More Articles | Free Reports | Premium Services Move fast and break things. That’s the Silicon Valley ethos that Elon Musk has brought to the Department of Government Efficiency (DOGE). But is Musk about to take a wrecking ball to Social Security? Afterall, he’s referred to it as “the biggest Ponzi scheme of all time.” And he’s not wrong about that. Today’s Social Security recipients collect their benefits from current tax receipts. There are no actual underlying investments. And the so-called Social Security trust fund was always an accounting gimmick. The federal government “borrowed” surplus Social Security funds to use on current spending. It was always a fragile system that only worked so long as every new generation of workers was significantly larger than the one it followed. So, yeah, it’s pretty much a Ponzi scheme… one that might actually challenge Bernie Madoff’s fraud as the biggest in history. Bernie also used the money from new investors to pay returns to earlier investors. He too didn’t actually invest any money into any investments. And as the number of investors wanting to withdraw their money grew, the scheme was revealed for what it was. With America’s birth rate in decline… and with the Baby Boomers, the largest generation in history, now retiring en masse… the system was well on its way to hitting a brick wall, with or without Musk’s intervention. So… what happens next? I don’t pretend to know what Musk’s plans for Social Security are. I don’t know if Musk has a plan or if he’s just winging it as he goes. For all I know, he may build a rocket and fly himself and his 14 children to Mars tomorrow to start a new human colony. But just for grins, let’s take a look at what privatization of Social Security would look like. And then let’s look at what you should do now to prepare… regardless. | Recommended Link | | | | One man is saying: FORGET most stocks. Because his strategy ignores 99% of stocks out there… And focuses on one — just one — to deliver gains of 85% in 14 days, 120% in under 3 months, and even 222% in just 8 days. In this video, he’ll tell you the name and ticker symbol, completely FREE. Click here to watch right now. |  | | A Really Lousy Investment The return the average American gets on Social Security is around 5%, according to the Social Security Administration. (That’s how much they get out compared to how much they contributed during their working years.) For lower income workers, the return is a little higher. For the highest earners, it’s a lot lower. And for higher-income Americans in Generation X (born between 1965 and 1980), the Millennials (born between 1981 and 1996), and younger generations, the returns are laughably bad… at less than 1%. That’s pathetic, considering the long-term average for the S&P 500 is around 10%. Even returns on real estate are better. Given that most people mortgage their real estate purchases, the leveraged returns are generally a lot higher than the 5% mark. Of course, the “return” you earn on Social Security depends on how long you live. If you had a relatively short working career but live to be 100, you’re clearly going to have a better return than the guy that collected benefits for two weeks before dropping dead. And tax rates and benefits affect this calculation as well. If Congress were to raise taxes, raise the cap on earnings subject to Social Security taxes, or force a later age for receiving benefits – any or all of which will likely happen in the decade ahead – the returns would be lower… potentially a lot lower. So, why not scrap the current system and have Social Security build a real trust fund invested in stocks, real estate, and other solid long-term investments? Better yet, why not get the government out of the retirement business altogether and privatize it? The 6.2% of your income that you pay in Social Security taxes and the matching 6.2% your employer pays could instead be used to fund something that looks like a 401(k) plan or IRA. Both Bill Clinton and George W Bush proposed varying degrees of partial privatization during their times in the Oval Office. Is Musk right? Might it be time to revisit those arguments? The Good, the Bad, and the Ugly At the Freeport Society, we believe in individual freedom. It’s your right to be left alone to invest however you see fit, so long as you aren’t directly hurting anyone else in the process. If you want to invest your entire life savings in stocks, bonds, or Star Wars figurines, that’s your business. Or at least it should be. You should be free to accept the risks and reap the potential rewards. In a world in which you’re free to invest your Social Security funds, you could potentially earn vastly higher returns. Corporate America would also have a massive new pool of potential investors. And all of that fresh investment capital could be used to finance the next great American growth story. There’s just one big problem that makes all of this really hard to put into motion. There’s no money to fund it. Private pension plans often have a buyout option. Rather than take a monthly check for the rest of your life, you could take out a discounted lump sum and hopefully invest it better on your own. That won’t work with Social Security because there are no actual assets. All of the money that you and I have paid into the system isn’t sitting in a bank account somewhere. Uncle Sam borrowed it and replaced it with bonds in the Social Security “trust fund.” And the so-called trust fund – or what is left of it – is projected to run out of money by 2035. That’s just 10 years from now. So, with no assets, there’s literally nothing to privatize. All new revenues coming in immediately go out the door to current recipients. And after 2035? Well, the Social Security Administration estimates it will only be able to cover about 80% of the benefits owed. So, not only is an investable lump sum off the table… You’re also looking at the likelihood of real benefit cuts in about 10 years. Perhaps that is part of President Trump’s plan… DOGE implements benefit cuts today to make the system sustainable over the long haul, and Musk takes the political heat for it. Given that he’s unelected and not running for office any time soon, he’d be the perfect fall guy. Is that plausible? Maybe. We’ll find out soon enough. But the takeaway is clear. While Social Security isn’t likely to be privatized, you’re still going to be on your own to fund your retirement. Your benefits, particularly if you are above the poverty line, are likely to be cut. Or at the least, a lot more of your benefits will be subject to taxes. And that’s why we’re here. The Freeport Society is your port in the storm. We’re here to help you navigate this Age of Chaos with your nest egg intact. We do this by investing in various themes that will do well in these times or deglobalization, reshoring and exponential technological progress. In particular, we find investments we like to call the “Rich Man’s Super Currency.” These are companies that the smartest investors know to have in their investment portfolio because they are industry leaders. They are the ones who will continue to do well, regardless of whether Trump or Musk fix the system, break it beyond repair or anything in between. Even through the volatility of the last two months, when stocks dropped into correction territory briefly, several of our “Rich Man’s Super Currency” positions in our Freeport Investor model portfolio are showing solid open gains. We’re talking 46%... 33%... and 68%... We’re also invested in gold and bitcoin. Gold is on a tear this year, breaking through $3,000 an ounce last week. The position we hold in our Freeport Investor model portfolio is up 48%. My point is this: You can’t rely on Social Security to fund your golden years. That responsibility is solely yours. So look to buy the market stalwarts, like Walmart and Visa. Join us at Freeport Investor for further guidance. You can do that here. And above all, keep reading these emails. To life, liberty, and the pursuit of wealth, | 
No comments:
Post a Comment