According to the latest
Trustees report, approximately 66 million people
receive some form of monetary Social Security benefits.
The cost of Social Security programs have exceeded its income since 2021. So they’re underfunded (and falling behind).
Without changes, the trust fund reserve will be depleted in the future. According to the Trustees, that future draws nearer every day:
Under the Trustees’ intermediate assumptions, OASDI cost is projected to exceed total income in 2023, and the dollar level of the hypothetical combined trust fund reserves declines until reserves become depleted in 2034, one year earlier than projected in last year’s report.
In just over a decade, if nothing is done, Social Security recipients could suffer an incredible 20-23% reduction in monthly benefits.
What’s more, even though the Administration’s cost-of-living adjustment (COLA) doesn’t account for inflation like it should (it’s currently 8.7%), recipients could lose even these inadequate adjustments after 2034.
Taking all that into account, it might seem like there is at least a little time left to solve these big problems.
But if Congress can’t find a resolution for the current debt ceiling by the June 1st deadline, things could get much worse in a hurry for anyone who receives Social Security or Medicaid benefits…
Social Security benefits delayed, or disappeared…?
If Congress fails to resolve the debt ceiling completely, the consequences would be catastrophic, at a global scale.
But even a post-deadline “standoff” between opposing political parties could pose consequences of its own for retirees (and disabled people for that matter).
It’s possible that payment delays, payment prioritization, and even worse could ensue:
The government wouldn’t be able to pay everyone on time. It would likely prioritize payments to investors holding U.S. Treasury bonds, to avoid a “technical default.” Payments like Social Security, Medicare, tax refunds, military salaries and others would likely be delayed.
Prioritizing who comes next is the “big question mark” in the grand scheme of unknowns, said Snyderman of the Bipartisan Policy Center.
In the event of default, the government would pick winners and losers (or, at the very least, who’s payments are prioritized and who has to cool their heels).
The hardship could reach catastrophic levels in only a couple of weeks, and even result in some Americans losing part of their benefits altogether:
Experts are generally warning that checks for Social Security beneficiaries may be delayed if the government no longer has the legal authority to borrow.
The National Committee to Preserve Social Security and Medicare has warned that Social Security, Medicare, Medicaid and other payments “may not be made on time and in full” without a debt limit increase.
Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare added an important point: “Even if all we’re talking about is a delay, you could end up with significant hardship on a large number of people.” They may not be able to buy groceries or medications, which could have “catastrophic” consequences after even a couple weeks’ delay, she said.
Here’s the thing: the debt ceiling is not the problem. It’s just a symptom of the real problem, which is a culture of reckless, wasteful and irresponsible government spending.
Any resolution that doesn’t also address balancing the federal budget and creating a plan to pay off the nation’s $31.5 trillion debt would be nothing but a band-aid on a gunshot wound.
Washington can’t just keep kicking the can down the road. Every day our nation delays costs us $1.08 billion (at least) in compound interest payments.
My fear is that the most likely “resolution” of the debt ceiling stand-off will be more of the same. Business as usual.
Print and spend. Inflate the currency to devalue the existing debt, further destroying the dollar’s purchasing power.
Regardless of how the debt ceiling crisis is resolved, be sure to read the fine print. Because it’s extremely unlikely today’s solution doesn’t create a host of tomorrow’s problems…
It’s no wonder so many Americans are searching for financial stability in times like these.
What’s immune to debasement, default and debt ceiling drama?
We’ve written it many times before: Don’t rely solely on Social Security benefits for more than about 40% of your retirement income. Don’t set yourself up for disappointment.
Whether the debt ceiling crisis is resolved, whether or not the federal government proceeds to drown the nation in an ocean of debt, whether or not the Social Security Trust Fund runs dry, one thing is perfectly clear…
You should consider ways to make your savings, and your financial future, secure and resilient on your own. Don’t wait for someone to do it for you!
With just a bit of foresight and planning, you can diversify your savings with tangible, intrinsically valuable assets like physical precious metals. They’re highly inflation-resistant and can’t be inflated away or defaulted on. Real, physical gold and silver are one of the very few things you can be certain of in uncertain times.
In addition to diversification benefits, owning gold and silver may offer a great deal of peace-of-mind. Can owning gold and silver help you stop worrying and start living? Learn more here.
Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver. Based in the Los Angeles area, the company has been in business since 2003. It has an A+ Rating.
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