Valuetainment - Episode 396： Social Security & Retirement Explained

00:00:00.000 30 seconds. One time for the underdog. Ignition sequence start. Let me see you put them up. Reach the sky, touch the stars up above. Cause it's one time for the underdog. One time for the underdog.

00:00:17.300 I'm Patrick, made to be your host of Value Tame. And today we're going to talk about retirement and social security and the history of it. How did it get started? Who came up with this idea? Why are we giving this out to people?

00:00:27.660 How did it go from something small of helping people out to what it is today to the point where it's ballooned?

00:00:33.600 Maybe America won't even be able to afford to offer social security to people.

00:00:37.400 So again, if you got a 401k, if you got a defined benefit plan, if you're planning on retiring on time, you do not want to miss today's how-to.

00:00:44.800 The first thing we're going to look at is life expectancy at the time where social security was introduced versus actual age of retirement for 100% benefits.

00:00:53.240 Here's what it looks like. 1935, FDR introduces social security, right?

00:00:58.980 Age of retirement for 100% benefits was 65, but the life expectancy for the average male in America was 59.9 years, which means barely 60, which means 5.1 years short of 65, which means the average male is never going to see these benefits.

00:01:16.400 Now, the average female was 63.9, which is still a shortage of 1.1 years, at a time where the population in America was 127 million.

00:01:24.600 Now, this continues. If you go through it, 1945, still 65, but the life expectancy goes up to 63.6, which is still short.

00:01:32.700 Average female life expectancy was 67.9, which means now the average female gets to enjoy the benefits for about 2.9 years. 0.87

00:01:40.000 Population was 139, right? Now, when you continue in 1955, the age of retirement, 100% benefits goes to 66.

00:01:47.200 Then a male life expectancy goes up. Now, they're seeing benefits of it for about 0.7 years, and the average female's life expectancy is 72.8.

00:01:55.360 They get to live 6.8 years enjoying retirement benefits from social security.

00:01:59.720 And then as you go down, it bumped down a little bit, and then it came back up.

00:02:03.720 Well, today, at around 2016, the average life expectancy for a male is 76.2, which means they get 9.2 years of benefits,

00:02:12.140 and the average female's life expectancy is 81.1, which they get 14.1 years of benefits. 0.59

00:02:19.400 So now you look at this and you say, Pat, what's the big deal?

00:02:21.980 I don't understand it. Here's the big deal.

00:02:24.640 The program was initially created for those that, in case you live too long, let us help you out with some payments here,

00:02:32.920 because you need some payment planned from the government to support you.

00:02:36.380 It wasn't a source of retirement.

00:02:39.780 It was in case you outlived, which means if we take the same exact formula of how it was started in 1935,

00:02:47.360 and look at it for today, this is when the benefits need to start today,

00:02:53.560 if we go exactly on how FDR and his administration introduced social security to the American people.

00:03:01.060 So the average life expectancy today in 2019 for a female is 81.4, and for a male is 76.36, okay?

00:03:09.220 So remember over here, where female was 1.1 year less than what the life expectancy was, 0.98

00:03:16.320 and for male was 5.1 years less than what the life expectancy was.

00:03:21.720 That means the average benefit for a female would start at 82.5, 1.00

00:03:24.860 and the average benefit for a male would start at 81.46. 0.96

00:03:28.160 You take the average of the two, 82 years.

00:03:30.800 If social security today, the benefits, was set up the same exact way, that it was in 1935,

00:03:37.200 benefits would need to start at 82 years old today.

00:03:41.060 82 years old.

00:03:42.180 Can you imagine if somebody on the campaign trail right now for presidential election,

00:03:46.020 where everybody's saying, Medicare for all, this for all,

00:03:49.240 I want to be able to eliminate school loans, I want to be able to eliminate this.

00:03:52.100 Imagine somebody on campaign trail says, I think America's broke.

00:03:56.020 I think America doesn't have any money.

00:03:58.300 I think we think America's rich, but man, America's in a lot of debt.

00:04:02.020 I think we need to really consider raising the social security benefits to 82 years old,

00:04:06.520 similar to how it was when it was first introduced by FDR.

00:04:10.060 What do you think would happen to that candidate?

00:04:11.900 Boom! 0.99

00:04:12.580 They're off.

00:04:13.520 There's no way in the world anyone's going to vote for that person because people want that benefits.

00:04:17.460 And a lot of this is the politicians to blame because they keep giving more free things,

00:04:22.180 more free things, and people kept voting for it, and now America's paying a price for it.

00:04:25.580 Now let's look at the dollar amount.

00:04:26.760 Let's look at the dollar amount.

00:04:27.860 In 1937, there was a total number of 53,000 beneficiaries receiving benefits.

00:04:33.360 Now keep this in mind, it's 53,000 on roughly 130 million people living in America at that

00:04:38.920 time.

00:04:39.700 The total benefits that America had to pay per year was roughly $1.278 million.

00:04:46.300 Not a billion dollars.

00:04:47.660 Million dollars.

00:04:48.900 It was an average of $24 of payment per beneficiary per year, not per month.

00:04:55.880 Let me say this again, $24 per year in 1937 to only 53,000 people, which in today's dollars,

00:05:05.340 that $24 is really $430 if you do the inflation math in it.

00:05:10.840 So what does that really mean?

00:05:11.780 By the way, the $430 a year compared to today is $16,258 per year.

00:05:18.880 It went from being a supplemental.

00:05:20.820 Hey, I know America's going through tough times.

00:05:22.880 It's great depressions.

00:05:23.760 Challenging times.

00:05:24.480 Here's an additional $430 to help you out.

00:05:27.300 Not retire, because it's only $24 per year.

00:05:30.440 In today's dollars, $430, here's some money to help you out with.

00:05:33.500 Here's some money to help you out with.

00:05:35.060 Over the years, politicians turned it into a retirement plan.

00:05:38.980 So look what happens next.

00:05:40.620 In 1940, now we have 222,000 people receiving the benefits.

00:05:44.820 $35 million cost.

00:05:46.320 Then it went to $157 per year, which is in today's dollars, 2008-17.

00:05:50.920 Then we went to $3.5 million.

00:05:53.080 It was about $961 million per year, $276 per payment, which is around $3,000 today's dollars.

00:05:59.400 Then we went to $14.9 million.

00:06:00.760 We can go all the way up.

00:06:01.880 If you want the PDF, we'll have the PDF for you at the end, so stick around for that part.

00:06:05.340 But today, 63 million people benefit from this.

00:06:09.940 63 million people are taking Social Security today.

00:06:13.700 Out of 330 million people in America, it's costing us $1,022,000 per year.

00:06:23.800 $1.22 trillion per year.

00:06:26.360 That is 25% of our annual expenses, U.S. expenses, is all due to Social Security.

00:06:35.500 25% is Social Security.

00:06:38.560 $16,258 on average is what we're experiencing today with Social Security.

00:06:42.100 So you look at this math here and say, wait a minute, Pat.

00:06:43.940 Is that real?

00:06:44.540 These are the numbers.

00:06:45.200 Go look at them.

00:06:46.020 Do your own research, matter of fact.

00:06:47.580 Now let's go through some of the dollars on this side.

00:06:50.140 You look at this and you say, so how does it work today?

00:06:53.220 Because some people take benefits at 62.

00:06:55.060 Is it really 62?

00:06:56.280 Is it 65, 67?

00:06:57.460 What is the real age?

00:06:58.660 If you take Social Security at 62, you get 70% of benefits.

00:07:02.100 If you take it at 65, it's 86.7%.

00:07:05.180 If you take it at 67, it's 100%.

00:07:07.700 Now this is for folks who are born after 1960.

00:07:11.280 Pre-1960, the numbers favor them a little bit more.

00:07:14.500 Post-1960, you're looking at the numbers you're looking at.

00:07:17.220 So now, let's get into it.

00:07:18.020 Remember how I said to you, the real cost is 25% of America's expenses per year?

00:07:23.060 Remember, this is America if it was a business.

00:07:25.420 I'm going to keep reminding for everybody to realize the basic math of this.

00:07:28.700 We bring in $3.3 trillion per year.

00:07:31.440 That's income.

00:07:32.280 That's revenues coming in, right?

00:07:34.260 But America spends $4.1 trillion per year, which is a loss of $800 billion per year.

00:07:43.140 And because of that, here's our total unfunded liabilities.

00:07:46.900 U.S. is total unfunded liabilities, which means we have not paid for this.

00:07:52.160 We're going to be paying for this.

00:07:53.420 What's the total amount?

00:07:54.320 If you go on U.S. Debt Clock website, you can see the link where you normally share this

00:07:58.640 debt clock.

00:07:59.440 It tells you to the second where we are today.

00:08:01.580 And when I did it, it's probably going to be higher when you do it.

00:08:04.280 When I did it, Social Security, unpaid commitment, is $20 trillion, $60 billion.

00:08:11.320 $20 trillion, $60 billion that we haven't yet paid out, that we've got to pay out, and

00:08:17.120 last year alone was $1 trillion.

00:08:18.860 For unfunded liabilities with Medicare, it's roughly $31 trillion.

00:08:23.940 But total unfunded liabilities of America, you ready?

00:08:28.900 $126 trillion, $248 trillion, $618 trillion, when we did it just now.

00:08:34.920 $126 trillion.

00:08:36.260 And people say America's rich.

00:08:38.200 America's the richest country in the world.

00:08:39.800 Based on what?

00:08:41.780 I know a lot of people that go into their house, they've got exotic cars, they've got

00:08:44.640 Bugattis, they've got Rolls Royce, they've got $300,000 watches, $46,000 suits, and oh

00:08:51.180 my gosh, this guy is so rich.

00:08:54.120 He lives in a $20 million house, and then I look at their finances.

00:08:57.820 They're in debt so much money, they have no idea what the hell to do.

00:09:01.080 Just because these guys make a lot of money per year doesn't make them rich.

00:09:05.080 They spend more than they make.

00:09:06.700 They are so broke, you have no idea.

00:09:08.580 They're about to lose it all.

00:09:10.300 It's a glass house story, and that's exactly what's going on with America. 0.58

00:09:13.740 Why?

00:09:14.820 Because politicians kept selling, kept selling, kept selling, and we kept voting.

00:09:19.200 We kept voting.

00:09:19.960 We kept voting.

00:09:20.620 We kept voting.

00:09:21.180 Yes, more free.

00:09:22.260 Yes, more free.

00:09:23.120 Now here's what's going on.

00:09:24.600 Smaller countries who don't have this kind of liabilities are richer than America is.

00:09:28.540 Nobody talks about Norway.

00:09:29.660 Kai's from Norway.

00:09:30.400 We were talking about this the other day.

00:09:31.580 Norway is richer than America is if you go simply based on basic needs analysis of what

00:09:39.500 a financial advisor at these big firms do when you look at their income assets versus

00:09:44.540 their liabilities that they have.

00:09:46.640 So now, Pat, I don't really get it.

00:09:50.380 What are you saying?

00:09:50.920 Are you suggesting raising that to 82?

00:09:53.560 I mean, it's one of the things you got to do.

00:09:55.200 Are you saying we lowered the amount of payments?

00:09:57.180 It's another thing we got to do.

00:09:58.320 So what is really the solution?

00:10:00.360 Let me bring it back.

00:10:01.200 It's not that easy to say it's black and white, and here's what we got to do.

00:10:05.160 There's five ways we rely on retirement.

00:10:08.520 You and I, our family, our parents, our grandparents rely on retirement, and it's kind of adjusted

00:10:13.320 over the years.

00:10:13.940 Okay, so let's go through some of them.

00:10:15.720 One of them is based on your investments and savings.

00:10:17.700 If you do a good job saving money, investing money, guess what?

00:10:20.100 When you get to a certain age, you're not relying on anybody on taking retirement because

00:10:24.040 you've done a good job saving money.

00:10:25.360 Instead of doing a barbecue every weekend with your friends and having cases of beer

00:10:29.280 and all this stuff, you know what you did?

00:10:30.940 You set that money aside.

00:10:31.960 Instead of going to Europe every year, maybe you went to another place.

00:10:35.660 New York cost you a third of the vacation.

00:10:38.760 Instead of living in the house you wanted to live in, maybe you bought a smaller house

00:10:42.400 and set aside and did some investments.

00:10:44.560 So investments and savings is one.

00:10:46.540 The other one is family.

00:10:47.620 For many years, grandparents lived with kids.

00:10:50.560 It's like, hey, who's going to live here?

00:10:51.620 Well, grandma's got a room upstairs or she's got her room over there, you know, or grandparents

00:10:55.360 are living over here.

00:10:56.420 They help raise the kids so we don't have to have a cost for a nanny and we don't have

00:10:59.280 to find a place for them to live.

00:11:00.460 So you don't have a rent, you don't have this.

00:11:02.140 They help with food and they kind of help with this.

00:11:03.940 Kind of worked out.

00:11:04.880 We're not doing that anymore in America, right?

00:11:07.880 You know, grandparents have to live by themselves and kids are kind of like, well, mom, I've got

00:11:11.240 my own life to live in.

00:11:12.160 That's the culture we have in America, right?

00:11:13.900 So family, all that stuff, that's another cost.

00:11:16.640 Then you have company, 401ks, right?

00:11:18.620 You rely on a company to take care of an employee.

00:11:21.300 I work for your company, you take care of me.

00:11:22.980 Matter of fact, there used to be a time when the whole debate took place with Ford and their

00:11:28.500 employees.

00:11:29.100 When there was a strike, Ford employees came for a pension plan and said, if we give you

00:11:34.400 a certain amount of our lives and we work for you, we want to be able to be taken care

00:11:37.900 of in return.

00:11:38.920 And Ford finally with the union, they negotiated, said yes.

00:11:41.920 But in 1980, we had 112,000 pension plans in America.

00:11:45.480 Today, we only have 24,000 pension plans in America.

00:11:49.640 So companies are being pushed around with taxes where they're like, listen, I can't afford

00:11:53.760 to do pension.

00:11:54.360 I'll just do 401k, right?

00:11:56.220 I'll just do 401k.

00:11:57.300 Now, the benefit of 401k is if the company goes belly flopped, you can take your 401k to

00:12:01.920 another company.

00:12:03.020 But sometimes the pension is linked to the company's stocks.

00:12:06.220 And if the company goes belly flopped, so does your pension.

00:12:08.680 So it's not really protected.

00:12:10.220 So there's a lot of that going on with company.

00:12:12.100 Then you have the government.

00:12:12.940 Should the government take care of us?

00:12:14.020 I mean, it's costing, you know, 25% of their expenses per year to fund social security.

00:12:19.780 Should we all rely on the company or should we rely on, you know, us continuing working,

00:12:25.140 right?

00:12:25.360 Because a lot of people nowadays are like, well, you got to retire early.

00:12:28.980 You know, you got to retire early.

00:12:30.180 Who the hell came up with this whole thing about retiring early anyways?

00:12:33.640 You know how many people when they retire, they feel like they're getting closer to death

00:12:37.840 and psychologically messes with them.

00:12:39.540 I don't even want to have an age determined.

00:12:41.460 Why do you make me think 65's the age or 67's the age?

00:12:45.320 Don't give me an age.

00:12:46.380 Let me continue transitioning out, right?

00:12:48.480 My dad is 70, 1942, 77 years old.

00:12:53.280 He's still working.

00:12:54.340 Not because he has to.

00:12:56.100 He's where I said, dad, what are you doing?

00:12:57.740 Here's his answer to me.

00:12:59.040 He says, what do you want me to do?

00:13:00.900 I said, why don't you come move to Dallas?

00:13:02.740 He says, man, every time I make something, I feel good about it.

00:13:06.560 I got to make something to feel like I'm still giving value.

00:13:08.980 Why do you want me to retire?

00:13:10.380 My dad gets upset with me when I, I'm on the selfish side as a son.

00:13:13.860 I want him to be right next to my kids so grandkids can get some value from their grandpa.

00:13:18.420 And he says, just level with me, man.

00:13:20.020 Let me work.

00:13:21.440 Please let me work.

00:13:22.420 The moment I stop working, I die.

00:13:24.000 This is my dad telling me this.

00:13:25.220 I'm not 77.

00:13:26.180 He is.

00:13:26.480 I'm 40.

00:13:27.720 So we're looking at this whole retirement thing.

00:13:30.500 And in a way, the companies are partially to blame.

00:13:34.200 The government's partially to blame.

00:13:35.980 We are partially to blame because we voted and we kind of are allowing others to adjust

00:13:40.100 to what we think.

00:13:42.140 You know, some of the family rituals and cultures is also something that we got to look at because

00:13:46.820 family, you got to also do your part where your kids want to support you.

00:13:49.660 It's not a one dimensional answer.

00:13:51.460 It's a lot of different things.

00:13:52.620 All I'm saying to you is I'm going to speak to you.

00:13:54.800 You are listening to me.

00:13:55.760 Forget about if they're Andrew Yang fans and saying, to hell with you, Yang gang, $1,000

00:14:01.140 a month for everybody.

00:14:02.500 We are the richest.

00:14:03.460 We can afford to pay $1.5 trillion.

00:14:05.200 No problem.

00:14:06.040 That's your views.

00:14:07.160 You know, I can't believe you said this.

00:14:09.280 Bernie, we got to write off all the college debt, that government, $1.6 trillion.

00:14:14.000 We got, you know, Elizabeth Warren this.

00:14:15.980 We got to go, you know, Trump, we need more military.

00:14:18.680 You're saying this.

00:14:19.420 All I'm saying to you is the following.

00:14:20.960 I'm speaking to you, the individual.

00:14:22.580 I'm not talking politics.

00:14:24.340 I'm speaking to you, the individual.

00:14:25.980 Okay?

00:14:26.140 You.

00:14:26.480 You and I are speaking.

00:14:27.460 Nobody else.

00:14:27.940 Hear me out.

00:14:28.560 Let me just give you my points here.

00:14:29.660 Okay?

00:14:29.800 For me, this is my recommendation to you.

00:14:32.180 Don't let anybody put a retirement age in your head.

00:14:34.540 Don't put it.

00:14:35.300 Don't even let that word linger and come into your head.

00:14:38.840 Use the word transition for you.

00:14:41.080 Transition.

00:14:41.660 I'm not going to retire.

00:14:42.640 I don't want to believe I'm going to retire.

00:14:44.160 Okay?

00:14:45.560 Some of us, like my dad, are going to work 40 hours.

00:14:47.380 We got 77 years old because you want to.

00:14:49.320 There's a lot of people that work to the very, very end because they want to keep building.

00:14:52.760 In your mind, maybe you go from working 40 hours to 20 hours to 10 hours, but you're

00:14:57.680 transitioning into still doing something because you got to be able to earn your own income.

00:15:02.340 You cannot rely on the government or your 401k to take.

00:15:05.500 You cannot do that.

00:15:07.480 This is going to blow up eventually.

00:15:09.860 It's just a time bomb.

00:15:11.820 This is not going to.

00:15:12.680 And by the way, this is not going like this.

00:15:15.140 This is going like this.

00:15:16.700 You're going to pay a price for this.

00:15:18.160 A lot of people are worried about climate change.

00:15:20.000 I get climate change.

00:15:21.320 Fine.

00:15:21.800 I understand it.

00:15:22.420 Maybe we'll do a video on it.

00:15:24.160 This is going to affect everybody living in America.

00:15:28.740 Everybody living in America.

00:15:30.220 And that's when all of a sudden the market goes like this, a sudden crash like this, because

00:15:34.440 this is real dollars.

00:15:35.240 This is not hypothetical, without something we've seen.

00:15:38.560 This is pure proof that we know this is going to be taking place.

00:15:41.500 Number one, get a little bit more serious about your money.

00:15:44.060 Understand the rules of money and how it works.

00:15:46.180 Understand the game, the doubles game.

00:15:48.000 Understand it.

00:15:48.600 Get clear on that part.

00:15:49.980 Number two, get the skill set.

00:15:52.380 Constantly fine-tune your skill set so your skill set can advance for years and you're always

00:15:58.140 adapting with how automation, AI, everything is moving.

00:16:01.620 Keep adapting.

00:16:02.880 You may be 60 years old watching this.

00:16:05.240 If your skill set was good for the 80s and 90s but not good today, you better start finding

00:16:09.180 a skill set that's going to be good for 2025.

00:16:12.000 Not 2020.

00:16:13.280 2025.

00:16:14.080 Like what do you need to start looking for where you can find a way to, you can't rely

00:16:18.220 on taxi and Uber if you're 61 years old saying, that pays me an additional $2,000 a month

00:16:22.800 because that's going to be going away.

00:16:24.680 You have to start thinking about those adjustments yourself.

00:16:27.480 Your investments.

00:16:28.460 Stop just wasting all this money.

00:16:30.240 Start being a little bit more frugal with your money.

00:16:32.760 Start saving your money, investing your money.

00:16:34.620 Start getting very serious about it.

00:16:36.060 Don't just wing it.

00:16:36.940 If your company offers a 401k plan or benefits plan and they match, start putting all the

00:16:41.600 money in there if they're matching.

00:16:42.900 Not all your money, but whatever them, if they're matching 100% up to 5% or 100% up

00:16:48.720 to 4% or 50%, nothing's going to give you better returns than that.

00:16:51.960 Actually, go sit with your person and ask them, what are the funds for our 401k?

00:16:56.040 Start getting serious about your money.

00:16:59.460 Because if you rely on this to take care of you and this to take care of you, times have

00:17:03.660 changed.

00:17:04.660 It is on you, you, and you.

00:17:08.080 That's the only way we can be a little bit more free without being affected by this, without

00:17:12.760 being affected by this.

00:17:14.560 You are going to be affected by this, but not as much if you're able to control yourself.

00:17:18.320 That's what I would do if I were you, and that's the history of social security.

00:17:21.920 Thanks, everybody, for listening, and by the way, if you haven't already subscribed to

00:17:25.280 Valuetainment on iTunes, please do so.

00:17:28.140 Give us a five-star, write a review if you haven't already, and if you have any questions

00:17:32.020 for me that you may have, you can always find me on Snapchat, Instagram, Facebook, or

00:17:36.620 YouTube.

00:17:37.080 Just search my name, PatrickVidDavid, and I actually do respond back when you snap me

00:17:41.800 or send me a message on Instagram.

00:17:43.960 With that being said, have a great day today.

00:17:45.700 Take care, everybody.

00:17:46.420 Bye-bye.

00:17:46.660 Bye-bye.

00:17:52.420 Bye-bye.

00:17:53.860 Bye-bye.

00:17:54.160 Bye-bye.

00:17:54.420 Bye-bye.

00:17:54.460 Bye-bye.

00:17:54.740 Bye-bye.

00:17:56.580 Bye-bye.

00:18:05.020 Bye-bye.

00:18:07.960 Bye-bye.

00:18:08.840 Bye-bye.

00:18:14.460 Bye-bye.

00:18:15.040 Bye-bye.

00:18:15.340 Bye-bye.

00:18:15.620 Bye-bye.

00:18:15.940 Bye-bye.

00:18:16.280 Bye-bye.

00:18:16.460 Bye-bye.

Valuetainment - December 02, 2019

Episode 396： Social Security & Retirement Explained

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