Perhaps one of the most common misconceptions in the world today is that the US government operates on a level of transparency with its people, especially when it comes to government retirement programs/entitlement programs like Social Security and Medicare. However, analysts and researchers have uncovered some gaping holes in the government retirement planning, guaranteed to affect every US citizen, sooner than later. When it comes to retirement planning, the more you know, the better prepared you are when it comes time to retire.
*Government Programs In a Nutshell*
Government retirement programs, concisely, take personal resources, deducting percentages from every paycheck in the country. Then, those resources are combined in a communal pot, known as Social Security. When people retire, the government tells them that they will receive a stipend of what they paid in to the community pot over their career. Essentially, everything dime paid in over the span of a 30 or 40-year career is nothing more than an interest free loan given to the government. The money paid into the pot doesn’t earn interest, account for inflation or work for the citizens paying into the program; it works for the government. In fact, big government often takes out “temporary loans” from the Social Security surplus to fund other projects. Hardly a transparent program when you think about it that way, and the problems don’t stop there.
*Social Security is not Absolute*
Even though you pay into the Social Security ‘pot’ out of each and every paycheck, you are not guaranteed a retirement benefit. With millions of baby boomers getting ready to retire in the next few years, the surplus in the Social Security ‘pot’ is estimated to dry up by 2037 or sooner, leaving those retiring after 2037 with nothing but a rueful government program sporting empty pockets. In other words, don’t count on having money for retirement unless you are planning and saving on your own, but don’t expect to have to stop paying into a system that won’t be there to support you either. Regardless of participation or funds availability, you are obligated to pay Social Security stipends out of your pocket, under federal law. Not quite fair is it?
*Medicare is Problematic*
Medicare, another government designed retirement entitlement program, doesn’t work on a standalone basis. In fact, even current Medicare recipients are faced with glaring co-pays and out of pocket costs with rising medical care expenses and increased prescription drug costs. The elderly currently living on a fixed income from Social Security, often have to choose between food and medication on a tight budget.
Without supplemental privatized medical insurance for retirement, achieved by individual planning ahead of time, Medicare doesn’t provide legitimate aid post retirement. Of course, that doesn’t revoke your responsibility to pay into the program with each check you receive, just like Social Security. As a citizen, you don’t retain a right to “opt out”. With life expectancy ever increasing, Medicare coverage after 2037 could be even less than the miniscule offerings provided to subscribers currently.
*A Dirty Little Secret*
Probably one of the most disturbing things that the US government doesn’t want to tell its citizens about is that the legislators in the House and Senate – those creating the laws regulating Social Security and Medicare – don’t pay into it, nor do they use it. Congressmen and Senators have their own privatized health and retirement programs after leaving office, far more comprehensive than the programs they structure for US citizens. Indeed, what is appropriate for the goose, isn’t suitable for the gander in this situation.
*Private Programs*
Many employers offer individual retirement programs like 401K or structured retirement plans, designed to help employees reach retirement with ample resources, without taxation from the IRS. The same holds true of Roth IRA and IRA programs; investment vehicles assisting individual consumers better prepare for retirement. The difference between these programs and Social Security is enormous; the money put into these programs earns interest for the citizen, accounts for inflation and gives those who plan ahead a larger, personal pool to withdraw from, guaranteed at retirement.
Employers also offer supplemental health care programs that an employee can opt into, tax-free. However, the government doesn’t want to educate the public on the importance of privatized retirement plans or healthcare, because that would raise public outcries to stop the madness associated with government entitlement programs; making it impossible for big government to maintain a hand in the limitless pockets of US citizens and borrow from the Social Security pool.