation. Let people learn to be independent; even if they first fail in order to become successful.

As we look at a supported adult’s life, what is missing? They lack skills on budgeting, resourcefulness, independence and, potentially, restraint. To be fair, if their problems stem from needing temporary assistance, then their lack of true financial independence actually makes sense; but, only for the learning period of time, not resulting in dependency.

However, we must be willing to acknowledge the amount of debt  some people hold is directly correlated to our willingness and ability to subsidize those expenses, as well as our willingness to encourage adult students  to blindly accumulate hundreds of thousands of dollars of debt, with absolutely no plan to pay it off.

There’s a giant chasm that exists between people not being able to fund an affordable lifestyle and enabling/encouraging them to pursue what’s an idealistic and unachievable lifestyle. That gap can be bridged with uncomfortable conversations and restraint. Ignoring the chasm will result in everyone falling in.

In most cases what I’ve seen programs supporting adults, the adult isn’t allowed to fail because the program either doesn’t want their client to experience temporary discomfort or the program doesn’t want to admit that they have failed.

It’s a” lose-lose” situation. We make more people dependent on taxpayer programs as we as taxpayers move toward retirement. That math doesn’t work (I’d be remiss to not acknowledge scenarios in which additional financial support is not only warranted, but necessary. Yet, these situations are the exceptions, not the rule.)

The way out of this conundrum will be messier than anyone wants. Even so, if we can’t articulate to people why long term support is a problem, then that’s where we begin, by better understanding the impact of a government entangled financial relationships.

If we do not solve this problem, we will work deep into our 70s so that these younger adults can avoid learning how money works.

Remember, our support isn’t about the sacrifice of your money. This is about sacrificing your feelings and letting failure be the teacher.

The long term continued support of adults will ruin our financial life, and will ruin theirs, too.

Retiring soon? Think Again: MEDICARE PART B PREMIUMS TO RISE 52%

MEDICARE PART B PREMIUMS TO RISE 52% 

7 MILLION ENROLLEES MUST PICK UP THE TAB

2016 might not be anything like 2015 for about 30% of Medicare beneficiaries — roughly 7 million Americans. That’s because premiums for individuals could increase a jaw-dropping 52% to $159.30 per month. And for individuals whose incomes exceed $85,000, premiums could end up ranging from $223.00 to $509.80 per month.

Do the math; the average Social Security benefit was $1,180.80 per month. That would make the $159.30  a whopping %13.5 of the SSI! 

What gives? Blame the “hold harmless” provision in the law that addresses cost-of-living adjustments (COLA) for Social Security benefits. That law limits the dollar increase in the premium to the dollar increase in an individual’s Social Security benefit, according to a report by Alicia Munnell of the Center for Retirement Research at Boston College.

The consumer price index (CPI) is not likely to increase in the period used to determine the COLA for 2016. That means it’s very likely that Social Security recipients — for just the third time since automatic adjustments started in 1975 — will not see an increase in their benefit, according to Munnell’s report.

WHO MUST PAY THE HIGHER MEDICARE PART B PREMIUM? 

This group includes individuals who enroll in Part B for the first time in 2016; enrollees who do not receive a Social Security benefit; beneficiaries who are directly billed for their Part B premium; current enrollees who pay an income-related higher premium; and dual Medicare-Medicaid beneficiaries, whose premiums are paid by state Medicaid programs.

What might you do or consider if you’re among those who have to pay the higher premium? 

Individuals who enroll in Part B for the first time in 2016. 

“Enroll earlier if you’re already 65 and otherwise eligible,” says Michael Kitces, publisher and author of the Nerd’s Eye View blog. “If you’re not eligible now, I’m afraid you’re stuck.” 

Enrollees who do not receive a Social Security benefit. 

Those who are already on Medicare or could apply immediately and who were going to start Social Security benefits in the next year or so might consider applying right now instead, Kitces says. “Those who file in the coming weeks should be able to get both Social Security benefits and Medicare in November and December, which are the two months used for measuring, and therefore make themselves eligible,” he says. If you are among those considering different Social Security claiming strategies — such as file-and-suspend, restricted application and delay to age 70 — there’s no getting around it. You’ll have to do cost-benefit analysis to see if the benefit of the strategy is greater than the cost of the increased Medicare Part B premium.

In the long run, Kitces says, those who anticipate living a long time and who will benefit from delaying Social Security by several years should still delay. “The value of delaying Social Security is far more beneficial than the squeeze from hold harmless,” he says. 

Beneficiaries who are directly billed for their Part B premium. 

If you’re already getting Social Security benefits, request to have your Part B premium deducted from your Social Security check ASAP; you should still have time to be eligible for hold harmless, Kitces says. 

Enrollees who pay an income- related higher premium. 

“It is critically important for folks to review the Social Security notice of 2016 Medicare B premiums that will be in mailboxes later this fall,” says Katy Votava, president of Goodcare.com in Rochester, N.Y. “It’s not uncommon for people to qualify for a decrease because their income drops to a lower bracket as a result of specific lifechanging events.” The problem, Votava says, is that Social Security doesn’t know about those events unless the person notifies the agency.

For those whose incomes are still above the thresholds: “Unfortunately, you’re stuck here,” Kitces says. “If possible, get your 2015 income below the line, so that at least if hold harmless kicks in again ... you can benefit slightly from the second time it flows through.” 

Dual Medicare-Medicaid beneficiaries, whose full premiums are paid by state Medicaid programs. 
“Since your Medicare premiums are being paid by the state at this point, it doesn’t effectively matter whether hold harmless applies for you or not, as to the extent higher premiums occur, they will be paid by the state anyway,” Kitces says. “Not surprisingly, I believe there are some states who are not so happy about this.”

US SHOULD NOT TAX SENIORS’ BENEFITS

US SHOULD NOT TAX SENIORS’ BENEFITS

U.S. Rep. Thomas Massie, RepublicanLast week I introduced the Senior Citizens Tax Elimination Act (H.R. 589). This bill would assist our struggling middle class by eliminating an unnecessary and unjust double-tax on seniors.

Social Security itself is financed by tax dollars, so forcing elderly and senior Americans to list these benefits as taxable income on their tax returns is absurd.

This sneaky technique allows Congress to obtain more revenue for the federal government by taxing benefits owed to citizens who have paid into Social Security most of their lives. When Social Security benefits are taxed, they are, of course, reduced for the person who receives the benefit.

As the Congressional Research Service reports, “Until 1984, Social Security benefits were exempt from the federal income tax. The exclusion was based on rulings made in 1938 and 1941 by the Department of the Treasury, Bureau of Internal Revenue (the predecessor of the Internal Revenue Service). The 1941 Bureau ruling ... viewed benefits as being for general welfare and reasoned that subjecting the payments to income taxation would be contrary to the purposes of Social Security.”

In other words, the 1941 equivalent of the IRS viewed the taxation of Social Security benefits as being unjust and contrary to the purpose for which Social Security was created! For over 40 years, then, Social Security benefits remained untouched by tax-happy congressmen. What made Congress change its mind?

Well, perhaps the opportunity to obtain more revenue for the federal government was simply too enticing for most lawmakers, who didn’t see anything wrong with taxing Social Security benefits to get more money for the government’s coffers.

When Congress first implemented the tax in 1984, it set politically palatable levels so as not to affect middle class retirees.

However, because the thresholds for taxing Social Security have not been adjusted for inflation, more and more retirees are now subject to the tax. What was considered a generous retirement income in 1984 is no longer comfortable, so eliminating this tax will benefit increasingly large numbers of Americans.

As the number of retirees forced to pay this tax increases, public awareness of the tax on Social Security benefits will likewise increase. If congressmen are inundated with complaints from their constituents regarding this unfair and unjust tax, surely Congress could find the will to reduce or eliminate it altogether.

As my colleague and fellow cosponsor Ron DeSantis says, “Americans pay taxes their entire working lives to support Social Security, so there is no reason why these earned benefits should be taxed once again when they receive them. Congressman Massie’s legislation promotes transparency by blowing the whistle on the federal government for double- taxation.”
The Association of Mature American Citizens supports HR 589, and says that the bill “rightly eliminates the unfair income tax on Social Security benefits and ensures that older Americans, who have paid into Social Security throughout their careers, are not excessively taxed by the federal government. Given that mature Americans and seniors have already paid tax on their Social Security contributions via the payroll tax, it is irresponsible for the government to double-tax the benefit in order to generate more revenue. The ‘Senior Citizens Tax Elimination Act’ will not only enable beneficiaries to retain more money for retirement, but it will restore integrity to the Social Security program.”

It is time for Congress to end this tax. Please let your representatives know your position on Social Security Taxation and to support HR 589!

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Social Security Insolvent, Voters Say 'Do Nothing'

Social Security Insolvent, Voters Say 'Do Nothing'

The main driver of the ballooning federal debt is wealth transfer payments. Indeed, more than two-thirds of the federal budget is money that goes from one taxpayer's pocket into someone else's. Some of this is naked wealth redistribution, like food stamps and other welfare. But much of it is what some call "earned" payments, like Social Security and Medicare -- money that has been taken from workers' paychecks for decades with the promise of a retirement return. The solvency of these programs, however, is in jeopardy.
Social Security already runs an annual deficit -- about $200 billion this year -- which will only grow worse as fewer workers support more retirees. From the start, politicians have raided the Social Security "trust fund" and spent the money on other general fund projects, leaving the program as a wealth transfer one instead of an investment as it's billed. Economist Walter Williams explains, "What the Treasury Department does is give the Social Security Trust Fund non-marketable 'special issue government securities' that are simply bookkeeping entries that are IOUs."

Now that benefits paid exceed taxes collected, the problem has become acute. According to the Social Security board of trustees, in 1945, there were 42 workers for every retiree; the current ratio of three workers to every retiree is unsustainable. Strictly speaking, Social Security is not a Ponzi scheme, in part because it's not against the law. Indeed, it is the law. (Try not paying payroll taxes -- a.k.a., "investing" in the system.) But it is structured exactly like a Ponzi scheme, and it will eventually fail for the same reasons.

Of the gap between Social Security taxes collected and benefits paid out, The Wall Street Journal's William Galston writes, "To close that gap while maintaining scheduled benefits, we would need to enact an immediate increase in the payroll tax rate from 12.4% to 15.9%. For workers earning $50,000 a year, that would mean a tax increase of $900, nearly 2% of gross income. And employers would have to match it. For workers making the maximum now subject to payroll taxes (a bit under $120,000), taxes would rise by $2,100."

If the income cap were lifted, workers at higher incomes would face an even more staggering tax increase. And yet as it stands, the payroll tax is regressive in that it hits lower income families disproportionately. If the income cap were doubled, it still wouldn't fix the problem. Galston notes, "One might imagine that such a sizable increase in covered earnings would be enough to stabilize the system for the long term. In fact, the CBO calculates, it would reduce the imbalance by only 30%. Indeed, eliminating the cap and taxing all earnings would solve just 45% of the problem."

Meanwhile, the expected return on the 12.4% in Social Security withholding from our income is practically criminal. Consider the potential return of investing 12.4% of a typical middle class income in indexed mutual funds, where decent investments would yield perhaps multiple millions of dollars over 30 years. Over a retirement span of 20 years or so, annual withdrawals could be six figures while still leaving a good chunk of change making money.

Compared to that, Social Security looks like the poorest investment ever concocted. In fact, from that perspective, Social Security is stealing our money by mandating that it do something for us in a worse way than we can ourselves.

Or put it another way. Financial advisers often recommend putting 10% to 15% of your income toward "retirement" (whatever that means to you). The potential return on that 15% over 30 years is fantastic. Unfortunately, Social Security is already taking over 12%, while giving us miserable returns. So for savers, Social Security is costing us significant returns that we could have realized but won't. What a "safety net."

In spite of the facts, Social Security has always been one of the most popular programs the federal government runs, and the overwhelming choice of voters is to do nothing to fix it -- let alone returning to the constitutional norm of the federal government staying out of your retirement. So we understand politicians desperate for votes not wanting to touch this beloved system. But Social Security is built on a half-truth at best, and it's unsustainable.

Analysis of Retirement Reveals the Possibility of Great Socioeconomic Change

Analysis of Retirement Reveals the Possibility of Great Socioeconomic Change

The Daily Bell

Why even $1M may not be enough for retirement ... You've been saving like a miser to get ready for retirement. You've pinched pennies, kept that last car for what seems like an eternity. And now you've banked a cool $1 million for your retirement years. Think you're set? Well, you very well might be. Then again, you still might be short. ... "The good news is there are more millionaires," says Richard G. Dragotta, at LPL Financial in Paramus, N.J. "Over 9 million people in the U.S. have $1 million or more." But, Dragotta says, $1 million might not mean you're wealthy: The new $1 million may be $2 million. – USA Today

Dominant Theme: It costs a lot to retire – but you can do it! You just have to concentrate ...

Free-Market Analysis: So now we know: Even a million dollars isn't enough to retire on.

Sounds reasonable, given all the obstacles to retirement in the West and especially in the US. But there is a problem with this article that is much bigger than the retirement issues it explores.

The problem is – and we can see from the article's feedback – that the readership is a good deal more sophisticated than the article itself. As we've often pointed out, when people cease to believe in the narrative provided to them by their own elites, then inevitably society begins to change in fundamental ways.

It is obvious that today's power elite wants more centralization, more globalism and more corporatism. But ironically, the fear-based dominant social themes that allow top elites to shape society are not functioning so well in terms of providing the requisite malleable result.

And thus we get the kind of strange disconnect encapsulated by this article and the feedbacks left by its reader below. Even when readers are explaining that they have managed to overcome obstacles and retire with a healthy income, their comments often reveal an astuteness missing from the article.

Here's more:

"Thirty years ago, $1 million was a huge amount of money," says Haitham "Hutch" Ashoo, CEO of Pillar Wealth Management, in Walnut Creek, Calif. "Today, given today's lifestyles and costs, it isn't so much money." Why not? "It translates into $40,000 to $50,000 (annually) in sustainable revenue," says Joe Heider, regional managing principal for Rehmann Financial Group in Westlake, Ohio. "That is not that much money on an annual basis."

Heider says that 10 to 12 years ago, when people earned a lot more on their investments, $1 million could generate $70,000 to $80,000 a year in retirement income. But with interest rates as low as they are, that's not really feasible. Still, that's not to say that no one could live on savings of $1 million.

Not everyone will need that kind of cash in their retirement kitty, financial planners say. It all depends on your lifestyle—the one you're living now, and the one you want to live in retirement. It also depends on your investment returns, taxes and inflation.

"I think it depends on how much money you're going to spend," says Tim Courtney, chief investment officer at Exencial Wealth Advisors in Oklahoma City. "A million is not like $1 million 20 years ago or 30 years ago. If you're wanting to spend $50,000 a year or less from your investment portfolio, $1 million will probably get it done for you.

"Everything is relative," says Clarence Kehoe, executive partner in the accounting firm Anchin, Block & Anchin in New York City. "For some people, I would think $1 million would be more than enough. For other people, I can tell you some of these clients spend more than $1 million in a year. It depends on the person, their lifestyle and what they are used to."

As we can see, this article glosses over the REASONS for increasing retirement problems. Interest rates are indeed very low and hover around one percent in many places. In fact, this is because of global corporatism and central banking money printing. As monetary policy is "coordinated" around the world, there is no place to hide.

Without such coordination, countries and even regions would offer a wide variety of interest rates, currencies, even competing monies. But in today's age, such competition is looked on as a kind of financial sin. Currency competition itself is consistently criticized and the threat of a "currency war" looms large.

The article expresses none of this. There is no causation explored. The article simply hangs in air. And yet, as mentioned, the commentary thread for this article is a good deal more enlightening than the subject matter itself.

Here are just three comments of many:

• By the time the Federal Reserve gets done devaluing the US dollar, a million won't last you a week. Under normal inflation, every 40 years your dollar is worth a nickle.
• Retire? What is this thing called "retirement"? Who dreamed up the criteria for this phenomena? Only in the last century has this concept of kicking back after your working years become sort of badge of accomplishment. Did anyone retire prior to the 1900's? Of course not. You worked until you dropped and died. And the same will be true of most of us going forward. To survive into my elder years I will have to work into my elder years. Quit teasing people with high expectations of some 1960's era company pension. Those days are dead and gone and only ever existed for a scant minority.
• Get a government job. Most of them are all stealing without a gun. They will eventually kill the golden goose. All the moochers will one day get exactly what they deserve.

These comments illustrate the divide between what the mainstream media proposes and what the readership increasingly rejects – or at least comprehends. The Internet Reformation, like the proverbial genie, cannot be put back in its bottle.

These days, informed readers of the alternative 'Net media – and there are tens of millions of them – often understand elite promotions intimately: They even use their understanding to protect or expand their wealth.

We often mention the ongoing Wall Street Party as one meme that can possibly be leveraged. But there are other actions that these informed 'Net consumers are taking: They are investing in gold and silver, purchasing assets overseas and attempting to become, generally, as liquid as possible within practical constraints.

Conclusion

When consumers outgrow the memes of their social conditioning, society itself teeters on the verge of great change. How that will manifest is as yet unclear. But the reaction to this USA Today article, and others like it, certainly provides us with evidence of an impending transformation.