We Ain’t Got the Money Of

Let me make this easy for everybody.

We, the people, in the form of our various governments, have been making a variety of promises with dollar signs attached… where said dollars would be paid in the future.

We do not have the money to cover those promises, as they are currently constituted. You can get into the squiggly details of discount rates, “bending the cost curve”, death panels, soaking the rich, and whatnot, but the bottomline is that the demographics are not favorable and when the demographics were favorable and the promises were made, not enough money was not set aside to fulfill the promises:

The federal government’s financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.

The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

This gap between spending commitments and revenue last year equals more than one-third of the nation’s gross domestic product.
The $61.6 trillion in unfunded obligations amounts to $527,000 per household. That’s more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.

Now, I agree that these promises will not bankrupt the U.S. — because they likely will not be fulfilled. And this is going to hit with the Boomers, because they are much too big a demographic bulge with too few to follow.

So I’m not particularly worried about things as my expectations are low to begin with. Unsustainable stuff will not be sustained.

But you know, some people may get cheesed off when they don’t get 100% of what they expected.

About Meep
Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.

2 Comments on We Ain’t Got the Money Of

  1. jefferson101 // 06/11/2011 at 10:56 pm // Reply

    But it’s mine, I tell you.

    Mine, mine, MINE! It’s mine, Precious.

    I paid for it, and it’s due to me as an absolute right! Nobody can take it away from me.

    Heh. The sound of people demanding their Social Security. I’m just happy that I have a non-physically demanding job, and can work until I’m about 72. If the .Gov will quit screwing with the free enterprise system and the markets, I may have enough money by then.

    If they don’t? I’ve been known to remark that us old folks can drive fertilizer trucks, too. That probably exaggerates my position by a good bit, but if the don’t either quit promising everyone the moon or quit destroying my investments, they are going to have some fair number of folks wanting to string them up from the nearest tree, for sure.

    Be it noted, my retirement plan is including Gold and Silver. And Copper, Lead, and Brass. I’m trying to cover all the angles.

    But most of my generation is still in “Hold your breath until you turn blue and demand more” mode.

    Tough titties, people. You ain’t going to get it. Either plan accordingly, or learn to love cat food. It’s all on you.

    And So it Goes.

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    • In my meaner moments, I recommend people take up “interesting” hobbies in retirement, such as smoking and BASE jumping. Then your worries about outliving any savings are less….

      to quote what I’ve written to someone else:

      If nothing else, I’ve been getting my friends to moderate their
      expectations. The issue isn’t that there will be no services, b/c
      current services will win out over paying retirees who don’t even live in the state anymore (wow, that was smart moving to Florida, guys…sure, you dodged the NJ taxes, but now nobody in NJ really gives a crap what happens to you!)

      It will get ugly in the short term with lawsuits and politics, but as with Prichard, Alabama, when the money runs out — it’s gone. The retirees there… several died in the period that no one was being paid, and the are getting piddly in that settlement. The retirees are not going to get zero, but they’re going to get far less than was originally promised, because it can’t be sustained.

      So while this causes massive demonstrations in Europe, in the U.S., we will have been warned about this for years prior — no one will say it was a surprise.

      I think Social Security will become an explicit welfare program (i.e., means-tested) and Medicare likewise will be more like Medicaid than a blanket program.

      I could be wrong. But I just think the demographic numbers are such
      that the cushy benefits given to my grandparents’ generation (the
      Greatest Generation) – the people who spawned the Boomers in droves
      which could pay for it – was a momentary bobble. I was born in the
      trough of the Baby Bust, and there’s not enough of me to pay for the hungers of the Boomers. And I don’t see the Chinese riding to the rescue, as they have a self-inflicted demographic crisis of their own, aging far more quickly than the U.S., with a ruling elite that has far deeper worries of unrest than our own has (for good reason).

      The bit above says nothing new, really.

      But the whole point is managing expectations. The sooner people can
      get realistic about what they can actually get in terms of government promises, the sooner they can plan.

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