Tags: greenspan | social security | benefit | cuts

Greenspan: Cut Social Security to Save It

Greenspan: Cut Social Security to Save It

By    |   Monday, 18 March 2019 11:31 AM EDT

Former Federal Reserve Chairman Alan Greenspan warns that cuts may be needed to eventually save the Social Security system.

Greenspan also predicted a slowdown in the U.S. economy could stem from an overloading of entitlement programs that aren’t being funded.

“We’re creating an odd imbalance in the system,” Greenspan recently told Fox Business Network.

“The best way to solve this problem is to fund our benefits, get a balanced budget, and the system will work.”

He said “the actuaries of the Social Insurance system say that in order to be actuarially solvent through the life of the programs, we would have to cut benefits by 25 percent right now and extending into the future.”

He said eventually America will have to come to some resolution with entitlement benefits because “the end of the road is very serious trouble,” while adding that defined benefits have been a big problem.

“Sweden had very much the same problems we did,” Greenspan said. “What they did first to resolve them is go from a defined benefit program, which is what we have now, to a defined contribution. What we have is 401(k). 401(k)s cannot go broke – you can only spend what you get,” he said.

For the immediate economic future, Greenspan couldn’t determine if a recession looms because the economy is moving at such a slow rate.

“I can basically argue that productivity growth has slowed down dramatically because, in effect, as I’ve said many times, that social benefits crowd out gross domestic saving and capital investment, which is at the root of what productivity growth is. So we’ve got to solve that problem,” he said.

To be sure, Newsmax Finance Insider Trevor Gerszt warns savvy investors that they shouldn't let their retirement entirely hinge on public entitlements.

"The entire $2.9 trillion that is stored up in the trust fund is expected to be drawn down over the next 15 years, with the trust fund falling to zero in 2034. At that point Social Security taxes will only be enough to cover less than 80% of expected Social Security outlays," he recently explained.

"Unless Congress does something to increase Social Security taxes or to cut Social Security benefits, retirees in a few short years can expect to receive less than 80% of the Social Security benefits they expected. For those who expected to rely primarily on Social Security in retirement, that could be catastrophic," Gerszt warned.

"The reality is that the only person you can depend on for retirement is yourself. Pensions have all but disappeared from the workplace and those that still exist are severely underfunded, Social Security is on incredibly rocky ground, and hoping to rely on friends or family is not viable. Unless you make a serious effort to save and invest for retirement, you will have a very rough time once you stop working," Gerszt warned.

"That means taking advantage of every saving and sound investment opportunity you can. Take advantage of workplace 401(k) plans, especially if they offer matching contributions. Open IRAs, brokerage accounts, anything you can to save money for the future. And above all make sure that your assets are protected by investing a portion of them in gold."

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Former Federal Reserve Chairman Alan Greenspan warns that cuts may be needed to eventually save the Social Security system.
greenspan, social security, benefit, cuts
Monday, 18 March 2019 11:31 AM
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