Watch Out! Washington Is Coming for Your Social Security

Between the civil unrest and the pandemic, this is going to be a strange election year. A lot of things we usually pay attention to are slipping under the rug. You want to be careful, because the powers that be in Washington, D.C. are taking aim at Social Security. And AFTER the election, it’s probably on the cutting board.

Here’s why you should be worried.

Lack of Funding

There’s too much going out and not enough coming in. This year, Social Security’s unfunded obligations ballooned to $16.8 trillion between 2035 and 2094.

Experts say that without a solution, benefit cuts of up to 24% may be needed for retired workers by 2035. Some experts say we could see cuts before that. Maybe MUCH sooner.

Are there solutions? We could raise the payroll tax cap — currently at $137,700. Or, we could directly fund Social Security from the federal budget. But the first is politically unpopular and the second may be impossible.

After all, Washington D.C. just shoveled $2 trillion into a pandemic economic rescue package. Heck, there’s even talk of raising that to $4 trillion. Meanwhile, the Federal Reserve is pumping an estimated $10 trillion in liquidity into the financial system. That’s essentially going into Wall Street’s pocket.

In other words, Washington can’t save Social Security because it’s too busy bailing out Wall Street.

All this money printing is causing the debt on the books of the Federal Reserve to balloon — bigger than in any quantitative easing (QE) program we’ve seen before.


 

Morgan Stanley sees the Fed’s balance sheet soaring past $10 trillion by the end of next year. In other words, the Fed’s balance sheet will expand more than it did in QE1, QE2 and QE3 combined.

So, with Washington’s priorities, there simply may not be enough money to pay for Social Security.

More Funding Cuts

One idea the White House has proposed to boost the economy during the pandemic is a payroll tax holiday. Unfortunately, payroll taxes accounted for 89% ($944.5 billion) of Social Security’s income last year.

So, a payroll tax holiday could bring the funding crisis for Social Security to a head.

The White House Is Already Targeting Social Security

In all four of the presidential budget proposals we’ve seen since President Trump took office, he’s singled out Social Security for cuts. The president proposed cutting Social Security (in aggregate) over 10 years by many billions of dollars. The budget proposals single out the Social Security Disability Insurance (SSDI) program. The White House says this program is very inefficient.

Will the Election Change Things?

President Trump is down in the polls for a long list of reasons I don’t have space to cover here, but I think the odds still favor him winning in November.

Even if the Democrats win, they’ll still face the same budget squeeze in Social Security. Maybe even more so, as the Republicans could suddenly rediscover they hate deficits again.

So, I don’t think Social Security is safe with either party. About three out of every four workers worry Social Security won’t be there for them when they’re ready to retire, according to a Transamerica survey. And they might be right.

What Can You Do?

The politicians in Washington are too focused on bailing out Wall Street to ever get around to bailing out regular folks. So, you need to do your own bailout. That is, invest wisely enough to not need Social Security.

I can think of three things you should look at …

  1. Precious Metals and Miners. The money printing has kicked into overdrive; that’s usually inflationary down the road. You can’t print gold. Precious Metals and miners are already having a great year, as subscribers to my Gold & Silver Trader well know. I believe 2021 will be even better.
  1. Dividend Raisers. In a time of ultra-low yields, solid stocks that raise dividends will do very well. In fact, history shows that dividend raisers outperform the markets in good times and bad. These are the kind of stocks we focus on in my Wealth Megatrends monthly newsletter.
  1. Cannabis Stocks. Right now, select cannabis stocks have more growth potential than just about any other industry. They’re much more speculative, sure. But if you have an appetite for outsized gains and can stomach risk, the kind of stocks we look at in Marijuana Millionaire Portfolio may be right up your alley.

Maybe you’ve been following Martin Weiss’ guidance for years and you’re already set. Maybe you find yourself behind for one reason or another and need to catch up.

Weiss Ratings has a bunch of publications to help you do just that, publications for all sorts of investing styles. From safety to speculation, we’ve got it covered.

If you’re doing it on your own, do plenty of research. And WeissRatings.com is a great place to start.

All the best,

Sean

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Comments 5

  1. Rob June 26, 2020

    If the government and the Federal Reserve can bail out private companies, they WILL bail out our Social Security!

    Reply

  2. john henry June 25, 2020

    Sean, U get over enthusesatic SP.

    Reply

  3. michael bolin June 20, 2020

    Touch my social security & I’ll work to get you fired. And there are millions, millions like me. No politician would be that stupid.

    Reply

    • john henry June 25, 2020

      O YES they wood.

      Reply

      • john henry June 25, 2020

        Sean, All in all U do a good job. John Henry

        Reply