Populations aging out

[Well-Prepared Witch]

http://money.cnn.com/2014/08/21/news/economy/aging-countries-moodys/index.html?sr=fb082214superaged3pVODtopPhoto

Going to have a negative effect on growth, at least in the short term, for the U.S. and others.  Thought it was interesting.

[DMCakhunter]

I saw that too.
An economist that presents at our annual industry meeting is forecasting a decade long depression starting in 2030.

[special-k]

Let's not forget to factor in the "idiocracy" effect:

Idiocracy

[Burt Gummer]

I would like to explain what this article means and why an "aging population" is a "problem" in a couple paragraphs, while accurate it won't be politically correct.
Still want it? Yea / Nay

[brat]

Burt, start typing. 

[JohnyMac]

Yeah Burt. 

[Nemo]

I would like to explain what this article means and why an "aging population" is a "problem" in a couple paragraphs, while accurate it won't be politically correct.
Still want it? Yea / Nay

Its quite simple gents.  Watch the TV commercials.  50 is the new 30.  Being 55 myself, I can confirm that assessment.

Nemo

[chenmi]

Aging population is a huge potential problem.  It is made worse by the high sovereign debt carried by the US and most countries.  The reasons are:
1.  Aging populations have fewer young workers, as in a lower proportion.
2.  Healthcare costs are higher for older people.  An older population also requires more healthcare workers.
3.  As people live longer, more out-live their financial resources and the slack is taking up by family, government or a lower standard of living.
4. Fewer workers means fewer tax payers.  They also need to be paying increased healthcare costs and for repayment of government debt.  In the US, interest on the national debt is about 11% of revenue and could go up sharply if treasury rates rise from the current, historically low 2-3%.  If rates went up to a more usual 5-6% the share of revenues would grow to 20% of US tax revenues. 
5.  Pension programs like Social security are based on life expectancy from years ago.  The SS retirement age has been adjusted up some, but revenues have not(still 6.4% each for employee and employer).  Congress has also increased benefits like disability without increasing revenues.  Many public and private pension plans are underfunded.  Wisconsin's and South Dakota's public retirement fund are a glowing exceptions at 99.9%  Some state put IOU's into the pension funds instead of cash into an independent account.  The lowest is Illinois where the cash contribution was 40% in 2013.  Various municipal funds are even worst, think Detroit.  Private funds are often in company stock, think GM.  The US government partially steps in when these funds fail (think smaller pool of tax payers).
6.  China's working population (19-60) declined last year by almost a million people (0.1%).  They will be continue feeling the problem sooner than the other developed western countries.  Countries can stall the problem by raising the retirement age.  That should keep the number of taxpayers up, but will not lower healthcare costs.

I labeled it a "potential problem" because if the SHTF, all bets are off.  Of course the timing is important.  If it happens in 2015, the aging population would have been a non-issue.  The collapse holds of until 2040, an unsolved aging population problem might be one of the mitigating factors. 

An aging population is only a problem if you think the world is fixable.  I think about and debate solutions to American and world problems, but the fact that I am a prepper says I don't really believe the world is fixable.  The sadness of that thought is sometimes crushing.

[JohnyMac]

Oh, the aging population is a BIG problem especially since both the DEMs and GOP have raided the Social Security "locked box."

IMO the retirement age for SS needs to be increased from 62 to maybe 67 for folks under 50 and to 75 for folks under 40 or abolish it completely for folks under 40. Than allow them to invest tax free, retirement dollars within set perimeters.

On the medical end, trust me here... Death panels are here now and will expand as the population ages. There is just noway to pay for this.

Case in point: My 84 year old step-dad had a stroke in December. He was taken by ambulance to the local hospital at which time the resident intern determined that he needed a operation in his neck to rotorooter his carotid artery, ASAP.

Over the past two months he went had many tests locally to make sure he would survive the operation and they fast-tracked him to being operated on tomorrow, February 11, 2015.

He contacted the VA (He is a Korean veteran and receives 100% medical compensation due to injury's during the war) at the beginning of January to get a release for the operation. Bottom-line, they refused to pay because he didn't have the tests done at the VA hospital 1 1/2 hrs from his home. That's 1 1/2 hrs to Providence, RI and another to return home.

If you have been listening to the news of late, you know that New England has been getting serious snow since November. So the VA wants an 84 year old man with 67% loss of facilities, to drive 1 1/2 hrs to/from the hospital on less than good roads. This travel for approximately half a dozen tests to determine that: Yes he needs the operation and then to wait in line to be scheduled for the operation.

We have been in contact with his Congressman's office and basically he was told that due to the fact he did not follow protocol, e.g. the ambulance did not take him to Providence when he had his stroke, and he went for tests locally based on the advise he received from his surgeon - The operation will not be covered under the VA mandate.

His surgeon wrote a letter to the VA last week and my step-dad received a letter from the VA yesterday stating:

> They will cover his ambulance ride to his local hospital and his 2 day hospital stay,
> They will not cover his tests done locally,
> They will not cover the operation at the local hospital, and
> They are in receipt of the letter from his surgeon and it is under review.   

Medicare will pay for a percentage of the operation but he and my mom will be expected to pay for the remainder of a $95,000- operation and hospital stay post the operation. 

So taking all of the drama out of the equation, this is in fact a death panel decision. Do it the .gov way, pay out of your own pocket or die. Pretty simple.

I am not looking for nor will I accept sympathy - It is what it is. Just another example how .gov treats the men & women who fight their wars.   



 

[brat]

Prayers for your Dad's successful operation and recovery.

Just another example how .gov treats the men & women who fight their wars.

You could add to that list, people who have worked hard and "paid" into the system all their life only to get phucked when they reach the point to "collect" what they paid. Because it's all been (and being) given away to those who have not contributed, nor will they, but only taken the freebies all their leaching lives. 

[JohnyMac]

I hear and agree with your statement, "You could add to that list, people who have worked hard and "paid" into the system all their life only to get phucked when they reach the point to "collect" what they paid. Because it's all been (and being) given away to those who have not contributed, nor will they, but only taken the freebies all their leaching lives."

Thanks for your prayers.

[chenmi]

I hope the situation works out well for your father and family.

On more theoretical matters....

"Raiding the lock box" is too vague for me to understand. Other than paying for new benefits without increasing revenues, I don't know what is meant by "raiding."  Help me out, please.

The trillions of dollars collected for Social Security needed to be invested for the future of the beneficiaries.  The safest investment was and continues to be US Treasury bonds.  The lock box is stuffed with them and I think only them.  With the ballooning national debt and increasing questions about the ability of the current revenues to redeem them when outflows exceed inflows, the safety of these investment is increasingly questioned.  I'm worried, too.  However there is no better investment as there is no bank where you can deposit trillions of dollars.  The stock market, if the stocks are chosen well, offers greater gains but more risk.  The same is true for corporate and municipal bonds.  International bonds on sovereign debt are a possibility with potential gains and risks varying widely.  (PS:  the US has never paid back any of the national debt, except for a tiny amount under Clinton. They pay some interest from current tax revenues and roll the rest of the interest and principle into new bonds.  How's that for scary!)

Raising the retirement age is definitely part of the solution. Another part is increasing or eliminating the cap at which FICA taxes are no longer withheld ($117,000 in 2014).  Other proposals call for reducing benefits especially for those with large retirement incomes from other sources and/or increasing the 6.4% withholding from employee and employer.  A few years ago that increase could have been less than .5% to stabilized the fund for the foreseeable future.  A recent bill did reduce the inflation adjusted raises in Social Security payment by switching the basis to a different inflation index at is lower than to one commonly quoted in the media.  If you are currently on Social Security, your 2015 payment adjustment is a up to $10/month less than might have been.

On abolishing Social Security for those under 40 or even anybody.........     I think enough people would not save, invest wisely or successfully and avoid wall street scams, meaning they would be dependent on the government.  The cost would be the same without the benefit of withholding taxes to offset them.

The bottom line is that if the SHTF before they retire, it won't have mattered what we did or how good our intentions were.

[JohnyMac]

chenmi, during the presidential debate candidate VP Al Gore told the American people that the money in medicare and social security would be put in a "locked box" and never touched for anything other then it's intended purpose. Well it has been raided and used to help finance war in the sandbox and other social programs.

Just for some levity...

Debate 2000

[Nemo]

Oh no, all the money Soc Sec took in is still there.  Look in the file cabinet in the head man's office.  You will see he has documentation of all the loans to and can get it back from the Fed Gov when he needs it.

Nemo

[chenmi]

I discovered how Social Security has been raided.  I read an article today where the administration is proposing shifting $330 billion from the SS Retirement Fund to the SS Disability Fund.  US Senate Republicans are gearing up for a fight.  I agree with the Republicans, this is a bad idea.  The article also states that this particular "raid" has happened 11 times before usually with other provisions to strengthen SS's overall finances.  The article didn't give dates, totals or "strengthening" provisions.  I intend to research this.

If the funds aren't transferred, it is estimated the benefits for 11 million people (1 in 35? Egads!) would go down by 19%.  Liberals say the problem could be fixed "permanently" but increasing the FICA tax ceiling to $118,500 + inflation adjustments from the current $114,000.  They point of how a $20 million wall street broker would still pay the same FICA taxes as a $118,500 person.  A tax increase for sure.  Unfair?  Opinion, but looks okay to me because it's not my money, lol.

Republicans are proposing a "longer-lasting solution", but are short on specifics.  For both sides, the devil is always in the details.

Here is a link to the full article:
http://news.yahoo.com/republicans-press-fix-social-security-disability-program-183304877--politics.html

[DMCakhunter]

The change is needed otherwise the disability fund will run out of money and there is no way this congress will increase taxes.

Look here for a little SS admin history.http://www.ssa.gov/oact/progdata/fundFAQ.html#a0=8
At the bottom, they admit that in 1982, the fund was nearly depleted. What they don't say is what it was replenished with.
Funny thing is that in 1983, congress made social security benefits taxable. My guess is that they needed more tax money.
Here is a record of deficits.

[DMCakhunter]

Liberals can point to what they want, if they would increase the tax ceiling, they also need to increase the payouts to those that pay more. And they won't do that.

Better to keep the rates where they are and do means testing (income levels) where people receiving benefits have those benefits reduced/phased out for ALL income above the tax ceiling.

[JohnyMac]

IMO, if we picked 5-7 regular Joe's & Jane's with business backgrounds and locked them in a room with the following instructions: You may not leave this room until you first come up with a plan to for a balanced Federal budget for Fiscal YR 2016 (Oct '15 - Sept '16) and then second, come up with a ten year plan to reduce our national debt to lets say 25% of GDP; They would be able to do so in seven days or less. 

When you are not in the business of buying votes you have no "dog in the hunt" and will cut where appropriate.

[DMCakhunter]

Right on JM!