I have two major milestones occurring over the next half-decade. First, I will be eligible for Medicare. Second, I will reach my full retirement age (FRA) for Social Security.
My wife and I have had Tricare Standard health insurance via my Navy retirement for the last 23 years. Another blessing is that the United States Department of Veterans Affairs provides “Tricare for Life” as a Medicare wrapper, so we don’t have to purchase a Medigap supplemental insurance plan.
Since I am in excellent health and Courtney men typically live into their 90s, there’s no pressing need to take Social Security early. Yet, I can increase my benefits if I wait until I turn 70 to take it.
The looming insolvency of both entitlements is forcing me to rethink my timeline, however.
People have known for 50-plus years that entitlements would be insolvent by the time I was eligible. I distinctly remember my high school civics teacher, Col. Walker, telling us not to expect entitlements when we retired. It was a house of cards, a Ponzi scheme, he said. “You need to save for yourselves since it won’t be there when you retire.” I took those words to heart.
Then in graduate school one of my economics professors told us that entitlements will always be there because the government can just print however much money it takes to pay out the benefits. Entitlement programs are “too big to fail” (channeling Obama). Feel the hope and change.
Secretary of the Treasury, Janet Yellen, recently released the 2023 Financial Report of the United States Government. It reads like a dumpster fire.
We have a federal budget deficit of $1.8 trillion, a national debt of $34.6 trillion, and Social Security and Medicare are underfunded by $175.3 trillion. When you add in all other “entitlements,” the total unfunded federal liability reaches $214 trillion. $250 trillion debt is staggering, considering the U.S. Gross Domestic Product is only $28.3 trillion.
Yellen predicts Medicare will run dry in 2031 and Social Security in 2033. I mentioned that Col. Walker called them Ponzi schemes. When we were a nation of fewer elderly than youths, the government took the money coming in for Social Security and Medicare and used it to fund other government spending and bonds.
I pulled my personal report from the Social Security Administration concerning that 15.3% FICA payroll tax I paid for most of my life. It’s too bad that I couldn’t have invested my FICA tax in the S&P 500 during those five decades. I would literally have $10 million today. That money was taken from me with the promise it would be returned to me, and I’m entitled to that return.
How can we fix this coming bankruptcy? Yellen writes in the Financial Report that “This need can be satisfied only through increased borrowing, higher taxes, reduced program spending, or some combination.”
One fix is to raise the retirement age to 70. Suggesting this has ended many a political career, and we know that politicians’ sole interest is getting reelected. So don’t hold your breath for this one.
Another fix is to raise payroll taxes. That 15.3% FICA payroll tax is a flat tax, and progressives hate flat taxes, so you can be sure we won’t take this path.
Another option is Bidenomics: print more greenbacks and use inflation to pay for entitlements.
The final option is to do nothing, the path politicians always take until it’s too late. Analysts anticipate Social Security benefits would be cut 23% within a decade, likely starting by means-testing the “rich.” So, if you faithfully saved for your retirement over the last 50 years, foregoing vacations and new cars, instead tucking money aside into IRAs and 401Ks, they will confiscate your entitlements.
Who knows. They may confiscate all my savings and redistribute it to those who never saved a thing. That would fit nicely into the World Economic Forum’s catchphrase “you’ll own nothing, and you’ll be happy.” Welcome to the Great Reset.
All this leaves me in a bind. Do I take Social Security early in hopes of meeting some arbitrary, retroactive government cutoff date? Or do I wait it out and see how the winds shift in the next six years?
I would like to see more discourse among those in my stage of life discussing our concerns about the current state of retirement. The worst thing we can do would be to roll over and wait for the government to fail us again. Or worse: to try and fix it with their same tired methods.
Courtney served 20 years as a nuclear engineering officer aboard submarines and 15 years as a graduate school instructor. A political independent, he spends his time playing with his eight grandchildren in Moscow.
