Lesson: Don’t Depend On Government For Retirement

Social Security was never supposed to be a complete retirement plan. It was a plan that provided insurance to those who retired so that they would have some income after their working years ended. There have been revisions along the years and they have expanded the scope of Social Security to something it was never intended to be. One of the provisions enacted was to index cost of living allowances (COLA) to inflation. When there is inflation the COLA goes up and when there is no inflation there is no COLA.

The government has announced that, for the second year in a row, there will be no COLA because there is supposedly no inflation. Prices are rising but there is not yet a measured inflation.

One would think that since there are rules in place that they would be followed. This is a pipe dream when it comes to Washington DC. Last year the politicians passed a law to give Social Security recipients a $250 check to make up for not getting a COLA. If the mechanism in place determined that there should be no COLA then why did they circumvent that mechanism and pay the money anyway?

When I originally wrote about this recent COLA news I indicated that it would not be long before Congress worked to send another check to people who did not get a COLA. Keep in mind that they did not get a COLA because of the law that Congress passed, but that makes no difference.

After all, it is an election year.

As I predicted, the Congress is working to pay another $250 to offset something to which Social Security recipients are not entitled (in accordance with the law).

Representative Earl Pomeroy (Democrat, North Dakota), who introduced the legislation, had this to say:

“Seniors who rely on their modest Social Security payments need these cost-of-living adjustments for their day-to-day survival,” Pomeroy said. “Passing this bill will ensure that the lack of cost-of-living adjustment will not jeopardize seniors’ ability to survive on their benefits.” My Way News

The message here is that Seniors are DEPENDENT on government. Seniors, according to Pomeroy, rely on the payments from government which means that they are at the mercy of the government when it comes to the amount of money they will receive. He also is saying that the laws the Congress passed dealing with COLA jeopardize senior’s ability to survive.

In other words, seniors depend on government to survive. This is not a place anyone should EVER desire to be.

By any measure, money paid to Social Security would have returned much better profits than government if invested in the market. The claim that seniors would have been wiped out is wrong. First of all, the most recent legislation would have exempted people over a certain age so they would have been unaffected. Those who are younger would have had plenty of time to recoup the loss. Second of all, if the money had been invested the return would have been higher so the amount lost would not have been as devastating.

In addition, had the system been set up that way decades ago, people would be much better off and not waiting for government to hand them a few more scraps. If those accounts belonged to the people (it IS their money) they would control it, it would not be taken by the government to spend on worthless endeavors and the money could be passed to heirs thus ensuring growth of wealth in this country.

But government can’t have people being wealthy and independent in their senior years.

How else will government control the people if they are not at its mercy?

A person who makes $1000 a month for 40 years at the average of 6% would have $245,712 in 40 years and this assumes NO increase in salary and no change in the interest rate. A person making $5000 a month would have $1,228,558 using the same assumptions. Government does not give this kind of return on investment

The lesson is to save as much as you can. The old saying about paying yourself first is great advice. Decide how much you can save and then invest it in a vehicle that pays good interest. A balance between interest and risk is a good idea.

If people fail to save they will be at the mercy of government, which is just where they want you.

They need that to pander for votes.

And to control the population…

Cave Canem!
Never surrender, never submit.
Big Dog


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10 Responses to “Lesson: Don’t Depend On Government For Retirement”

  1. Worth noting: local and state pension plans are starting to fail.

    My personal gripe: the savings interest rates from the banks are way too low. We who have saved aren’t earning any interest to speak of now.

    • Big Dog says:

      That is very true and it is because of government. Why should the banks pay you a better interest rate when they can get money for practically nothing from the Fed?

      That is why investment vehicles, in addition to saving, are important.

      When the pensions fail there will be chaos.

    • Blake says:

      The banks are sitting on their money, because they are scared of what else the government has in mind for them.
      (It will be “Nationalization”, but some banks have their heads still stuck in the sand-)

  2. Mr. Ogre says:

    And don’t you love the way this is (typically) being sold? Seniors NEED this money, or they will die. After all, it’s a whopping $20 a month. Sheesh.

    And yes, AOW, rates are low because the fed demands it to be so. Don’t worry, though, the fed is making noises that it might raise rates soon — which means not only will savings rates increase, but so will, well, the cost of everything else. The fed has honestly said in the last couple days that prices are not increasing enough for the fed, and they want HIGHER prices!

  3. Blake says:

    This is why people should be given options in their investments- SS pays a whopping 1% in interest- if you bought gold, or guns, you would have at least had a 10% increase in your wealth.
    More options is always a better way- and it should be YOUR choice, not the governments- SS was a failure from the first day it was implemented, it just took a long time for the rot to become apparent- and we might still not know, if the politicians from both sides of the aisle hadn’t stolen so much from the fund.

  4. Jay Banks says:

    Usually the factors used to set a COLA are not rational. From a logical and of course mathematical standpoint, the SS system can not work. It was fine when families had 6 to 10 children who would join the taxpaying base. But now with 2.3 children per family, the ponzi scheme collapses. So, what do we do now? I don’t have a solution to that one. At least a solution that anyone will like.

  5. Mike Radigan says:

    Dave Ramsey answers a social security question:


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  7. Lue Gnekow says:

    Well, I guess they have us where they want us. They support Wall Street – support the banks support AIG, Fannie & Freddie, but every day we hear that SS is not working. I worked for 45 years, saved money (no pension for me) so I would not have to rely on SS. Didn’t take vacations, just worked for that nest egg. I put some of that nest egg into the stock market through Morgan Stanley. Lost most of it. Gave a big chunk to a local “upstanding citizen realtor” to help finance some real estate purchases and was promised a return of principal and interest. That turned out to be a scam – lost that. Gave some to an investor in California and lost that. Seniors need to be very careful of any investment as there are too many ponzi schemes around. It’s time to put it under the mattress. I’m only lucky I have a little left – I’m 70 so maybe I can squeek by until I die.

  8. Lue Gnekow says:

    Oh yes, about the no pension business. I was caught in the earliest part of NAFTA where jobs went out of the U.S., so I worked in several manufacturing plants, but when they closed, there was no way a pension was in my future.

    Thanks for listening!