Marvin J. Ramirez
NOTE FROM THE EDITOR: Dear reader: Recently, much has been written and speculated about the collapse of Social Security in the next couple of decades. Michael Snyder, of The Economic Collapse, brings to us a few facts that should be taken into consideration when reviewing the causes of that collapse. El Reportero reprints the article below, in order to facilitate a better understanding of this institution to which most American have, unknowingly, a contract with it. Due to its length, it will be published in two parts. This is the Second and Last Part 2.
The Federal Reserve is systematically destroying Social Security and the retirement plans of millions of Americans
by Michael Snyder
The Economic Collapse
So what happens if we have another major recession or worse?
And most Americans know that something is up with Social Security.
According to a Gallup survey, 67 percent of all Americans believe that there will be a Social Security crisis within 10 years. Part of the problem is that there are way too many people retiring and not nearly enough workers to support them.
Back in 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. But now things are much different. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 fulltime private sector workers for each person that is receiving Social Security benefits in the United States.
And remember, the number of Americans drawing on Social Security will increase by another 35 million by the year 2035.
Another factor that is rapidly becoming a major problem is the growth of the Social Security disability program.
Since 2008, 3.6 millionmore Americans havebeen added to the rolls of the Social Security disability insurance program.
Today, more than 8.7 million Americans are collecting Social Security disability payments.
So how does this compare to the past?
Back in August 1967, there were approximately 65 workers for each American that was collecting Social Security disability payments.
Today, there are only 16.2 workers for each American that iscollectingSocial Securitydisability payments.
The Social Security Ponzi scheme is rapidly approaching a crisis point.
Sadly, the Federal Reserve has made it incredibly difficult to save for your own retirement.
Millions upon millions of Baby Boomers that diligently saved money for retirement are finding that their savings accounts are paying out next to nothing thanks to the ultra-low interest rate policies of the Federal Reserve.
The following is one example of how the low interest rate policiesof theFed have completely devastatedthe retirement plans of many elderly Americans….
You can understand the impact of the invisible tax on the elderly by watching the decline of interest income from $50,000 invested in a five-year Treasury obligation.As recently as 2000, this would have yielded about 6.15 percent and an interest income of $3,075 a year. Now the same obligation is yielding 0.7 percent and an interest income of $350 a year.This is the lowest yield on this maturity of Treasury debt since the Federal Reserve started keeping an index of the yields in 1953.
But it’s more than a low interest rate. It’s an income decline of nearly 89 percent in just 12 years.
And after you account for inflation, those that put money into savings accounts today are actually losing money.
Of course most Americanshave not saved up muchmoney for retirement anyway. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.
Overall, a study conducted by Boston College’s Center for Retirement Research discovered that American workers are $6.6 trillion short of what they need to retire comfortably.
So needless to say, we have a major problem.
Baby Boomers are just starting to retire and the Social Security system is still solvent at the moment, and yet the number of elderly Americans that are experiencing financial problems is already soaring.
For example, between 1991 and 2007 the number of Americansbetween the ages of 65 and 74 thatfiled for bankruptcy rose bya staggering 178 percent.
Also, at this point one out of every six elderly Americans is already living below the federal poverty line.
So how bad are things going to be when Social Security collapses?
That is frightening to think about.
In the short-term, millions upon millions of retired Americans that are living on fixed incomes are going to be absolutely crushed by the inflation that QE3 is going to cause. Just like we saw with QE1 and QE2, a lot of the money from QE3 is going to end up in agricultural commodities and oil. That means that retirees (and all the rest of us) are going to end up paying more for food at the supermarket and gasoline at the pump.
But those on fixed incomes are not going to see a correspondingincreasein their incomes. Thatmeans that their standards of living will go down.
Things are tough for retirees right now, but they are going to get a lot tougher.
Right now, there are somewhere around 40 million senior citizens. By 2050 that number is projected to increase to 89 million.
So how will our society cope with more than twice as many senior citizens?
Sadly, we will likely never get to find out.
The truth is that our system is almost certainly going to totally collapse long before then.
We are rapidly approaching a financial crisis unlike anything we have ever seen before in U.S. history, and the foolish policies of the Federal Reserve just keep making things even worse.
(This article was posted: Wednesday, September 19, 2012).
