Entries in Dr. Murray Sabrin (3)

Monday
Oct082018

Is Social Security Going Broke?

By Theresa Yarosh,

CGSF Board Member

This is part 2 of a 3 part series

The Social Security Board of Trustees is reporting through its Annual Report that the trust funds for both the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) was little changed from the previous report in 2017, but that “annual balances are slightly worse in the short term and slightly better in the long term.”

The conclusion is that in 2032 the DI Trust Fund will be completely depleted, which is “four years later than projected in last year's report, and ten years later than projected at the passage of the Bipartisan Budget Act of 2015”.

The OASI Trust Fund, on the other hand, will be able to pay full benefits “until 2034”, which is one year earlier than in the 2017 Annual Report, but there are still problems in the future.

The reason for the problems is that the amount that Social Security must pay out annually is larger than what it receives each year.

Social Security receives roughly $800 billion a year in taxes, in 2015 $795 billion (85 percent) of total OASI and DI income came from payroll taxes, while it also generates about another $100 billion from interest earnings on the trust fund to pay current Social Security beneficiaries.

The payout is, unfortunately, much higher as the benefits that the 63 million enrolled beneficiaries received in 2017 totaled close to $965 billion.

At this time, the Social Security Board of Trustees estimates that Social Security has a $13.2 trillion-dollar unfunded liability over the next 75 years. These are the benefits they expect to pay minus the revenue they expect to receive.

Even with this shortfall, there is still a possibility that Social Security will be able to continue as provisions have been created to help minimize what Social Security will have to pay out in the future.

With federal regulations pertaining to retirement, for a person to receive their Social Security benefit they must also accept Medicare when eligible.

Meaning, that when a person is no longer covered by credible health insurance through an employer health plan or a spouse’s employer health plan and they are 65-years old or older, they must accept Medicare or forfeit all of their Social Security benefits.

The other added regulation: the bulk of their Medicare premiums, by regulations, are automatically deducted from Social Security benefits.

You may begin to see what has happened and will, unfortunately, happen in the future; Medicare premiums will inflate at a higher rate than what your Social Security benefit will increase at through Social Security’s cost of living adjustment (COLA)

To further complicate matters, in 2003 Congress, through the Medicare Modernization Act, granted the power to the Centers of Medicare and Medicaid Services (CMS) to implement a surcharge on top of the standard Medicare premiums for those retirees who are earning too much income.

Below are the current 2018 Income-Related Monthly Adjusted Amounts (IRMAA) for Part B and Part D of Medicare (Table 1.)

 

Thus, those who happen to have not planned accordingly for health coverage costs through Medicare will be subject to not only higher premiums, but they will also realize a much lower Social Security benefit throughout retirement. 

Because of these provisions, Social Security is afforded the luxury of not having to pay out the total amount that is due to retirees as their Medicare premiums will work to reduce that benefit.

For those who are not subject to Medicare’s IRMAA, their income is lower throughout retirement; thankfully, there is the Hold Harmless Act.

The Hold Harmless Act of 1984 stipulates that no retiree who is enrolled in Medicare and Social Security can see their Social Security benefits decrease due to Medicare increases.

The result is that those who experience a higher Medicare premium while also seeing their Social Security benefit not increase will be afforded the luxury of having their Medicare premium remain constant while their Social Security benefit will remain the same in that given year as well.

Again, with federal regulations working with both Social Security and Medicare the total amount that is paid out from Social Security will never be as high as previously projected.

Regulations even further the possible viability of Social Security since the Hold Harmless Act was ratified by Congress in 2009 to disqualify those who reach any Medicare IRMAA bracket.

Essentially, only the Standard Premium of $134 per person is going toward the Medicare Trust Fund because the Hold Harmless Act was a subsidy for those at the Standard Premium of Medicare and as such that subsidy is being paid back to the general account via the Medicare IRMAA Surcharges.

Dan McGrath, Co-Founder of Jester Financial Technologies and author of the bestselling retirement planning book “What You Don’t Know About Retirement Will Hurt You” believes “that the main solution to this problem is obvious, and it’s not pretty.”

Mr. McGrath believes that there is not just one solution, but a multiple number of steps that CMS and Social Security can take to ensure that both these programs will remain viable in the future.

For Medicare, Mr. McGrath believes that the first step is to “lower the expenditures paid to healthcare professionals in order to have Medicare being able to control its budget.”

For Social Security, he is under the impression that the federal government will increase the tax on payrolls for those who are still working to generate even more revenue to cover benefits.

The last action Mr. McGrath believes may happen is that the government will take the Medicare IRMAA brackets and adjust them lower so even more retirees will be impacted by it in the future.

Ultimately, with a higher and higher percentage of an individual and couple’s Social Security checks being allocated toward Medicare-related expenditures the ability for Social Security to remain solvent in the future can be achieved.

The issue though is that for many people who will rely on their Social Security benefit to help pay for their expenses in retirement may find themselves having to work longer or changing their lifestyles even more.

As for those in the higher income tiers they may see a day when they are writing checks to the US Treasury to pay for their Medicare.

As their Medicare premiums increase with surcharges from IRMAA and the possibility of their Social Security never increasing and quite possibly decreasing, the bulk of their Social Security benefit will be consumed in its entirety.

The added insult to injury, they will also be taxed on the very same Social Security benefits that they never received.

Is this possible, is Mr. McGrath correct in his assumptions?

Well, according to the Medicare Board of Trustees, in 2026, it may just happen as the proposed Income Related Adjusted Amounts (IRMAA) surcharges are expected to be adjusted due to federal regulations.

With the passing of the Bipartisan Budget Act of 2015 and 2018 not only will the IRMAA brackets change, but they will not be adjusted for inflation until 2028.

At that time the brackets will be adjusted to the CPI-U (Consumer Price Index for all Urban Consumers) on an annual basis to keep Medicare solvent. (Table 2).

Table 2. Proposed 2026 Income-Related Monthly Adjusted Amounts (IRMAA)

These changes are being proposed in conjunction with the expected depletion of the Social Security and Medicare Trust funds as well as containing the future unfunded liabilities.

 

Dr. Murray Sabrin, Professor of Finance at Ramapo College, states the following situation with regards to the data above “as what I call trickle-down economics, namely well-intentioned but structurally flawed federal programs cannot meet the needs of retirees in a cost-effective manner. Thus, we need to have a national conversation— and action--on how to address the financial tsunami that seniors will be facing for the next couple of decades. In addition, with that said there needs to be a focus on solutions that will properly address these costs not only on the individual level but on the level of National and State pensions.”

Regardless of the unfunded liabilities as it pertains to both Social Security and Medicare, it is important that individuals and couples start planning now for higher healthcare costs in retirement. It is essential to seek out an advisor who is trained in healthcare regulations, the associated inflation rates as it pertains to Medicare and the planning strategies that need to be utilized to restore the purchasing power of retirement assets and Social Security throughout retirement.

Theresa J. Yarosh, CFP®, CLU®, ChFC® is the Founder and President of Macro Wealth Management, LLC. She has been in the financial services industry for over 20 years. She has worked closely with Dan McGrath over the last three years as it pertains to understanding the Impact of Healthcare Costs in Retirement. She is considered to be on the leading edge of financial planning as it pertains to the impact of healthcare costs in retirement. This specialization has given her the focus to identify what financial products in a retirement plan result in higher healthcare costs versus what financial products do not. This allows for a plan that seeks to contain and reduce ongoing healthcare costs to restore the purchasing power of retirement assets.

She is also the Founder and President of Main Street Medigap, LLC. Main Street Medigap, LLC provides Medicare Supplement Insurance policies to seniors ages 65 and over. Also, Main Street Medigap, LLC also consults Attorneys. Banks, CPAs and other Financial Advisors on Medicare and its related cost structure. She can be reached at tyarosh@macrowealthmanagement.com.

Representatives are registered through, and Securities are sold through Nationwide Planning Associates, Inc., Member FINRA/SIPC, located at 115 West Century Road, Suite 360, Paramus, NJ 07652. Investment Advisory Services are offered through NPA Asset Management, LLC. Nationwide Planning Associates, Inc. and Macro Wealth Management, LLC are non-affiliated entities.

 

Thursday
May102018

Sabrin for Senate to start ad campaign next week

We've noticed a lot of movement in  the camp of Libertarian U.S. Senate candidate Dr. Murray Sabrin.  The candidate, a professor of finance in the Anisfield School of Business at Ramapo College, indicated yesterday that the campaign's first radio ads should be airing next week. 

The Sabrin campaign is running on a platform that features the following: "100% tax credit for donations to houses of worship and nonprofits; end trickle down welfarism; abolish corporate welfare; end undeclared wars; stop the Fed's manipulation of interest rates; stop domestic spying."

Professor Sabrin recently wrote:  "I have been meeting voters throughout the state collecting signature with volunteers.  The issue that is resonating with voters across the political spectrum, 100% tax credit for donations to nonprofits and houses of worship."  

Dr. Sabrin offered this brief history lesson on the subject, by Dr. Walter E. Williams, the John M. Olin distinguished professor of economics at George Mason University, and a nationally syndicated columnist:

"Before the massive growth of our welfare state, private charity was the sole option for an individual or family facing insurmountable financial difficulties or other challenges. How do we know that?  There is no history of Americans dying on the streets because they could not find food or basic medical assistance. Respecting the biblical commandment to honor thy father and mother, children took care of their elderly or infirm parents. Family members and the local church also helped those who had fallen on hard times." 

Continue reading: 

https://www.lewrockwell.com/2018/05/walter-e-williams/before-and-after-welfare-handouts/ 

The Sabrin campaign recently released this video...

https://www.facebook.com/Sabrin4Senate/videos/vb.244280012410056/1009846632520053/?type=2&theater 

Murray Sabrin, Ph.D.

Libertarian Party US Senate nominee

www.SabrinforSenate.com 

Tuesday
Jan302018

Will Robert Hugin meet conservatives half way?

It's "the-past-as-future" for the neo-Whitmanites who want to make the New Jersey Republican Party their private, personal playground.  Yep, just like the good-old-days of "pass the cigars" and "let the interns beware."  And that was just what the ladies got up to! 

The current mantra coming from some GOP establishment types in New Jersey is that only a "moderate" can win statewide.  This is, of course, simply an opinion and an opinion that ignores the fact that the only Republican who has won statewide in the last twenty years has been Pro-Life, Pro-Second Amendment, and opposed to Same-Sex Marriage.  

Besides, in these very partisan times, merely having an "R" next to your name -- leave out supporting Donald Trump or Chris Christie -- is enough to preclude any significant support from voters who self-identify as Pro-Choice on Abortion, Pro-Gun Control, and Pro-LGBT.  If these are your first tier issues, what floats your boat, you are not voting Republican.  Period.

Despite this, there is a full court press to mint Republican candidates at all levels who intentionally suppress key parts of the GOP base.  And the trend has got worse, with the suppression of actual conservative candidates by key players in the neo-Whitman, "My-Party-Too" crowd.  Like true greedy crony capitalists, it's not in them to share.  But in elections that increasingly depend on identifying and turning out anyone who will even consider voting Republican, this is a disastrous trend. 

Of course, squishy candidates are real popular with the dregs of the GOP's Whitman-era glitterati --  cocktail-party liberals and crony capitalists who still want to show that they run the NJGOP -- and who are increasingly uncomfortable in the knowledge that they make up just a thimbleful of actual Republican voters.  Unfortunately for them, most voters are not looking to transfer more wealth and power to the one-percent, while infantilizing various "groups" deemed worthy of protection. 

Working class Republican voters and working class Democrat voters are really not that different.  They care about being able to have the means to life.  They want jobs, the opportunity to start a small business; to be free from the worry of foreclosure; an education system that balances costs with results; a safety net that hasn't all been spent before they need it, and a justice system that looks on them a free citizens and that keeps safe the places where they live, work, and shop. 

The  needs of working people are pretty straight forward.  If it were an ice cream shop it would be plain vanilla, chocolate, and strawberry.  Of course, the oligarchs of the Democrat Party can't provide that -- so they advertise a dozen flavors other than vanilla, chocolate, and strawberry -- while the "My-Party-Too" Whitman Republicans have placed out a sign that says, "Closed for business, we've run out of ideas."

Why this is so was the subject of a study conducted by Princeton University.  Take the time to listen to this video.  This is an issue that unites both Left and Right:

Which brings us to Mr. Robert Hugin of the Celgene corporation.  He is the promising candidate for the United States Senate that has the whole GOP establishment buzzing.  They say this erstwhile Marine is the man to beat Bob Menendez.  And a big reason they are so excited about Hugin is his ability to fund his own campaign.

Hugin earns over $20 million a year -- making him one of the best paid bosses in the pharmaceutical industry.  Before joining Celgene, he worked for Wall Street's J.P. Morgan & Company.  Hugin is a longtime member of Chris Christie's fundraising inner-circle, whose allegiance was transferred to Donald Trump after Christie dropped out of the 2016 presidential contest.  Hugin even served as a Trump delegate.  This biography strongly defines the man, making it hard to see how the average Bernie or Hillary voter could ever mark a ballot for him. 

But sure enough, it has emerged that Hugin is conveying to people the idea that he is "a different kind of Republican" and not one of "them" -- as in Pro-Life, et al.

Hey, you donated six figures to Chris Christie and served as a Trump delegate... so do you think you're going to fool a committed Democrat with that Pro-Choice on Abortion line?  You will only drive away thousands upon thousands of voters who want to vote for you, but for whom you will make it so that they can't, in good conscience.

Could Hugin run as the kind of populist who doesn't need cultural conservatives?  Sure, as a Democrat.  Those chocolate and vanilla "kitchen table" issues are grafted onto a cultural worldview that makes you a Trump populist or a Bernie populist.  Neither could have attracted so many voters had they adopted the other's cultural positions. 

In trying to have it all their own way, the "My-Party-Too" crowd might end up destroying the Republican Party in New Jersey.  Ideas matter to most voters and it is ideas that draw people to identify with a political party in the first place.  But in New Jersey, ideas are merely advertising gimmicks for the lobbyists, vendors, and consultants who increasingly run the GOP.  It is something almost unknown to most Republican voters... but too, too easy to demonstrate.  So few don't have Democrat money in their DNA. 

Many GOP leaders make money off Democrats -- or with Democrats.  Lots of money.  While most Republicans just get taxed by Democrats.  That's the great divide.  So where do you stand?  And would you like to know?

Already, conservative libertarian Dr. Murray Sabrin is thinking about another third party run -- like the one in which he almost sunk Christie Whitman.  Perhaps an even stronger candidate will emerge.  Surrendering cultural issues conservative voters to these candidates would not be a good strategy for Mr. Hugin. 

If cultural conservatives, reform conservatives, good-government conservatives, non-insider/crony capitalist conservatives, were to figure out that the fix was in, and that no matter how hard they worked with the GOP establishment they would never get a break, then who knows  -- in these troubled times of Trumpian rebellion and Bernite reaction -- how this could flower?  Would we see its fruit in the low, low turnout 2019 elections?  Would a third-party, seeking that elusive 10 percent, find its way? 

Instead of trying to stand-out and apart from the "usual" Republican through the tired and ultimately unconvincing trope of "a different kind of Republican" when it comes to issues like abortion and LGBT rights, Robert Hugin could act boldly to unify Republicans -- the establishment thimbleful and the conservative majority -- by finding a way to meet both half way. 

Yesterday, Senate Democrats blocked an effort to bring the United States into line with most of the nations on earth in preventing abortions after 20 -weeks, the point at which science has shown that an unborn child is sensitive to the pain of being... killed.  Every other country on earth recognizes this fact except North Korea, China, Vietnam, Singapore, Canada, and the Netherlands.  Isn't it time we bring our laws into line with science and the rest of the civilized world?

The Senate's vote was on whether to stop the Democrats’ filibuster of the Pain Capable Unborn Child Protection Act.  This legislation highlights how unborn children feel intense pain when they are killed in abortions. Fifty-one senators (forty-eight Republicans and three Democrats) voted to take the bill up for debate, but 60 votes were required.  Because Republicans don’t have 60 votes in the chamber to overcome the filibuster, Democrats successfully stopped the bill, which came after President Donald Trump indicated he would sign the bill into law.

Hey, you can still support Roe v. Wade and acknowledge the scientific fact that after 20-weeks, a child should not suffer the kind of death that the U.S. Supreme Court wouldn't apply to serial killers, mass-murder terrorists, and rapists who murder children in the commission of a sexual assault.  That, the Court would argue, is "cruel and unusual" for the worse criminals... but for unborn children... are we supposed to look the other way?

So be "Pro-Choice" on abortion.  But support the Pain Capable Unborn Child Protection Act too.  Give conservatives something.