Episode 2: Shattering the Mirror of Erised

In our second episode, Shattering the Mirror of Erised, SuperBOYs use powerful incantations – also known as facts and logic – to fight the mighty spell cast by Aunt Bizarro and her Mirror of Erised.

As our story opens, we come upon a celebration of all good cheer.  Our revelers, mostly senior citizens, are toasting the news that in 2012, their Social Security benefits will rise for the first time in three years.

And a woeful trio of years it’s been.

Beginning in 2008, many Americans lost as much as 40% of their retirement funds in the stock market rout.  Home values plummeted and have yet to rebound.  Energy costs – particularly gasoline, cut deeper than ever into disposable income.  Rising out-of-pocket medical costs remain unrestrained.  And inflation, although mild, shaved even more spending power from those 65 and older.

So no wonder Aunt Bizarro and her blind-faith minions are throwing a party.

The 2012 benefits increase “underscores the importance of Social Security as the only guaranteed, lifelong and inflation-adjusted source of retirement income for most Americans,” cheers Nancy LeaMond, an executive vice president with AARP, the vast propaganda bureau that masquerades as a friend to those 50 and over.

…For millions of American seniors already suffering in this economy and facing years of rising costs, shrinking returns on their savings and no cost-of-living increases, today’s…announcement lets them know there’s some relief around the corner,”

-chimes in Max Richtman, the ebullient president and CEO of the National Committee to Preserve Social Security and Medicare.

Never before has $39-a-month excited so many people.  Yes, after three painful years of financial losses and erosion, the 3.6 percent increase in Social Security benefits in 2012 will average just $39 a month, or about $467 for the full year.

Such is the craftwork of Aunt Bizarro: The poor naives who have entrusted her – more than one-third of all retirees receive at least 90% of their income from the Social Security Administration – are bewitched into believing that an annual increase of $467 is cause for celebration.

Which perhaps it really is, when measured against the stark reality awaiting those of us not yet dependent on Aunt Bizarro to keep food on our tables.  Indeed, by 2036, when citizens born in 1974 reach the earliest-possible retirement age of 62, the Social Security system will be penniless.

Aunt Bizzaro knows this all too well.  But each and every payday, she shows up nonetheless to collect her bounty – from young and old alike – promising to deposit their earnings in her lockbox.  It’s a promise she’ll never keep.

How does she do it?

What facilitates Aunt Bizzaro and her grand Ponzi scheme is the seemingly unlimited capacity of tens of millions of Americans to live – contented – in a perpetual state of self-denial.

From the time we are but cherubs, Aunt Bizzaro and her governmental backers, invite us to gaze into her Mirror of Erised, which like the magical looking glass in the Harry Potter fantasy series, reflects not reality, but a version of reality that the gazer prefers.

Who doesn’t want to believe that America remains a beneficent financial colossus, 100% reliable, and certain to care for us and our financial needs in our golden years?  Who doesn’t want to see Social Security as the safety net and secure lockbox we’ve always been taught it is?

In fact, Social Security has become the most significant source of income for American’s age 65 and older.  And, with each passing year, our reliance on other personal assets to see us through our retirement has shrunk like a teenage boy and his dog in some Walt Disney movie starring Rick Moranis.

Standing at a stark 11% today, the percentage of available cash that retirees derive today from non-governmental asset income is down from 15% back in 1962.  Indeed, only about half of all retirees (53%) enjoy any non-governmental asset income whatsoever.

Writing this month in the AARP Bulletin, veteran personal finance writer Jane Bryant Quinn – an Aunt Bizzaro apostle – mocks the notion that individuals would be better off if they could manage their Social Security taxes in their own accounts.

“Hmmm – you’re saying that you’d faithfully put that money aside, every year of your working life… without ever skipping a year, drawing on your nest egg or selling when the market dropped?  Few such paragons exist,” Quinn writes.

Obviously, our SuperBOYs have yet to pry Ms. Quinn away from the Mirror of Erised

Hundreds of thousands of Americans, folks just like you and me, have in fact secured a sizeable, non-governmental retirement asset income following the Bank on Yourself method.  And yes, Jane, these “paragons” do avoid the temptations, seductions and traps that bedevil so many people misguided by the forces of SSH4TT.

For the sake of argument, understand that even if Quinn and AARP are correct and those folks who brought you the Social Security mess would be better stewards of your money than you, the government’s old age system has already failed – and failed sooner than anyone anticipated due largely to the weak economy and stubborn high unemployment rate.  Unemployed workers have no wages from which to contribute to the Social Security pool.

While no one was looking in 2010, the program went cash negative because payroll taxes weren’t sufficient to cover all of Social Security’s obligations.  After years of generating surpluses, last year Social Security needed to borrow money from the general Treasury – roughly $46 billion – to cover its shortfall.

The trustees of the Social Security program do not expect it to pay its own way – more cash in than out – again during the lifetimes of anyone old enough to read this article.

The drip, drip, drip of billions of dollars from Aunt Bizarro’s lockbox will soon turn into a stream of red ink and eventually a waterfall.

In an effort to stimulate the dying U.S. economy, the Obama Administration temporarily reduced the rate workers pay on their wages in 2011 from 6.2% to 4.2%.  The draw on our national debt will be $105 billion on top of the original $46 billion.  If President Obama gets his way and the payroll tax reduction is expanded in 2012, The Washington Post says the outflow will rise to $267 billion.

All told, Aunt Bizzaro and her agents have collected $2.6 trillion in the Social Security trust fund.  That is the vast number on the government’s ledger — $2,600,000,000,000.  How much has the government actually set aside?  Not one cent remains.

However the politicians and economists eventually attempt to stem the bleeding – if they can ever reach a consensus on any band-aids – the solution will mean fewer benefits, higher taxes, more borrowing or, most likely, a combination of all three.

Meanwhile, week-in and week-out, Aunt Bizarro repeats her unrelenting mantra: “I’ll gladly care for you in the future, so kindly hand over your earnings today.”

The SuperBOYs solution is far better…

Once they are able to draw Aunt Bizzaro’s disciples away from the Mirror of Erised, shattering its illusion once and for all, these fighters for good and justice make this simple proposition:

If it turns out in 2036, by some twist of fate, that the Social Security wizards are able to rescue the system, then what have you forfeited?  The money you hold in your Bank on Yourself account will still be there for you, exactly as promised, growing a predictable, guaranteed amount each year.

But if Aunt Bizarro and her courtiers continue on their current course – and Social Security adherents cling to the belief that a $39-a-month increase is a soothing balm for suffering seniors, then won’t you be delighted that you rebuffed all that SSH4TT was dishing out and that you secured your own retirement funds?

And so the amazing SuperBoys lead the escape from another harrowing financial situation. Armed with this graphic tale, it’s now your mission to prevent your loved ones and friends from ever again coming under the trance of Aunt Bizarro and her evangelists.

Warn them.  Inform them.  And if need be, call in the posse.

Look, up in the sky.  It’s a bird.  It’s a plane.  No, its SuperBoys and they’re ready to fight for you, your loved ones and your American right – to get it right – when it comes to wealth information.