The Social Security Crisis: An Insider’s Perspective

MIKE BARNES 0:10

Welcome to America’s Gold Authority Podcast. My name is Mike Barnes. Retirement security is something a lot of people worry about, and with the Social Security concerns, there may be a bigger worry even more. Let’s bring in an expert and talk about that. Ed Moy joins us now, 38th Director of the United States Mint, senior IRA strategist for U.S. Money Reserve. And Ed, I want you to tell me in layman’s terms, what is the problem with Social Security?

ED MOY 0:36

Quite simply, Social Security is running out of money. The Social Security Trustees, which oversee the trust fund, recently released their annual report. And it basically said Social Security Trust Fund will run out of money much sooner than what they originally projected. And what that means for most Americans is if Congress doesn’t do anything, everyone’s going to receive a pretty big cut in the benefits that they receive, somewhere between 22 and 25% cut starting in roughly 2023, uh 2032.

MIKE BARNES 1:14

Only six years away. That’s something we have to worry about. And I know you have a lot of experience not only with the government, but also with Social Security. So how hard is this for you to watch?

ED MOY 1:35

Everyone said, you know, Social Security is going to crash in, you know, 25 or 30 or 40 years. And it was under uh President Reagan in 1983 that they reformed the Social Security Program and basically uh increased financial support through the increase of Social Security taxes. Uh bottle and they also raised the um eligibility uh for drawing benefits from 65 to 67, and that basically pushed out the um the running out of money window until uh you know 40 or 50 years from then. Well, uh bottom line is uh there’s a lot more people retiring, and there are a few people being born supporting those people who are retiring, and the trust fund uh which collects all the excess Social Security taxes that aren’t used for paying benefits. That trust fund is kind of like a savings plan for Social Security uh to cover this uh problem of more benefits and less people paying for them. But that’s gonna run out sooner. And unless something is done uh soon and all the options are unpleasant, uh the current Social Security plan um is gonna have to change because it’ll go bankrupt uh in uh five or six years.

MIKE BARNES 2:59

Well, if we fixed it way back in 1983, why can’t we easily fix it again?

ED MOY 3:04

Well, uh the longer you kick the can down the road, uh, the bigger the money problems. And the bigger the money problems, the more unpleasant the political solutions are. So bottom line is the delta between the money coming in and the money going out has gotten so large that cutting benefits uh deep enough is not a political option because uh people receiving those benefits are gonna complain. Raising uh taxes high enough to cover that delta is such a big uh increase in taxes that very few people are gonna be supportive of that. Or raising the retirement age from 67 to something north of that uh is also gonna upset people. So the uh because we’ve kicked the can down the road for so long, uh, there are no politically viable solutions, especially with a dysfunctional Congress and the polarization of our country.

MIKE BARNES 4:08

Well, let’s talk about what we, the public, need to do about this. Because if we’re gonna lose up to 25%, maybe of our Social Security check in the near future and say our check was supposed to be 2,000, it’s gonna go down to 1,500. What do we need to do to make up for that $500?

ED MOY 4:24

Uh, that’s a really good question. And uh the best way that Ed Moy uh approaches this being someone who helped uh the president appoint Social Security administrators, uh, both Joanne Barnhart and my friend uh Mike Astrew, or Social Security trustees. Uh, you know, I’ve been um wading waist deep into trying to find a solution for many, many years on this. And the bottom line is for those who can, you need to take a look at Social Security more as a supplement and not as the main source of income when you retire. And uh for those of us who are fortunate to have savings and uh retirement plans, uh, for you to diversify in the future because those income sources are going to become uh more important, uh, especially as Social Security hits uh the big problems five years from now.

MIKE BARNES 5:22

Well, as a senior IRA strategist, I know you talk about this type of thing a lot, but it seems to me like an easy thing to do is well, let’s just take the Social Security money that I’ve been paying in for the last 35, 40 years and the money that’s been matched by my employer all this time. Let me just have that money all the time and let me invest in different things, diversify into gold and silver, and I’d have so much more money than I do in Social Security.

ED MOY 5:47

Uh, that would be a great solution, although uh all the money that we paid in uh doesn’t belong to us anymore because Social Security is a pay-as-you-go program. And so the money that you’ve paid in has already gone out to pay for somebody else’s benefits who is already there. Uh so the uh best thing uh uh for people in this position to do is to diversify your retirement uh investments. Uh so just don’t depend on Social Security, uh, but take advantage of your company’s 401k program or if you’re uh self-employed, uh do I’ve and uh not only diversify uh where you uh put those standard investments, but also take a look at what you’re investing in. Most people, when they think about retirement, think about stocks, bonds, and cash. And uh we all know that uh when you’re investing for retirement, you’re investing for a window that’s five, 10, 20, 40 years out. And it’s tough to predict uh what’s going to happen then. And as a result, you want uh to also diversify your investments instead of just cash, stocks, and bonds into alternative assets uh that have long-term viability. And for me, as a former director of the United States Mint, um, I understand uh how gold can fit into that portfolio and how most people should at least consider uh having uh gold as part of your retirement uh package uh makes really prudent sense, knowing the long-term horizon on retirement investments.

MIKE BARNES 7:33

It’s kind of a case of breaking everything that we’ve learned in the past because for so long it was this 60-40 split. Take your investments, your retirement, 60-40, 60-40. And now we’ve been told 60-20-20. And I took that step earlier this year and putting 20% into precious metals. It’s a big step to take, but it can help so much.

ED MOY 7:53

Absolutely. Uh, what had worked in the past, the uh 60-40 split that that you talked about, uh, was fine, but uh going into the modern economy and with all the uncertainty uh going on, uh the 60 2020 uh makes a lot of sense uh for a greater amount of people. And you know, that’s why uh Congress uh in 1997 uh passed legislation enabling uh very prudent investors to start putting gold into self-directed IRAs. And uh the gold that qualifies, Congress specifically said the United States mints uh products, uh both its uh gold and silver bullion qualify, which is why I know a lot about that program.

MIKE BARNES 8:41

In my mind, it’s plan for the worst and hope for the best. Well, if we plan for losing that Social Security 20, 25% each and every month, and we’re ready for that, then everything’s gonna be okay. We just need to plan for that so that we’re ready for it, correct?

ED MOY 8:59

Yeah, I totally agree with you, Mike. And for me, I’m not even planning on Social Security anymore. I have no idea uh how much I’m gonna be getting. And uh so I’ve built my retirement uh apart from Social Security. And if it’s still there when I retire, that’s a bonus to me. Uh, but I don’t have to now depend on uh a dysfunctional political system trying to figure out a solution to make my retirement uh available to me.

MIKE BARNES 9:29

Tell me the steps you did to do that. What did you do? Did you just take Social Security off the table and look at what my IRAs are gonna provide in the future?

ED MOY 9:38

For me, I have uh taken a look at Social Security and just assumed it’s not gonna be there. And if it’s there, that’s a bonus. Uh so I built my retirement on several things. One is uh when I work for an employer, uh, put money away in the uh 401k program that my employer has, and uh built up a pension that way. Uh but when I’ve been self-employed, I have uh diversified into self-directed IRAs, uh, as well as uh traditional and Roth IRAs, and I have those investments, some in mutual funds, uh, since I was mint director and realized the importance of uh what gold can do in my retirement portfolio. Uh I became an advocate and a customer of uh gold IRAs, uh of which uh uh my gold IRA is with U.S. Money Reserve.

MIKE BARNES 10:36

Ed, I am sorry, but the numbers just don’t work out with me. The math to me is that it’s 40 years of me paying in Social Security with my employer matching it, and it’s only going to be 10 or 20 years for most people that they get Social Security. We should have plenty of money there. Where is it?

ED MOY 10:55

That’s a really good question. And I’m sure uh many of us who are like for me, I’m 68, uh retirement age, I’m asking the same question. Being in government, I have a very unpleasant answer for you, and that is that Social Security uh is a pay as you go program. And so when they started it, all the money that people were paying in were immediately going out to people who are retirement age who didn’t pay in at all. So government’s been playing catch-up uh ever since, and the demographics haven’t helped. Baby boomers, as you know, is the largest group uh of uh demographics in our population. They’re all retirement age or they’re entering retirement age. So that number is only going to get bigger, and the birth rate in the United States has significantly declined, which means working, people who are working, there’s going to be fewer of them. Uh that means that uh you have fewer people paying for more people. As you said, the math doesn’t work out. We’re headed to some really big problems.

MIKE BARNES 12:00

Well, we’ll see what we can do without it. Plan for the worst, hope for the best. Ed Moy, thanks so much for joining me today.

ED MOY 12:06

Yeah, you’re you’re very welcome, Mike. Good to be with you.

MIKE BARNES 12:09

Good to be with you as well. Retirement security, that’s what we’ve been talking about. What are we going to do if Social Security does run out? Take a look at your IRAs and take a look at your retirement planning and plan without Social Security being in there and seeing how it goes from there. That’s all the time we have for today’s episode. On behalf of all of us here in the U.S. Money Reserve Studios, thank you so much for tuning in. If you have any questions or you want to learn more about today’s episode, you can call the number in our episode description and speak with one of our friendly account executives. They’re going to be more than happy to answer any questions you may have about precious metals and the strategic role they can play in achieving a secure and comfortable financial future. I’m Mike Barnes. We will see you next time on America’s Gold Authority Podcast.