Continue reading Lack of 2010 COLA for Social Security a Two-Edged Sword for Investors

Lack of 2010 COLA for Social Security a Two-Edged Sword for Investors originally appeared on BloggingStocks on Thu, 14 Oct 2010 15:00:00 EST. Please see our terms for use of feeds.

Federal law bars creditors from taking Social Security to recover a debt. Other deposits that are exempt include pensions, payments to disabled veterans and survivors' benefits for children.

Banks have been ignoring the law when it comes to garnishment orders. They freeze the accounts, then rip off people by charging them outrageous fees. First the account goes into deficit and there is a fee Then the account goes on hold and the customer cannot get access to his or her money. If the customer tries to use a debit card, it is rejected and another fee is added. Once the account is in deficit, the banks keep adding fees on and on ...

Continue reading Treasury to Stop Banks from Freezing Social Security Accounts

Treasury to Stop Banks from Freezing Social Security Accounts originally appeared on BloggingStocks on Mon, 15 Feb 2010 12:40:00 EST. Please see our terms for use of feeds.

It's been overlooked -- it's received scant coverage by the popular press -- but it's worth repeating: one benefit of the health care reform legislation will be enhanced employee mobility.

Don't misunderstand: a bill that prohibits discrimination by insurance companies due to medical condition/history, provides substantial subsidies for those who don't have health insurance from their employer, and that also offers much-needed tax breaks for small businesses who do provide coverage, is a major accomplishment. It's big change and it's big news. If the health care reform bill passes, it would be the biggest social policy advance by the United States since the passage of Medicare in 1965, and it would rank third behind the latter and the establishment of Social Security in 1935 in terms of social safety net significance.

Continue reading Employee Mobility, Options Would Increase Under Health Care Reform Bill

Employee Mobility, Options Would Increase Under Health Care Reform Bill originally appeared on BloggingStocks on Mon, 21 Dec 2009 13:00:00 EST. Please see our terms for use of feeds.

Good news! President Obama is calling for a $250 payment to seniors.

This news comes on the eve of an announcement by the Social Security Administration stating that there will be no "cost of living" this year. By law, increases in Social Security payments are tied to the cost of living, or COLA. Since there is no inflation this year, there will be no increase in Social Security benefits. This would be the first year since 1975 with no increase.

Continue reading Good news! President Obama wants a $250 payment to seniors

Good news! President Obama wants a $250 payment to seniors originally appeared on BloggingStocks on Thu, 15 Oct 2009 10:10:00 EST. Please see our terms for use of feeds.

Attention seniors! You may not be receiving your cost of living adjustment (COLA) this year.

We must understand that the COLA increase is based on the Consumer Price Index (excluding food and energy) This is called the "Core CPI." The Core CPI, excluding volatile food and energy, actually rose 1.5% on an annual basis.

About 50 million retired and disabled Americans receive Social Security. Since 1975 Social Security payments have increased based on the cost of living adjustment.

Continue reading Attention seniors! Your Social Security payment could shrink next year

Attention seniors! Your Social Security payment could shrink next year originally appeared on BloggingStocks on Mon, 24 Aug 2009 16:20:00 EST. Please see our terms for use of feeds.

Continue reading Social Security will run out of money... in the year 2525

Social Security will run out of money... in the year 2525 originally appeared on BloggingStocks on Wed, 10 Jun 2009 19:00:00 EST. Please see our terms for use of feeds.

How will President Obama's $825 billion plan to stimulate the economy work? It looks like it will create jobs for the people working on the projects. But how long will those jobs last and will they continue after the projects are over? And if there's something wrong with his plan, what would be a better alternative? I think that if these projects are investments that create revenue generating operations, they are worth doing -- especially if those revenues ultimately recoup the investment.

Here are some of the specific plan elements that I view as investments:

• Boost renewable energy supply. The plan seeks to double renewable energy generating capacity of over three years -- to power six million American homes. It would upgrade two million homes and 75% of all federal buildings to better protect against the heat and cold -- saving low-income homeowners $350 a year in utility costs and cutting government costs by $2 billion a year. It would also provide loan guarantees to boost the $100 billion in private sector investment in clean energy projects over three years.
• Upgrade 3,000 miles of transmission lines for a national electric grid to make more efficient use of energy.
• Build 1,300 waste-water projects which would provide an ongoing revenue source for cities and states and reduce the costs of cleaning up polluted water.

Continue reading Is Obama's $825 billion stimulus plan an investment or an expense?

Is Obama's $825 billion stimulus plan an investment or an expense? originally appeared on BloggingStocks on Sun, 25 Jan 2009 11:30:00 EST. Please see our terms for use of feeds.

Welcome to Way Off Wall Street, a column dedicated to providing Main Street opinions on topics of interest to investors. Each installment highlights the views of Americans who are far removed from the canyons of Wall Street -- and who often see things more clearly as a result.

I've spent a good deal of time researching and soliciting opinions about how people are looking at their own retirement in relation to the American economic downturn. Many people are looking at retirement with the same mind-set that they've always had. In many cases, I found people believe that our economy will recover rather quickly. In others, I suspected they are intentionally blinding themselves from the truth that this could be a very long economic downturn.

Since today's retirement realities is such a big topic, I'm going to discuss it over two posts. This first one concerns the group of people who either have already retired, or expect to retire within the next five years. My next column will cover people who have more than five years until retirement, as well as those people who believe that the word "retirement" will never truly apply to them (I myself fall into the latter part of the second group).

Continue reading Way Off Wall Street: Those near retirement are growing increasingly agitated

Way Off Wall Street: Those near retirement are growing increasingly agitated originally appeared on BloggingStocks on Sat, 15 Nov 2008 09:40:00 EST. Please see our terms for use of feeds.

Continue reading Housing sector slump seen decreasing some Baby Boomers' nest eggs

Housing sector slump seen decreasing some Baby Boomers' nest eggs originally appeared on BloggingStocks on Thu, 26 Jun 2008 12:44:00 EST. Please see our terms for use of feeds.

Continue reading The economics of Social Security, Medicare, and you

The economics of Social Security, Medicare, and you originally appeared on BloggingStocks on Thu, 27 Mar 2008 12:20:00 EST. Please see our terms for use of feeds.

While it comes as no surprise, both Medicare and Social Security are financial disasters waiting to happen. In a report issued today by trustees of these two large government programs, while the dates of bankruptcy are unchanged, the date of the programs being cash flow negative have moved up to a date closer than was previously thought.

According to an AP report: " The first year that payments will exceed income for Social Security will occur in 2017, just nine years from now, reflecting growing demands from the retirement of 78 million baby boomers. Medicare is projected to pay out more than it receives in income starting this year.

"The financial difficulties facing Social Security and Medicare pose enormous challenges," the trustees said in their report. "The sooner these challenges are addressed, the more varied and less disruptive their solutions can be."

Continue reading If you are under 40 forget about getting Social Security

If you are under 40 forget about getting Social Security originally appeared on BloggingStocks on Tue, 25 Mar 2008 18:24:00 EST. Please see our terms for use of feeds.

Long hailed by free market economists as the model for how to create a pension system, news out of Chile that it plans on making payouts to low income seniors, has government interventionists jumping for joy.

The new $2 billion-a-year program will expand public pensions to groups left out by private pensions - the poor and self-employed, housewives, street vendors and farmers who saved little for retirement - granting about a quarter of the nation's work force public pensions by 2012.

The fact is that this move is the way that governments should generally function. Stay out of things unless there is a real need to do something. No one is of the opinion that low income seniors should be thrown out into the street. Of course they should be helped. I would rather see the community take care of them and set up a network of charity, but if that doesn't work, then the government should step in.

What government interventionists miss is just how successful the 1981 pension reform has been.

Continue reading Should the U.S. adopt the Chilean pension system?

Should the U.S. adopt the Chilean pension system? originally appeared on BloggingStocks on Mon, 10 Mar 2008 15:08:00 EST. Please see our terms for use of feeds.

In an excellent column for Forbes, Ken Kam explains what's really wrong with Social Security. Forget the politics and the debate about its future solvency -- Kam explains it this way: When his daughter was born, he realized that if he could invest $2 thousand for her each year of her life and grow it at 11% a year (An aggressive target, but we'll go with it), that money would have grown to $1 million by her 40th birthday -- and $30 million by her seventieth!

What does that have to do with Social Security? Most people put in more than $2 thousand per year -- a lot more. And yet Social Security will never provide them with anything like that kind of a nest egg.

Albert Einstein is widely quoted as having said that compound interest is the most important mathematical discovery of all-time -- or words to that effect. And yet our federally mandated retirement system fails to take advantage of it, instead opting for what amounts to an elaborate Ponzi scheme, sustainable only by the rule of law and population growth.

Mr. Kam talks about his idea for a "Bicycle Trust" as a way to "assist our children in their efforts to become self-sufficient, valuable members of society. Just as a bicycle enables you to travel farther and faster than being on foot, our trust should amplify our children's own efforts to develop their abilities so they can go farther and faster than they otherwise would have."

There's a link to more information in the column, and it's certainly worth checking out.

What's really wrong with Social Security? originally appeared on BloggingStocks on Sun, 16 Dec 2007 15:40:00 EST. Please see our terms for use of feeds.

In the weeks ahead, BloggingStocks will take an in-depth look at the U.S. dollar's decline, its impact on the global and U.S. economies, as well as on job creation, trade, and investment.

Continue reading (Yet another) remonstration about the weak U.S. dollar

(Yet another) remonstration about the weak U.S. dollar originally appeared on BloggingStocks on Tue, 30 Oct 2007 19:00:00 EST. Please see our terms for use of feeds.

In a New York Times column dripping with sarcasm, the brilliant Ben Stein wonders whether we should give top hedge fund managers some taxpayer dollars to manage:

Supposedly, a number of wizard managers consistently earn more than 40 percent a year for their hedge funds. Yes, I know that this conflicts with every bit of investment and market theory -- or almost every bit. I know that such a thing should be impossible. But, supposedly, magicians like Steven A. Cohen, founder of SAC Capital in Stamford, Conn., can regularly earn 40 percent a year -- often more -- on their capital.

But why waste our time on envy or disbelief? Let's put Mr. Cohen to work for the greater good. Let's have the federal government issue about $10 trillion in Steven A. Cohen National Debt Retirement Fund Bonds. After interest is paid on the bonds, if Mr. Cohen makes 40 percent on the money, the fund will return 36 percent a year. That means that in only two years, he will have made roughly $10 trillion for the taxpayers, with which he can pay off the entire United States federal debt.

Continue reading Let hedge funds manage taxpayer money?

Let hedge funds manage taxpayer money? originally appeared on BloggingStocks on Sun, 28 Oct 2007 18:10:00 EST. Please see our terms for use of feeds.

Social Security's future is in trouble? Yeah, and Yogi played baseball. originally appeared on BloggingStocks on Tue, 16 Oct 2007 18:47:00 EST. Please see our terms for use of feeds.

USA Today writes about the first baby boomers retiring next year at a rate of 365 an hour. The articles goes on to use terms for the fix that feed into the fears the current Administration is raising about the event. But is the crisis truly that bad? Yes it's true a fix is needed for Social Security, but if you look closely at the numbers used even in the USA Today you'll see that the fix is not that drastic. As long as we take it seriously and do something.

In the story USA Today states the fix would need to be a 16% increase in the existing payroll tax or a 13% cut in benefits. First let's look at that 16% in actual tax rates. The current tax rate for Social Security is 15.3%, which is 7.65% paid by the employee and 7.65% paid by the employer. Were the Congress to decide to fix the system solely by using tax increases then the increase would be 2.448% or 1.224% for the employer and the employee. That added would move the total tax collected to 17.748% (or 8.874% from one's paycheck). When a cut in benefits is discussed options always look at future promised benefits. The cut would not impact those currently collecting Social Security, but may include a number of different things such as increasing the age for retirement, reducing the COLA increase, or some other combination of benefit changes.

The fairest way to fix the problem would be a combination of tax increases and cuts in promised benefits. Let's say we cut responsibility for the fix in half - an 8% increase in tax rates or 1.224% shared equally between employer and employee: each paying 0.612% more in taxes. Would you be willing to pay that to secure Social Security for at least 75 years? A cut of 6.5% in promised future benefits would be necessary if the fix is to be shared by all.

Continue reading Social Security: Scare tactics or true crisis?

Social Security: Scare tactics or true crisis? originally appeared on BloggingStocks on Mon, 15 Oct 2007 19:31:00 EST. Please see our terms for use of feeds.

USA Today reports that at age 62, America's first baby boomer opted into Social Security today. The question for America is whether the 80 million people born between 1946 and 1964 will bankrupt Social Security by the time all of them are receiving their payments.

The caseload for so-called entitlements -- Social Security and Medicare -- is going to explode in the next 23 years. By 2030, Social Security's caseload will be 84 million people, up from 50 million today. Medicare will go from 44 million beneficiaries to 79 million. That will leave about two workers paying payroll taxes for every retiree. The tab is estimated at $50 trillion in future obligations over the next 75 years. Social Security will rise from 4% to 6% of the GDP, and Medicare will go from 3% to 11%.

The options are not good. Fixing Social Security solely with higher taxes or cuts in spending would mean a 16% increase in the payroll tax or a 13% cut in benefits. Medicare's needs would be far greater: a 122% payroll tax hike or a 51% reduction in spending, just for hospital care. Unfortunately, the longer we wait to fix the problem, the more it will cost.

However, if history is any guide, we'll wait until a crisis before we find the will to act. And that crisis will fall on the shoulders of the baby boomers' children and grandchildren -- not much of a legacy.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Will baby boomers bankrupt social security? originally appeared on BloggingStocks on Mon, 15 Oct 2007 15:11:00 EST. Please see our terms for use of feeds.

Some BloggingStocks readers have been kind enough to comment on my blog post regarding the tax protest undertaken by Mr. and Mrs. Brown of New Hampshire. It seems to me that in light of the many ways in which our government has mishandled issues with its citizen over the last several decades, the issue of taxation should be taking more of a front seat. Not a one of us enjoys paying taxes, but most all of us agree that they are a necessary evil. Many of us see serious inequities and abuses in the system. I'll clarify some of my positions on the subject and I'll certainly provide some fuel for debate.

I don't disagree that the Browns have a right to protest their taxes in their own way, but what they are doing is, in my opinion, selfish, short sighted, ill-thought-out, and probably illegal. They are acting like the little child who hurls insults at the boogie man from under the covers. They buttress their actions by claiming that the system is so completely broken that any attempt to work with it is useless. Therein lies my reason for suggesting they should go elsewhere. There are a hundred ways that the Browns could stage an open, effective, and legal protest. They, however, have chosen to hide themselves in protest. In my opinion, they are shameful, loud-mouthed cowards.

Does our government overtax us? You damn bet they do. When hard-working citizens reach a certain income level, their governmental tax load is between 30% and 40% of their income. It approaches 50% if you add in all the permits, licenses, user fees, and a host of other city, county, and state hidden payouts. To me this is completely unacceptable. I've been saying for quite some time that, if you consider that our incomes start with a finite 100% and the governments keep taking one additional percent after another, how long will it be before we no longer have the funds to effectively operate as a public? Even more upsetting to me than the amounts of the funds taken is the fact that we have little to no say in how that money is spent. Taxation without (effective) representation? It wouldn't be too hard to argue that such is the case.

Continue reading Continuing the tax protest dialogue

Continuing the tax protest dialogue originally appeared on BloggingStocks on Sun, 29 Apr 2007 10:40:00 EST. Please see our terms for use of feeds.