“I wrote him a check for $5,000 15 years ago because my mother would have died on the spot if she had been evicted from her home.”
Source link
Majamitrovic | E+ | Getty Images
How to find your Social Security full retirement age
If you were born between 1943 and 1954, your full retirement age is 66.
If you were born in 1960 or later, your full retirement age is 67.
The full Social Security retirement age gradually increases from 66 to 67 for people born between those years.
Social Security full retirement age
| Year of birth | Social Security full retirement age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and two months |
| 1956 | 66 and four months |
| 1957 | 66 and six months |
| 1958 | 66 and eight months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Source: Social Security Administration
For some people, this can come as a surprise, because they may still confuse their Social Security full retirement age with the Medicare eligibility age of 65, according to Elsasser.
Others are familiar with their full retirement age because they have been seeing it on their Social Security statement over the years, he said.
Social Security statements can be accessed online by creating a My Social Security account.
How Medicare can trip up retirees in other ways
It’s not just the Medicare eligibility age that can trip up prospective Social Security retirement beneficiaries, Elsasser noted.
Retirees may be tempted to sign up for Social Security when they become eligible for Medicare at 65 so they do not have to write checks to cover their premiums. Those payments for Medicare Part B — which covers doctor’s visits, outpatient care and preventive services — are typically deducted directly from Social Security benefit checks.
But tying those decisions to each other will result in permanently reduced Social Security benefits, since that would be before full retirement age.
“You really should make those decisions independently of each other,” Elsasser said.
Of course, not everyone can or should delay claiming Social Security retirement benefits. The earliest eligibility age is 62, and experts say claiming then may make sense for individuals in some circumstances, such as if they have a poor health prognosis.
By waiting until full retirement age, you can receive up to 100% of the benefits you’ve earned.
If you delay claiming past your full retirement age and up to age 70, you stand to get an 8% benefit increase per year.
A better way to think about it is that each month you delay is worth two-thirds of 1%, Elsasser said. Therefore, even delays of small increments can help increase your monthly checks over your lifetime.
The full retirement age may be subject to go up again, depending on whether Congress decides to include that change to shore up Social Security’s funding woes.
However, such a change would likely affect only prospective retirees ages 55 and younger, Elsasser predicted, and isn’t necessarily a sure thing, as life expectancy in the U.S. is no longer accelerating.
One of the most important decisions you’ll make when it comes to retirement planning is when to claim Social Security. While most people become eligible to apply for benefits starting at age 62, many decide to wait at least a few years before they claim their benefits.
Following the wisdom of the crowd is often a smart financial strategy that can keep you from making big mistakes with your money. Should you do that here and claim benefits at the average retirement age, or should you forge your own path in retirement?
Before you make a decision, consider the average age Americans claim Social Security benefits and how much you can expect to receive each month.
Here’s when the average American claims Social Security
The average age for retired workers to claim Social Security has steadily climbed since the start of the century. That’s due to changes in the Social Security laws, which raised the full retirement age from 65 to 66 and then from 66 to 67, depending on when you were born. It also impacted the penalty or credit beneficiaries received for claiming early or delaying benefits.
If you claim your retirement benefits before full retirement age, you’ll see a reduction in your monthly check. The reduction is based on how far away you are from full retirement age. So those claiming at age 62 who had a full retirement age of 65 saw a smaller reduction in benefits than those with a full retirement age of 66 or 67.
If you claim your benefit after your full retirement age, you’ll receive a bigger monthly check. Those born in 1943 or later receive an additional 8% on their checks for each year they delay beyond full retirement age. But that annual percentage was smaller for those born earlier. For example, someone born in 1932, with a full retirement age of 65, would receive just 125% of his or her primary insurance amount by delaying until age 70. By comparison, someone born in 1960 or later, with a full retirement age of 67, can receive 124% of his or her primary insurance amount by delaying until age 70.
All this is to say the range of potential benefits for claiming early versus delaying has widened substantially over the past 25 years. As a result, retirees are rewarded more for each year they delay, and they’ve naturally increased the age at which they apply for Social Security benefits.
The average retired worker claimed Social Security benefits at 63.4 (men) or 63.5 (women) in 1998, according to a bulletin from the Social Security Administration. In 2018, that age climbed to 64.7 (men) or 64.6 (women). Based on the data from the latest Social Security statistical supplement, the average age of someone receiving a new Social Security retirement benefit award in 2022 (excluding disability conversions) was 65.0 for men and 64.9 for women.
Here’s the average amount retirees receive when they apply for benefits
The average benefit awarded to a new retiree in 2022 was $1,938.75. Those retirees are receiving an average check of about $2,174.86 in 2024 after the cost-of-living adjustments made in 2023 and 2024.
While you’d expect anyone who claimed earlier than average to receive a below-average benefit, it may be surprising that those who claimed at age 65 still received a benefit less than the average new award in 2022. The average 65-year-old who newly applied for Social Security retirement benefits in 2022 received a monthly check of $1,874.56.
That reflects the discrepancy in circumstances that often leads people to claim their Social Security benefits earlier rather than later. Those who delay benefits beyond their full retirement age have, on average, a higher primary insurance amount than those who claim earlier. That suggests those claiming before their full retirement age earned less in their career, which may have led to less retirement savings, thus requiring them to claim benefits earlier to supplement their retirement income.
Should you claim at the average retirement age?
Age 65 is often thrown out as the standard retirement age. It’s the age at which you become eligible for Medicare, so it makes sense for a lot of people to work at least until that age to maintain health insurance coverage.
But claiming Social Security at age 65 could be a big mistake for many retirees.
If you’re able to afford your retirement on your own savings, it will probably work out in your favor to delay your benefits until at least your full retirement age, if not until 70. More often than not, you’ll maximize your lifetime benefits by waiting until age 70, according to the most recent data from the CDC on life expectancy. So unless you have reason to believe you’ll have a shorter life than the average retiree, you should try to delay as long as possible.
That strategy is further supported by a 2019 study from United Income. The researchers found the majority of retirees would maximize their wealth by waiting until age 70 to claim benefits. The next best age, 67, would only maximize wealth for about 10% of retirees. Meanwhile, just 8% are better off claiming before age 65.
The wisdom of the crowd doesn’t seem to work as well when it comes to Social Security claiming decisions. That’s because everyone’s retirement will look different and come under different circumstances. If you have the luxury to plan for the long term, you should wait to claim benefits until later in life.
The $21,756 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $21,756 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
View the “Social Security secrets”
The Motley Fool has a disclosure policy.
Here’s the Average Age Americans Claim Social Security and the Monthly Benefit They Receive was originally published by The Motley Fool
FTX bankruptcy estate intends to sell its $175 million general unsecured claim against the collapsed crypto lender Genesis, according to a Feb. 2 court filing.
FTX proposed to divest these claims through public auctions or private transactions, either in entirety or in parts, with single or multiple purchasers. The generated funds would be used to facilitate debt repayment and also restructure its financial obligations to creditors.
This development aligns with FTX’s recent commitment to not resurrecting the platform, opting to liquidate assets as part of the ongoing efforts to compensate customers affected by its 2022 collapse.
Data from Claims Market showed that over $1 million in customer claims were trading at over 65 cents on the dollar as of the end of January.
FTX creditors have until Feb. 15 to voice objections to this proposed claim sale.
Genesis filed for Chapter 11 bankruptcy protection in January after the failure of FTX triggered mass customer withdrawals on its platform.
Genesis and FTX, initially engaged in substantial reciprocal claims, eventually settled with the failed exchange, holding a $175 million claim against the collapsed lender. Under the settlement agreement, both parties also relinquished other claims held against each other. Genesis Global Capital, the crypto lending arm of Genesis, had previously extended loans exceeding $2.8 billion to Alameda.
Genesis settles SEC lawsuit.
A recent court filing revealed that Genesis reached a $21 million settlement with the U.S. Securities and Exchange Commission (SEC) concerning the now-defunct Gemini Earn investment product.
“The proposed settlement will, among other benefits to the Debtors’ estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC,” the filing stated.
The filing further explained that the $21 million settlement would be disbursed after Genesis fully pays “all other allowed administrative expense, secured, priority, and general unsecured claims.”
The SEC had alleged that Gemini and Genesis violated U.S. securities laws through the crypto lending program.
Meanwhile, the company is still embroiled in a lawsuit filed by the New York Attorney General, which also involves DCG and Gemini, over allegations of fraud.
Dear Quentin,
My husband and I purchased a house together in New York about a year ago. We’ve been married 14 years. His parents gave us $100,000 toward the house, which was deposited in a joint bank account, one that I don’t have access to.
About a week later, my in-laws had me sign a document stating that the funds were considered “separate property” and that I wouldn’t claim any of those funds in case of a divorce. I signed this document on the day of the closing with their family lawyer, who was also the notary.
Does this document have legal standing in case of a divorce in New York state? Would this be considered signing under duress given that it happened on closing day, or a conflict of interest given that the family lawyer represented all of us?
Confused and Curious
Related: My Tinder match asked if I ‘rent or own’ my apartment. Is it gauche to ask financial questions before a first date?
“You have three questions to ask yourself: the legal and financial questions and the moral one.”
MarketWatch illustration
Dear Confused,
There is a lot of uncertainty in your letter about what happened on the day you signed this postnuptial agreement — and how you felt about signing it. The most revealing and yet confusing word you use is when you say your in-laws “had” you sign. It appears that you did so voluntarily and exercised your free will, but also that you felt pressure to do so. An attorney should walk you through the events of that day. But you do not say that you were forced to sign or did so under duress.
However, there are other aspects to this scenario that should be considered if you consult your own attorney — one who represents you exclusively. You say you were given no time to think it over. According to the New York City Bar: “If either you or your spouse uses pressure to get the postnuptial agreement signed or does not give the other enough time to consider the postnuptial agreement, the court may not enforce the postnuptial agreement.”
It adds: “The postnuptial agreement takes the control over your property and assets away from the state and places it in the hands of you and your spouse. A postnuptial is valid and can be enforced as long as it protects both you and your spouse and it was entered into with a full and fair disclosure of all assets by both you and your spouse. The agreement must also be executed and acknowledged with the full formality required for a property deed to be recorded.”
You say $100,000 was deposited into a joint account. I assume you mean it was one held by your in-laws and your husband, and your postnuptial agreement deals with this $100,000 as a separate gift before it was used as a down payment. (An aside: This strikes me as bizarre behavior, given that you are both buying a home — I assume you will both be on the deed as well as the mortgage — and you have been married for 14 years.)
Marital property versus separate property
“In order for an agreement waiving your right to marital property to be valid and enforceable under New York law — in this case the apparent postnuptial agreement at issue — it would have to be (i) in writing, (ii) subscribed by you and your husband and (iii) acknowledged or proven in the manner required to entitle a deed to be recorded,” says Ory Apelboim, partner in the Matrimonial & Family Law Practice Group at Blank Rome.
And if these conditions were met? “Then other issues might come into play,” he says. “New York has a strong public policy favoring individuals deciding their own interests through contracts. However, an agreement between spouses may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress or other inequitable conduct, or if the terms are unconscionable or the product of overreaching.”
The fact that you had no counsel and that it could be considered manifestly unfair could also play in your favor. “There could be an inference of overreaching by your husband, which he would be required to rebut,” Apelboim adds. “Additional considerations are the existence of a fiduciary relationship between you and your husband and the fact that postnuptial agreements are contracts which require consideration that is a benefit to each party.”
You have three questions to ask yourself: the legal and financial questions and the moral one. Do you have a legal basis to challenge the postnuptial agreement? Do you believe challenging your husband for half of this down payment ($50,000) would be worth it in the event you divorced? Or is this a matter of principle — you should have been given more time to consider your options, especially given that you have been married for 14 years?
If you do decide to contest this agreement, do it because you would not have signed under any other circumstances. How would you have responded if your in-laws had given you time to think this over? It seems like a big ask by your in-laws after 14 years of marriage. I could better understand their rationale if they had asked you to sign a prenuptial agreement. If you genuinely believe this is unfair, and you signed this contract under duress, ask an attorney for an opinion.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
I asked my elderly father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this a good idea?
My partner is against us getting married. I’m not on the deed to his home, but he has a revocable trust. What could go wrong?
I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.
Once you start collecting Social Security, you’ll be eligible for a specific benefit each month. And you may be eager to boost that benefit as much as possible.
To that end, there’s a really simple solution, at least in theory. All you need to do is delay your Social Security claim beyond full retirement age (FRA). For each year you do, up until your 70th birthday, your benefit gets to grow. And if your FRA is 67 and you claim Social Security at 70, you’ll snag a 24% boost to your monthly benefit for life.
Getting more money from Social Security on a monthly basis might seem like a great thing for your retirement. But you should know that holding off on filing your claim also comes with some risk.
Image source: Getty Images.
Will you come out ahead financially in your lifetime?
It’s natural to focus on growing your monthly benefit in the context of Social Security. But what makes even more sense is to aim for the highest lifetime benefit possible. And delaying your Social Security claim may not yield that result.
Remember, when you delay your claim, you lose out on what could be many months of payments. So if you don’t end up living a long enough life to make up for those missing payments, you could end up losing out financially all in.
Let’s say you delay your Social Security claim until age 70 but end up passing away at 72. At that point, you’re hardly getting any benefits, so a larger monthly payday isn’t all that helpful.
Now if your health is great going into retirement, you may feel confident that you’ll live a reasonably long life. And you may decide to delay your Social Security claim in light of that. But if your health is iffy, then holding off on collecting Social Security may be risky.
Your decision starts with your break-even age
If you’re not sure whether delaying Social Security is the right choice for you, start by figuring out your break-even age. That’s the age at which you’d collect the same total lifetime benefit based on different filing ages.
Let’s say you’re torn between an FRA of 67 and age 70. Let’s also assume you’re looking at a monthly benefit of $2,400 at FRA.
In this case, you’ll break even at age 82 1/2 with a lifetime payout from Social Security of $446,400. If you live until age 83, a filing at age 70 puts you ahead by $3,456 in your lifetime.
Now without a crystal ball, you can’t say definitively that you’ll live until 82 1/2. But if your parents lived until their late 80s and you’re in even better health than they were as retirement approaches, you might use that as a reason to hold off on filing your claim.
Plus, in this scenario, if you were to live until age 90, a Social Security filing at age 70 would leave you with an additional $51,840 of lifetime income. That’s a pretty sweet payoff for waiting.
All told, delaying your Social Security claim is a risk. And there’s no getting around that. Whether it’s a risk worth taking will have to depend on your specific situation.
Now that 2024 is officially here, you may be gearing up to make certain retirement-related moves. And one of those may be signing up for Social Security. But before you claim benefits in 2024, run through these important questions to make sure that’s really the right choice.
1. Am I reaching full retirement age?
Full retirement age, or FRA, is when you’re entitled to your full monthly Social Security benefit based on your individual earnings history. If you were born in 1957 or earlier, you’ve already reached FRA. If you were born in 1958, FRA kicks in at 66 and eight months, so you may reach FRA this year.
You’re allowed to sign up for Social Security as early as age 62, so not getting to FRA in 2024 won’t prevent you from claiming benefits. But for each month you sign up for Social Security ahead of FRA, your monthly benefit will get a permanent reduction. Before you lock in a reduced benefit, figure out whether waiting a bit longer to file makes sense.
Image source: Getty Images.
2. Do I know how my spouse feels?
You may be more than ready to sign up for Social Security. But if your spouse feels differently, that’s the sort of thing you’ll want to know.
It may be that your spouse would like you to delay your Social Security claim as long as possible so you can snag the highest monthly benefit. Delayed retirement credits that result in a higher monthly Social Security benefit can accrue until the age of 70.
It may also be that your spouse was a lower earner during their career and isn’t entitled to much from Social Security. In that situation, they may be counting on a spousal benefit, which can equal up to 50% of the monthly benefit you’re entitled to. That would be another good reason for your spouse to want you to wait to file, so it’s important to let them weigh in.
3. Do I have ample savings?
Maybe you’re sitting on a $2 million nest egg and are thinking of claiming Social Security in 2024, even though that’s a couple of years before FRA. In that situation, an early filing may not hurt you.
Either way, it’s important to assess your savings before signing up for Social Security. If you realize your nest egg isn’t as robust as you’d hoped for, that might motivate you to hold off on taking benefits.
If you’re turning 70 in 2024, it pays to sign up for Social Security regardless of what your 401(k) or IRA looks like, since there’s no financial incentive to delay your claim any longer. But if there’s room for your monthly benefit to grow, then you’ll definitely want to evaluate your savings before making your Social Security claim official.
Is 2024 a good year for you to file for Social Security? Maybe. Or maybe not. But running through these questions could help you arrive at an answer that makes sense for you.
Dear MarketWatch,
I have a pension worth $1.5 to $2 million depending on my and my wife’s longevity. It passes to her when I die, and she is six years younger. I am still working part time, and earn about $75,000 a year. I plan on retiring in 1.5 years when I reach my Full Retirement Age. We have zero debt and newer vehicles so I don’t anticipate any major expenses in the next few years.
Our investment portfolio, which I manage, is worth about $975,000 with some moderate and higher-risk investments with an asset allocation of 90% stocks and 10% bonds. I’m debating on drawing Social Security at my FRA and investing some of that rather than waiting until I am 70 to draw. I can also start drawing from some of our investments rather than Social Security to increase that benefit amount.
We do not live an extravagant lifestyle, but we enjoy traveling domestically and overseas once a year. When I retire, if I draw Social Security and take 3% annually from our investment income, I anticipate my annual income to be $100,000; my wife will retire in three years and possibly draw her Social Security at that time.
What are your thoughts as far as a retirement strategy?
See: I’m 56 and have $3.4 million in assets. I’m semi-retired, but my spouse, 64, has no savings. How do we move forward?
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear Reader,
You’re in a great position for retirement, so kudos to you.
It’s great that you’re getting so granular with your retirement planning. Not everyone considers the balancing act it takes between Social Security and retirement-plan distributions, but that may be because many people simply must claim Social Security earlier than their Full Retirement Age, or FRA, to afford their cost of living. That being said, a lot of it will come down to running numerous projections.
There’s no crystal ball, unfortunately, but you can still make some well-informed calculations. Let’s start with your Social Security benefits.
You probably already know this, but you can get a decent estimate from the Social Security Administration itself as to what your benefits will be at FRA versus age 70. There will also be cost-of-living adjustments in the years to come. If you know what the base figures are, however, you can use that for benchmarks when comparing what you’d need from your investments.
Break-even analysis
Now let’s do a quick break-even analysis. In this example, if you started at 67, you’d be $64,800 ahead from if you started at 70 (the monthly benefit for three years). If you divide that figure by the excess monthly benefit for delaying ($432 per month), you would find it would take you 12.5 years to break even. The break-even analysis doesn’t consider COLAs or other factors, of course, but it does give you an idea of when your delayed benefits would surpass the benefits you would receive if you decided to take them at an earlier age. You can use it to compare to your expected life expectancy, which is another determining factor when choosing the time to claim Social Security benefits.
Other things to consider with delaying your Social Security benefits: I hate to use the word “guaranteed” for anything in retirement planning, but with Social Security, you can count on it being inflation-protected. Whether it’s a big annual increase every year is of course variable, since some recent years we’ve seen practically no COLA and others we’ve had a larger jump, but it’s more certain than investment returns, which rely on a market that can be volatile year to year.
The delay would also benefit your wife, who could see a larger survivor benefit because of the delayed retirement credits, should you predecease her.
However, if you were to claim Social Security at your FRA and not delay, you’d allow your retirement account to grow over time untouched.
Going back to basics
I suggest going back to the basics and looking at what you actually need in retirement income, then providing yourself with numerous scenarios, ones in which you mix various claiming ages for Social Security with distributions from your pension and investments. Keep in mind the implication of taxes, investment returns, inflation rates (for your benefits as well as expenses). A qualified financial planner can help you with this if you want to get specific with the numbers.
As you enter retirement, you might want to reconsider your asset allocation so that it isn’t completely at the hands of market volatility — retirees need to strike a balance with conservative and aggressive assets so their investments continue to grow but they aren’t at risk of losing a huge chunk of it in a downturn — in which case a qualified financial planner could also assist.
Overall, you have something not many others have when entering retirement — a pension — and that provides you with an incredible amount of flexibility when adding in Social Security and an additional investment account. It’s great that you’re taking the distribution and claiming strategy so seriously. Now it’s just a matter of the specifics.
Also see: I’m 76 with $73,000 in an investment account that has not increased in 2 years. Should I abandon the 50/50 strategy?
Readers: Do you have suggestions for this reader? Add them in the comments below.
Dear Quentin,
My wife and I have been married for over 30 years. Throughout the years, we relied mainly on my income. My wife worked occasionally, but mainly raised the children. We started to struggle financially when I was laid off. We went through all of my 401(k) investments.
I lost my home through a short sale because of the difficulty of keeping up with the expenses. I asked my wife to help by getting a job, but that did not happen. Now we are finally at a comfortable place, renting a home, and my wife is finally working.
My question: Do I have the legal right to an equal share of her $200,000 inheritance when she gets it, given I used all of my retirement funds to get us through those hard years?
Divorcing in Ohio
Related: My husband added my mother-in-law to the deed of our house 20 years ago. Now we’re getting divorced, and she wants one-third. Can I fight this?
“It’s a tough break that after 30 years of marriage and several years of homeownership, you are bidding adieu to the former and had to let go of the latter.”
MarketWatch illustration
Dear Divorcing,
You have experienced a lot of financial loss, and you are about to go through what I hope is the last of it. It’s a tough break that after 30 years of marriage and several years of homeownership, you are bidding adieu to the former and had to let go of the latter. Given how difficult it is to get on the property ladder, you would have been better off living in a studio rental with your wife and renting out your house rather than letting it go. But we all do the best we can with the resources we have at the time, and you have finally reached a place of stability.
The short and long answer to your question: Ohio is an equitable-distribution state, meaning that marital assets are divided fairly, if not equally. Inheritance is regarded as separate property in Ohio, unless it is in some way used to benefit the marital assets — that is, commingled. For instance, if it were used to renovate your home or it was deposited in a joint bank account, it would cease to be separate property in a process called transmutation. This can easily happen: One letter writer used $142,000 from a $246,000 inheritance to pay off her mortgage.
For anyone else out there with an inheritance and a divorce pending: “Do not use inheritance money for regular spending, then replenish the account balance,” according to Manning & Clair Attorneys At Law, a law firm in Willoughby, Ohio. “This can be problematic for a separate-property claim. That is because inheritance money must be ‘traceable’ [or identifiable] to prove to a court that it is separate property. … You must be able to prove the inheritance, or asset purchased with the inheritance, maintained its separate nature from the rest of the marital assets.”
The final and, perhaps, bitter irony of your own situation is that you would, in all likelihood, have had to give up 50% of your property if you still owned it at the time of your divorce, assuming it was purchased during your marriage. Unless you had a prenuptial agreement before you got married, you may have to factor in alimony payments given that you have typically been the breadwinner in the relationship, in addition to other legal costs. The sooner you get divorced, the sooner you can start rebuilding your wealth, and saving once more for retirement.
Obviously, withdrawing money from your 401(k) comes with penalties and should always be seen as a last resort. But you’re not the only one who has had their hand forced in such a way: 37% of workers have taken a loan, early withdrawal or hardship withdrawal from their 401(k) or similar retirement plan, according to a report released earlier this year by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute. Among those workers, 21% took an early and/or hardship withdrawal.
Good luck with the next chapter.
More from Quentin Fottrell:
My father has dementia and ‘forgave’ my brother’s $200,000 house loan. The nursing-home notary said he was of sound mind. What can we do?
My husband bought our house with an inheritance. I signed a quitclaim. He said I could live there after he dies, but changed his mind. What now?
Low-paying jobs are the economy’s way of saying you should get a better job’: I’ve decided to stop tipping, except at restaurants. Am I wrong?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, or weigh in on the latest Moneyist columns.
By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.
By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Renowned investor and business magnate Warren Buffett has long been a vocal participant in discussions surrounding economic and fiscal matters. In a 2001 interview with Becky Quick on CNBC, Buffett introduced a bold strategy aimed at addressing the enduring challenge of America’s deficit.
Buffett’s proposal revolves around making Congress accountable for deficit decisions. He suggests passing a law stipulating that if the deficit exceeds 3% of gross domestic product (GDP), all incumbent members of Congress become ineligible for reelection.
Buffett made the visionary proposal in 2011. It recently resurfaced on social media, particularly on X (formerly Twitter), and appears more pertinent than ever in the current economic climate dominated by inflation and debt.
Don’t Miss:
Buffett frequently comments on global and domestic monetary policy and the likely movement or state of various countries’ economies or currencies. In a 2011 statement at the annual Berkshire Hathaway Inc. shareholders’ meeting, he said, “We’ve got a huge national debt, which is a problem. But it’s not necessarily a problem that’s going to cause the country to collapse. We’ve had periods of higher debt in the past and we’ve come through them.”
Buffett feels his proposal is the only way to encourage legislators to keep the deficit below the specified threshold to secure their chance at reelection. He is highlighting lawmakers’ responsibility for fiscal policies, making their political futures contingent on their management of the nation’s debt. Ideally, such an inducement should encourage the adoption of strategies that align with long-term sustainability rather than politicians succumbing to actions that relate only to short-term political gains.
Trending: The average American couple has saved this much money for retirement — How do you compare?
On the positive side, Buffett’s plan could incentivize lawmakers to act more responsibly with the nation’s finances. However, skeptics might argue that this could lead to too much emphasis on deficit reduction and less attention on critical areas such as social programs, infrastructure and education.
Buffett is not the only high-profile investor and financial commentator talking about the national debt. Author and investor Robert Kiyosaki recently said on a taping of “The Rich Dad Radio Show” that “America is now bankrupt. And the question I want to answer today is how [come] America, at one time reportedly the richest country in the world, is now bankrupt?”
While America is not currently bankrupt, the high national debt and resulting interest remain extraordinarily high. The U.S. Treasury notes the current public debt outstanding is more than $33.8 trillion as of Dec. 8.
While it’s unlikely members of Congress will approve a law that ties their reelection eligibility to deficit choices, Buffett’s thoughts present them with a reminder of the need for accountability and fiscal responsibility.
Read Next:
“ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start Your 14-Day Trial Now!
This article Just Give Me 5 Minutes! Inside Warren Buffett’s Claim That He Can Fix the National Debt In 300 Seconds originally appeared on Benzinga.com
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Newer Posts