750,000 Americans Take 50% Drop in Social Security
Don’t worry about losing your Social Security benefits in 2040 or 2050. Three quarters of a million American citizens are already losing theirs.
Don’t worry about losing your Social Security benefits in 2040 or 2050. Three quarters of a million American citizens are already losing theirs.
Every month, the Social Security Administration (SSA) either mails off or direct-deposits payments to American retirees living overseas. Apparently, more SSA checks are sent to Polish-American recipients in Warsaw, Poland than any city in the world except Chicago. Huge numbers of foreign-born Americans retire back to their country of origin after a working life in the United States. Hundreds of thousand of others choose to live in countries where the cost of living affords them (or used to) a sustainable lifestyle.
And all of them are being skinned.
Consider someone who retired to the Czech Republic, the former
Czechoslovakia, thinking he could make it there on his Social Security.
Born in America, a series of late-life reversals left him without
savings or a private pension. He came to realize that George Bush
didn’t believe in those kinds of possibilities, but then he didn’t have
lifelong access to George's family bail-outs either.
As Rumsfeld would say, stuff happens. Not to everyone, but stuff happens occasionally to more ordinary folks.
What our intrepid retiree didn’t plan, was Bush following him to Europe to take away half of what little the government promised to pay him--about a grand a month. That’s just about the average, by the way. $1,000 will make a car payment in America or maybe pay the rent, but there won’t be much left for food. And medicine? Forget it.
Which is one of the major reasons Americans are driven from their own country in their old age. With an income at half the poverty level, who can afford to stay home? Everyone knows (god knows they've been told often enough) not to depend on Social Security as an only source of retirement income, but sometimes stuff does indeed happen.
To get down to the nitty as well as the gritty, a retiree moving to
Prague just at the end of the Clinton administration found the dollar
was convertible to 42 Czech crowns. Renting a flat in Prague, if you
were careful, cost about 10,000 crowns--$238 bucks a month. Dinner out
could be had for $4 and that included a glass of house wine and a tip.
A movie was $1.25, an unlimited tram/metro pass for a whole year cost
$60 and walking the incredibly beautiful streets of one of Europe’s
most famous and historic cities was not only safe, but cost not a dime.
You could live well on a grand a month, travel a bit and never worry about making it.
It will come as a shock to most Americans who don’t venture outside the country, but all is not well with the dollar abroad. It still buys 30% of a Big Mac or a Starbucks coffee of the day in America, but it’s worth 19 crowns in Prague, 70% of a euro and less than half a British pound. Our good old American buck, that used to be the standard of the world and its most sought-after currency, is as broken as our military.
Alan Greenspan thinks it will be okay. Alan didn't see the dotcom bubble or sub-prime mortgages as a problem either. He cheer-led the tax breaks and now writes that he regrets them. Nice timing, Alan.
During six years in Prague, Czech prices have gone up about 20% (a moderate 3% annual increase) and the dollar has dropped by half,
while Alan wasn't looking. The combination of those circumstances have
boosted the $238 flat to $631, the $4 dinner to $10.60, a movie to
$3.30 and a yearly tram pass to $159. Suddenly travel is out of the
question and those casual stops at the bookstore are a thing of the
past.
Make a quick note of what shape your family finances would be in if, during the past six years, everything you need to pay for had increased by over two and a half times. You might want to take George and Alan out to the woodshed.
That’s what’s happened outside the country. That’s why travel agents warn you to get ready for $400 hotel rooms in Europe, $6.50 a gallon for gas and (heaven forbid you need it) $9 a quart for oil. Nine bucks a quart!
We don't talk about how this happened in America, because we mostly don't know that it happened. But we began this little trip down Ruination Lane by giving $2.5 trillion to the already unconscionably rich in tax breaks. It didn’t matter, because Starbucks coffee was still $3.50. Then we blew another $1 trillion (well on its way to $2 trillion) for the Iraq thing, without raising anybody's taxes to pay for it. But again it didn’t show up on the public’s radar because Big Macs still cost pretty much the same and someone else’s kid was being called up—and called up—and called up.
Who knew? I'm coming to that.
A funny thing happened on Wall Street, where they don’t eat many Big
Macs (the same cannot be said of Starbucks). The guys who make their
hundreds of millions (and get tax breaks on them) were all selling the
dollar short—that’s street-speak for betting it was on the way down—and down is where it went.
America had become the world’s profligate uncle, (adjective) recklessly wasteful; unrestrained by convention or morality
Uncle Sam was buying like a drunken sailor buys drinks and he wasn’t
shoving any cash across the bar, he kept reaching for over-limit credit
cards. Four or five trillion ‘on the cuff’ in a country that used to make stuff and didn’t any more. Four or five trillion by an administration that claimed to be fiscally conservative. Conserve, (adjective) keep in safety and protect from harm, decay, loss, or destruction; use cautiously and frugally
Profligacy is like that. Recklessness and money woes tend to encourage one another. Bush is a reformed drunk. Did he fall off the wagon while on the country's business, or what?
The prudent man (and America used to be prudent) earns money, puts some away, invests in equipment, builds a better mousetrap and spends years working his way up through Chevrolets and Buicks until he ventures into a Cadillac.
Even then, he tends not to be smug about it.
That portion of the world that believed in us has shrunk like a cheap
sweater. To a large extent, the Soviet Union kept us honest, but
they’re not there any more and we’re intoxicated with money these days—other people’s money. Personal debt in America is out of control, with too many carrying four or five maxed-out credit cards.
Our profligate uncle raised profligate kids and the financial world isn’t answering the phone as often as they once did. An American dollar worth half what it was six years ago.
Everything in America worth half what it was six years ago.
Not true? Explain Chrysler selling for $7 billion? Show me how Ford and GM came to find themselves on the ropes? Tell me why our airlines are bankrupt and our bridges falling into the Mississippi, while we’re unable to rebuild a city hit by a frigging hurricane? How does it happen our schools are gone to hell, prisons full to bursting, 50 million without health insurance. We have a sinking middle class, a wall to keep Mexicans out and you think the world’s judgment of us is not true?
The last to recognize a society in shambles is the society itself—Americans in America.
It may be that the first to know are Americans outside America—they’ve seen their native currency through desperately clear eyes. And, to paraphrase the commentary about Maine as a bellwether state,
“as the currency goes, so goes the nation.”
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Media comment;
Ooh boy. There are so many wrong conclusions and invalid inferences drawn by this article that I don’t even know where to begin.
“Born in America, a series of late-life reversals left him without savings or a private pension.”
And, what, pray tell, are these reversals and how did they happen? Assuming he has a defined-contribution retirement savings plan (automatic enrollment into which is now mandatory, thanks, ironically, to an initiative pushed by Bush himself), then for a person to experience enough “late-life reversals” to wipe out both savings and pension is like an Australian person losing the entirety of his or her super. Which is borderline ridiculous, but all right, let’s assume away…
“Everyone knows (god knows they've been told often enough) not to depend on Social Security as an only source of retirement income, but sometimes stuff does indeed happen.”
This is too ridiculous to bother dismissing. Of course you don’t depend on SS as the only source of retirement income. Even FDR himself said that.
“Alan Greenspan thinks it will be okay. Alan didn't see the dotcom bubble or sub-prime mortgages as a problem either. He cheer-led the tax breaks and now writes that he regrets them. Nice timing, Alan.”
If you’re going to demonize Alan but praise the Clinton years, keep in mind that Clinton not only kept Alan in office, but renominated him to the Fed chairmanship twice.
“We don't talk about how this happened in America, because we mostly don't know that it happened. But we began this little trip down Ruination Lane by giving $2.5 trillion to the already unconscionably rich in tax breaks.”
By what point are you “unconscionably rich”? With 100K in the bank? 200K? A million? Ten million? And as for the tax breaks, well, there is a reason America’s economy rebounded within six months after losing almost four trillion in market value in the month after 9/11.
“The guys who make their hundreds of millions (and get tax breaks on them) were all selling the dollar short—that’s street-speak for betting it was on the way down—and down is where it went.”
Well, duh. Every time you buy British pounds, or Swiss francs, or Japanese yen, you are “selling” the US dollar to buy foreign currencies. The only way to prevent people from selling the dollar is to forbid American investors from buying foreign currencies or foreign currency assets. Is that what this guy is getting at?
“Personal debt in America is out of control, with too many carrying four or five maxed-out credit cards.”
I have four credit cards. Mainly to arbitrage rewards opportunities. Three are entirely unused, and on the fourth, I carry a balance of $2 to keep up my credit score.
“Show me how Ford and GM came to find themselves on the ropes?”
You want to know? Because of unionists. Ford and GM found themselves on the ropes because their cars are more expensive, and of slightly lower quality than overseas competitors’ cars, notably the Japanese. I’m sorry, but given two cars of similar quality, one costing $10,000, and one costing $12,000, it’s not just greedy Wall Streeters, but rather any smart, logical, consumer that would choose the $10K car.
But why are Ford/GM cars more expensive? Because the unionists refused to budge on things like $70/hr wages, and lifetime healthcare benefits. That’s why GM and Ford have to pass the increased costs onto consumers. The only way to “force” consumers to eat up the higher costs is to forbid them from buying foreign-made vehicles. And that’s just silly. Again, is that what this guy is getting at?
Buy this guy makes some very coherent points. I agree with his assessment of the problems facing the US. However, my response can be boiled down to two points:
1. The guy’s points on Social Security are very valid. I hate Social Security. Because the way it works is that the government takes your money to lend money to itself. It would be absolutely amazing if we could introduce something like Australia's superannuation, which is one of the most brilliant public policy moves ever made by any government anywhere – and it would solve most of our problems. But unfortunately, when Bush tried that in 2005, the Democrats killed it, claiming that it would allow retirees to “gamble away” their retirement savings. I wonder if anyone told them that it was shepherded through the Aussie Parliament by a Labor government, and that Aussie retirees haven’t managed to “gamble” themselves to destruction yet. I’m sorry, but if there’s anyone to blame the SS fiasco on, it’s the Democrats – both for coming up with such a hare-brained idea in the 40s, and for standing in the way of any attempts to reform it, even along the lines of something championed by an even-further-to-the-left party in Australia.
2. The guy’s bewailing of the fact that Americans don’t like the US dollar and US-made goods incorrectly places the blame on greedy Wall Streeters. However, it’s logical behavior to not want to hold a depreciating asset, or to not want to buy a more-expensive good when one of better quality for a cheaper price is available. The only way to reverse this trend is either to 1) ramp up quality and cut costs, essentially produce faster, better, and cheaper than the Japanese or Indians or Chinese can, or 2) legally forbid Americans from buying foreign currencies or foreign-made goods. This guy sounds like he would go for the latter.
Posted by: Roger Milford | October 28, 2007 at 04:15 AM
Hey Roger, Check your facts on average credit card debt in America. (Using yourself as evidence for a lack of credit card debt in America is beyond laughable, although,I am laughing at you)
Posted by: Bill Kaye | November 10, 2007 at 10:39 AM