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We have to face the bleak reality.........
Is The Social Security Trust Fund Solvent?
Mike
Patton, Contributor for
Forbes magazine
Each
year, Social Security’s Office of the Chief Actuary issues a report on the
financial status of Social Security and Medicare. In its most recent release we
read,
In the past, when inflows exceed outflows, the surplus was used to fund other government programs. However, beginning in 2010, deficits have been the rule. The deficits in the past few years were as follows: $49 billion in 2010; $45 billion in 2011; and $55 billion in 2012. The Trustees expect the deficit to average $75 billion each fiscal year from 2013 to 2018 before rising sharply. Congress must continue to issue more debt just to meet Social Security’s current obligations. This is very significant as expenditures for Social Security and Medicare accounted for 38% of the federal budget in fiscal year 2012. The actuaries report goes on to say,
“Both programs (i.e.; Social Security and Medicare) will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment…”
Annual Averages for Rate of Inflation
US Bureau of Labor Statistics
The
chart and table of annual
averages for rates of inflation displays the yearly averages
from 2004-2014. This information is made available by the US Bureau of Labor
Statistics and its monthly published Consumer Price Index.
The chart and table was last updated on April 15, 2014. The next update is
scheduled for May 15, 2014, which will be the fourth reading for the year.
Generally, more interest — at
least what you hear or see through news media — is directed toward current inflation rates
instead of annual averages shown below.For 2014, the most recent monthly data (12-month based) is used in the chart and table.
Chart of Annual Averages (2004-2014)
Table of Annual Averages (2004-2014)
Date
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
Annual
Average
|
188.9
|
195.3
|
201.6
|
207.3
|
215.3
|
214.5
|
218.1
|
224.9
|
229.6
|
233.0
|
236.3
|
Inflation Transfers Money from Savers and Investors to Debtors
If you follow the implications of
this, you come to realize there are two major effects of inflation.
- The effect of inflation on savers and investors is that they lose purchasing power. Whether you've buried your money in a coffee can in the back yard or it is sitting in the safest bank in the world, it is becoming less valuable with the passage of time.
- The effect of inflation on debtors is positive because debtors can pay their debts with money that is less valuable. If you owed $100,000 at 5% interest, but inflation suddenly spiked to 20% per year, you are effectively watching 15% of your debt get paid off each year, totally free to you. At some point, you'd be able to get a minimum wage job at McDonald's for $100 per hour and just obliterate your debt.
Food for thought......
My savings do not earn any interest at all....
Where do I put my money?How do I protect the value of my money against inflation?
Will my SSS pay check be enough to get by?
Should I plan for a secondary passive income?
