Usa Social Security Changes Impact On Retired Expats Here

[InterestedObserver]

Because compared to this there was only one other & the flight to safety that time was a dollar backed by gold.

Perhaps it is partially because the world believes we hold what we claim in Fort Knox?

All the gold in Fort Knox would only cover the US federal budget for about 1 month. Most people don't realize the amount of money the US government spends, 50% borrowed from China et al. It's a massive amount, well beyond the grasp of common folk who cannot tell you how many zeros there are in one trillion..

[flying]

Because compared to this there was only one other & the flight to safety that time was a dollar backed by gold.

Perhaps it is partially because the world believes we hold what we claim in Fort Knox?

All the gold in Fort Knox would only cover the US federal budget for about 1 month. Most people don't realize the amount of money the US government spends, 50% borrowed from China et al. It's a massive amount, well beyond the grasp of common folk who cannot tell you how many zeros there are in one trillion..

Actually the supposed 8000 tons would do a bit better than a month but I hear ya

I was only suggesting folks mindset may still linger on the good as gold USD of old

[flying]

Equity portion of net worth is based on mark to market... what a willing buyer and willing seller would do a net deal for at the time of the mark. We all know property values have taken a major hit in many places in the U.S. so that a condo in Nevada costing $379,000 three years ago can't be sold for $150,000 today. Any one holding a mortgage on such a place will loose maybe $229K for making the loan and be out the interest income until the property is sold because the buyer can/will stiff you.

Personal balance sheets have taken a major hit so 2004 Net Worth stats are worthless.

I hear ya, but not every market has taken huge hits. Vegas, Phoenix, Florida...all got hit the worst...but then they went up the most. Some places didn't skyrocket in the early 2000's, so they didn't fall like others.

Both true & hence the heavy jingle mail traffic as many walk away & mail back the keys to mortgages that remain & will remain under water.

Also true craig that sales still exist at pre 2005 prices. That is what I see too which as a builder is actually what I always thought those places should be priced at.

Problem remains.. all that should not have been loaned & will not be re-paid is yet to come to rest. When it does it will stress the already fragile market & we will see more & more auctions which will further upset valuations.

When any property changes hands whether via sale by owners or auctions by banks or courts... their sale price affects the surrounding area of sale.

Next buyer up tries to get a loan on a home purchase priced fairly & it may still not qualify due to the appraisal now including the fire sales as comparable.

Naturally those with no debt

( rare these days of home equity loans thinking aka: treating your home like a ATM )

Are fine if they intend to sit pat.

Edited July 31, 2010 by flying

[craigt3365]

Equity portion of net worth is based on mark to market... what a willing buyer and willing seller would do a net deal for at the time of the mark. We all know property values have taken a major hit in many places in the U.S. so that a condo in Nevada costing $379,000 three years ago can't be sold for $150,000 today. Any one holding a mortgage on such a place will loose maybe $229K for making the loan and be out the interest income until the property is sold because the buyer can/will stiff you.

Personal balance sheets have taken a major hit so 2004 Net Worth stats are worthless.

I hear ya, but not every market has taken huge hits. Vegas, Phoenix, Florida...all got hit the worst...but then they went up the most. Some places didn't skyrocket in the early 2000's, so they didn't fall like others.

Both true & hence the heavy jingle mail traffic as many walk away & mail back the keys to mortgages that remain & will remain under water.

Also true craig that sales still exist at pre 2005 prices. That is what I see too which as a builder is actually what I always thought those places should be priced at.

Problem remains.. all that should not have been loaned & will not be re-paid is yet to come to rest. When it does it will stress the already fragile market & we will see more & more auctions which will further upset valuations.

When any property changes hands whether via sale by owners or auctions by banks or courts... their sale price affects the surrounding area of sale.

Next buyer up tries to get a loan on a home purchase priced fairly & it may still not qualify due to the appraisal now including the fire sales as comparable.

Naturally those with no debt

( rare these days of home equity loans thinking aka: treating your home like a ATM )

Are fine if they intend to sit pat.

Yeah, things are still a mess. Vegas was a zoo in 2003 to 2005. Prices going up almost daily...now doing the reverse! I've gotten many pieces of land back via foreclosure lately. Does me no good as I can't sell them now. Oh well.

Always use to amaze me when I lived in California. I knew people driving Ferrari's, BMWs, etc., living in huge houses, nice furniture...and a lousy job. Found out they had a 2nd and maybe 3rd mortgage on their house. Works great while prices rise...kills ya when they don't! Stupid...

A good friends son is still looking over his shoulder as he did a lot of unscrupulous loans...to those he knew were not qualified and could not make the payments. But, he made big money and there was no recourse later on. He's no longer a broker, but still scared he will be brought to charges for these scams....

Anyway, a bit off topic, but these issues will for sure hurt those planning to retire shortly. No time to recoup the losses and that house is no long the next egg it use to be. I would assume that would mean a bigger reliance on social security? Medicare? It will be interesting to see how this all plays out over the next year or so.

[flying]

Anyway, a bit off topic, but these issues will for sure hurt those planning to retire shortly. No time to recoup the losses and that house is no long the next egg it use to be. I would assume that would mean a bigger reliance on social security? Medicare? It will be interesting to see how this all plays out over the next year or so.

Yes a little off topic but all true what you said. I see no problem with your grabbing real assets at a bargain if you can. As you say they are not for now but may serve you or yours well in the future

Also it does as you say tie back into SS because more & more will rely too heavily on it.

But in one way it does benefit the government. People will not bite the hand that feeds them in times of need. Otherwise I imagine folks could revolt same as other countries.

Not that it is entirely out of the question still.

It is one thing for folks of countries that have always been poor who had a lift with exports to have to return to being poor....It is another for fat lazy countries that have always been so to suddenly be thrust into a much reduced standard of life.

Edited July 31, 2010 by flying

[InterestedObserver]

Actually the supposed 8000 tons would do a bit better than a month but I hear ya

The US gold reserves are quoted by CNBC as being worth $360 billion, US federal spending YTD is 3.6 trillion and growing. That's a 10:1 ratio. Nice isn't it, the US would go broke in 1.2 months if it had to pay in gold.

[jazzbo]

God save us from FDR.

[flying]

Actually the supposed 8000 tons would do a bit better than a month but I hear ya

The US gold reserves are quoted by CNBC as being worth $360 billion, US federal spending YTD is 3.6 trillion and growing. That's a 10:1 ratio. Nice isn't it, the US would go broke in 1.2 months if it had to pay in gold.

That is amazing isn't it

Then again if ( I do not believe it ever would mind you ) if USD were backed by gold then of course gold would be re-valued to match or paper would need to be removed from the system to match.

One way or the other as you point out they sure are not even close

[cloudhopper]

the US would go broke in 1.2 months if it had to pay in gold.

Only if gold were valued at 1200/oz but not perhaps so quickly if it were valued at 50,000/oz.

[JimGant]

No one is even going to challenge Moveon's 5 myths? They're not myths -- not even one of the five. Where to begin....

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds.

Jeez. Treasury Bonds ARE IOUs. All the surplus FICA taxes paid into the so-called 'trust fund' come out the other end as dollars into the general fund (you thought these dollars went under the mattress -- or bought Eurobonds -- or goldmines?). In effect the Gov't is loaning these dollars to itself, issuing Treasury paper IOUs in return. As a result, the Gov't (at least while the FICA taxes are in surplus) doesn't have to borrow as much from China. However, once FICA tax intake is no longer in surplus, well, the Gov't will now have to pay back these dollars -- from itself. The implication of that, I hope, is obvious.

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever

Read carefully the preceding debunk. $4.6 trillion in Treasuries held by the 'trust fund' will have to be paid back in real dollars. This will mean: raising taxes, cutting programs, borrowing -- or, most likely, all three. Kinda suggests going broke to me.....

Myth #5: Social Security adds to the deficit

Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8

It's all one big Federal Budget. Putting a fence around one entity of the budget, and cooking the books so "show" it's not in deficit, just means other entities of the budget will reflect more deficit than otherwise. It's all one big pot, thus a zero sum game.

Myth #3: Benefit cuts are the only way to fix Social Security..... Myth #2: We have to raise the retirement age because people are living longer

Yes, if we're to realistically address the problem. Other aspects will have to be: Means testing; applying FICA (and Medicare) taxes to all income, not just wages; lifting the cap off FICA taxes (a la Medicare taxes); etc.

I don't really see too much gloom and doom for the future, as long as Congress appreciates the reality of the situation, and makes it a pay-as-you-go system (eliminating the myth of a 'trust fund' as a panacea). Hopefully, organizations like Moveon will be seen for what they are.

[Jingthing]

Interesting ideas. Disclaimer -- I am a proud progressive, but also a realist. I love FDR!

Some changes are going to be easier than others; some may be politically impossible.

1. Raising the income limits to stop contributions -- politically LIKELY

2. Changing the benefit formulas -- politically likely but staged and less or no change for current retirees

3. Changing the minimum benefit age -- politically difficult. The left will fight this hard because it penalizes poor people, black people, Latino people etc. because on average more of them don't live long enough to receive any benefits (that's part of the financial game of the whole program). Politically possible, but if done likely to be staged for the currently younger age groups, certainly not including those currently at (and probably near) age 62.

4. Changing the full benefits age -- politically possible or somewhat likely, especially for the currently younger age groups

5. Withholding SS on capital gains, dividend, interest -- politically VERY difficult or even impossible. Business interests will scream bloody murder about this as will AARP, etc.

6. Means testing to get old age benefits. Politically very difficult. This would be very unfair to people who have paid into this for life, especially after point 1 is raised. The right wing will see this as too aggressive class warfare. I bet against this happening.

To sum up -- bring back the estate tax for really rich people! Write in a few exceptions such as for family farms.

Edited July 31, 2010 by Jingthing

[ronz28]

The Tea Party Republicans cry about their 35% tax rate possibly going to 45% but the fact of the matter is the real effective tax rate on the wealthy has been lowered to 16.6% via loop holes and lowering the tax rates. The latest IRS pub on the top 400 earners in the US indicates the effective rates for the elites have been cut about in half over the last 10 years and is now only 16.6%. The 35%+ tax rate myth is the biggest fraud the Republicans have ever perpetrated against the rest of the US.

http://www.irs.gov/pub/irs-soi/07intop400.pdf

Selected Items for Taxpayers with the Top 400 Adjusted Gross Income (AGI), 1992-2007 from PDF page 10

Average tax rate

1992..................... 26.38%

1993..................... 29.35%

1994..................... 28.57%

1995..................... 29.93%

1996..................... 27.81%

1997..................... 24.16%

1998..................... 22.02%

1999..................... 22.23%

2000..................... 22.29%

2001..................... 22.85%

2002..................... 22.88%

2003..................... 19.53%

2004..................... 18.16%

2005..................... 18.23%

2006..................... 17.17%

2007..................... 16.62%

Edited July 31, 2010 by ronz28

[flying]

The Tea Party Republicans cry about their 35% tax rate

Sorry to again drift off topic but every time I see a reference like this I cringe.

The Tea Party has so utterly been hijacked

The original Tea Party was a Libertarian movement

The “Tea Party” was a nationwide event organized by Ron Paul supporters.

Sad to see what it has been turned into. I am sure Ron Paul feels the same way.

[Suradit]

Any one that relies on Social Security (or promises from the US or any government more generally)

I think the "any government" comment is especially pertinent. Most states and municipalities have vastly under-funded their pension obligations and most of those same entities are flirting with default if not some form of bankruptcy.

I agree the Social Security should be thought of as only a gap filler when considering retirement income, but think of all the teachers, policemen, fire fighters, and every other category of state and municipal employees who depend very much on the pension they are getting or think they'll get from these ponzi schemes.

[witold]

Full SS Benefits retirement age has been creeping up for a long time now. It will continue to do so. As SS solvency issues become unavoidable, tough choices will be made.

For me, to get full benefits, my retirement age is 67. (source)

The statistic about Americans not having much savings is deceiving. At that point in their life, a huge portion of Americans has a lot of equity. (house/s paid off, etc.) As you can see quoted above, the stats are:

Median Net Worth: $209,200

Top 25%: $647,200

Top 10%: $1,429,500

This is a 2004 statistic. That means the data backing the study is likely 2002-2003. You can be almost certain that the 2010 numbers are drastically higher. Property prices - even after the bubble bust - are still much higher than in 2003. Sure, the house prices are not as great as in 2006, but they are still much higher than pre-bubble prices.

Also, I think a lot of people forget that there was no bubble in many places in the US. The places where property values plummeted were places where property prices skyrocketed for no reason in the first place. In most places in the US, house prices have been steadily creeping up in the past 10 years, just as they have in the past 100 years. During the 'boom era', those folks felt a little left out that their property didn't skyrocket in value but they are probably pretty happy now after seeing what has happened in some areas that were overrun by speculators like Las Vegas.

Thailand is a good value place to retire so the link to Thailand is pretty clear. Instead of worrying about US SS, I would be more worried that Thailand becomes too Western and prices in Thailand skyrocket to the point where moving to LOS carries minimal financial advantages.

Edited August 1, 2010 by witold

[flying]

Thailand is a good value place to retire so the link to Thailand is pretty clear.  Instead of worrying about US SS, I would be more worried that Thailand becomes too Western and prices in Thailand skyrocket to the point where moving to LOS carries minimal financial advantages.  

You know I come every year for 2 months or more at a time.

I must say that it is a good exercise to see the costs changing.

I know many still feel LOS smokes the US in cost of living but it is just not as true each year.

Also it is not as many claim/think that it is just the westernization that costs more or imported things. It is even basic goods.

I look at things like clothing....even basic T-shirts all made in China. Same as USA sold through places like Walmart, Ross etc. US is actually cheaper now & for some reason the quality of cotton sent to the US in this form is better.

So I find it interesting each time I come & see prices changing.

[craigt3365]

Interesting article from CNN today. Social security is in the red this year, and for the next several:

http://money.cnn.com/2010/08/05/news/economy/social_security_trustees_report/index.htm