Tuesday, April 2, 2013

Wall Street Journal Personal Finance Section Gives Wrong Advice/Information on Retirement Finances

Incompetence, Or Deliberate Attempt to Inject Politics into News Reporting?  - You Decide (But Really Not All That Hard a Question)

The Wall Street Journal has undertaken the admirable task of explaining some of the complex issues in Social Security and Medicare to future retirees.  Unfortunately, the first thing they tackle is the future of Social Security, which they get dead wrong.

Making Sense of Social Security and Medicare

by Jennifer Waters

Q: Will I receive Social Security benefits?
A: That's a big "It depends." If you're over 65, no sweat. If you're 45-65, you might see some changes from the relatively generous benefits enjoyed by your parents. If you're under 45, you have plenty to worry about.

The problem is more money is being paid out of the system than is going in. The shortfall, now about $200 billion a year, is being made up by drawing on the $2.73 trillion Social Security Trust Fund.
The fund is U.S. government bonds that have been bought by the Social Security Administration for 30 years with money paid by baby boomers. They have spent most of their working lives paying more into the system than it spent.

The extra money was lent to the government, which used it to offset some of the huge deficits of the 1980s and 2000s. (Without the overpayments, the government surplus in the late 1990s wouldn't have happened.)

Now, the retiring boomers are taking out more than younger workers are putting in. According to current estimates, the trust fund could be fully tapped as soon as 2033.

Ok, that is factually correct and utterly and totally misleading.  The correct answer to the question is a simple, but inconvenient for the Conservatives, 'Yes'. The author strongly implies that when the trust fund is tapped out, there will be no Social Security benefits.  But that would only happen if absolutely no one was working and paying into the SS trust fund.  Because money will be coming in each year, hundreds of billions or more the worst case scenario is that the Social Security system would be able to fund only 75-80% of statutory benefits.  Ok, this is not great, but it is not zero. (The article does go on to soften its conclusions in the next paragraph, resulting in a highly contradictory and un-informative piece of writing.)

One wonders why the Journal would allow such misleading nonsense to be printed.  The thinking here is that this is ideological, that the ultra Conservative bias of the editorial part of the Journal is spilling over into the news section.  The likely purpose, to scare potential retirees into supporting privatization of the SS system, resulting in billions in fees to Wall Street and benefits reduced by even more than they otherwise would be.

Yep, that sounds about right.  Anyone in doubt, look at how happy the author is over the problems of Medicare.

Q: Speaking of health care. I understand Medicare is in worse shape than Social Security.
A:You bet it is. The Government Accountability Office estimates the 75-year funding gap will be a staggering $76.4 trillion. The Medicare Security Trust Fund could run dry as soon as 2016, according to a 2011 report from the trustees. And the system is rife with fraud and abuse, costing us nearly $100 billion a year—yes, a year—according to some congressional estimates.

That is also false and misleading, but then when bias injects itself into the reporting that is what you get.

So nice going Jennifer Waters, with your biased reporting you have a great future in journalism The Wall Street Journal.

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