Biggest Risk to Your Retirement
Pre-Retirees and Retirees often worry about the risks to their retirement. Will retirement assets last throughout retirement? Other risks include investment returns, effect of inflation, overall increase in cost of living. All understandable and there are more.
However, I would suggest one of the greatest risks to your retirement did not get a lot of media coverage and simply was not on the radar for many retirees. Congresswoman Green from Georgia stated this past February.
“We need a national divorce. We need to separate by red states and blue states...”
It did not surprise me that a member of Congress would state something so silly or ignorant. After all, we are a big country, and this means we have a lot of very bright people, and we also have a lot of people on the opposite end of the intelligence spectrum. Sometimes many of them live in the same district and elect someone to Congress who consistent this group’s intelligence level. Hence, Congresswoman Green.
Some may say Congresswoman Green not taken seriously and should be ignored. I would respectfully disagree and argue she is the one the most powerful members of Congress. For example, she made it possible for Congressman McCarthy to become Speaker of the House. It was possible because she brokered a deal to bring support for his election from the conservative right-wing of the party which she leads. So who is more important, the King or the one who makes the King?
So, when a leading member of Congress makes this statement, it should be taken seriously. Retirees should especially be concerned because if there should be a national divorce, that would be the end of social security and Medicare.
- An analysis from the National Institute of Retirement Security stated that 40% of retirees rely solely on social security for income. Obviously, without social security these retirees become destitute. But it is also important to note that without social security, most retirees would have great difficulty maintaining a comfortable lifestyle and would likely have to take a significant reduction in standard of living.
- Add to this currently retirees on Medicare pay 15% of their Medicare premiums. The rest is paid by workers paying Medicare Premiums [34%] and the rest is paid by the General Fund. No Medicare, how many retirees will be able to afford to pay for 100% of health insurance premiums not to mention medical expenses not paid by insurance.
As serious as the loss of social security and Medicare would be for retirees, the other consequences would likely dwarf them.
- What would happen to the stock market? I suspect a National Divorce would lead to stock market collapse affecting retireesâ€™ retirement assets.
- How many companies receive significant work from federal contracts? What happens to their earnings, profits, and stock price if no government contracts?
- What happens to the bond market? US bonds have been considered the safest bonds in the world. Who backs the bonds if the US were to have a divorce? Would the bonds go into default?
- Who does National Defense be replaced?
These are a few, but the questions and/or consequences are endless.
Again, some may think this is just politics as usual and could never happen. Maybe. But consider this.
- A June 2021 poll by Bright Line Watch and YouGov found that 66% of Southern Republicans supported leaving the U.S. and forming a new country.
- The same poll found 47% of Democrats in the West, supported a division.
For different reasons, there is a significant group of Americans who would like a national divorce.
- Not sure why Southern Republicans want a separation, maybe they want to return to a pre-1860 environment. The study did not say. But if they think the states will replace Social Security and Medicare benefits, I will humbly suggest they have no chance. A study by “Moneygeek” published in April 2023 on state dependency found of the 12 of the 15 states most dependent on federal funds were red states. They are already getting more back from the federal government then are sending in. Given this and knowing it would be impossible to replace social security and Medicare without dramatically increasing taxes which would be very difficult. I suspect the result would be most if not all retirees and pre-retirees would likely end up in total poverty.
- The same study may indicate why some west coast Democrats want a separation. For every dollar Washington sends to the federal government the state receives $.63 back while California receives $.65 back. [Oregon receives $1.01 back for every dollar sent to the federal government.] I can understand why some Democrats in those states believe they would be better off on their own. And they be right in some areas, but for retirees, I would suspect the states would base replacement benefits on years worked in the state. It would be very complicated process again likely to leave many retirees in poverty worse than they already are.
Do I believe a national divorce will happen? No. Do I think it could happen? Yes. And if it were to happen, that would end the possibility of a comfortable retirement for most Americans.
When you vote in the next Election, be it Presidential, Senate or House, if your candidate does not specifically denounce the possibility and complete idiocy of a National Divorce, they I would suggest find another candidate and/or party. Remember, your retirement may depend on it.