Social Security and EPF

Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday. Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year, just as it did for the first time in 2008. The trustees project that the Medicare fund will be depleted by 2017, two years earlier than the date projected in last year's report.

The trust funds -- which exist in paper form in a filing cabinet in Parkersburg, W.Va. -- are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.
Treasury Secretary Timothy Geithner, the head of the trustees group, said the new reports were a reminder that "the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."
Geithner said that President Barack Obama was committed to working with Congress to find ways to control runaway growth in both public and private health care expenditures, noting the promise Monday by major health care providers to trim costs by $2 trillion over the next decade.

However, Republicans pointed to the newly dire assessments as evidence the Obama administration has failed to come forward with actual entitlement reform to close the funding gaps.

"Instead of getting existing public programs in order right now, some are saying we should create a new government-run health insurance plan," Sen. Chuck Grassley, the top Republican on the Finance Committee, said in a reference to the administration's health care proposals. "When we can't afford the public health plan we have already, does it make sense to add more?"
House Republican leader John Boehner said the trustees report "confirms what we already knew: Our nation cannot afford to continue this reckless borrowing and spending spree."

The findings in the trustees report, the annual checkup given the two benefit programs, did not come as a surprise. Private economists had been predicting that the dates the programs would begin to pay out more than they take in and the dates the trust funds would be insolvent would occur sooner given the economic recession.

The deep recession, the worst the country has endured in decades, has resulted in a loss of 5.7 million jobs since it began in December 2007. The unemployment rate hit a 25-year high of 8.9 percent in April.

Fewer people working means less being paid into the trust funds for Social Security and Medicare.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees report projected that Social Security's annual surpluses would "fall sharply this year," then remain at a reduced level in 2010 and be lower in the following years than last year's projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring.
That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year's report.

At that point, the annual Social Security taxes collected would be enough to pay for three-fourths of current benefits through 2083. To tap the trust fund, the government would have to increase borrowing or raise taxes because Social Security bonds exist only as bookkeeping entries.

While the smaller surpluses that will begin this year will not have any impact on Social Security benefit payments, the government will need to borrow more at a time when the federal deficit is already exploding because of the recession and the billions of dollars being spent to prop up a shaky banking system.

Medicare's condition is more precarious, reflecting the pressures from soaring health care costs as well as the drop in tax collections.

The options available to deal with the Social Security shortfall include raising the payroll tax that funds Social Security, such as removing the cap on income subject to the tax, or cutting benefits in some fashion such as raising the retirement age.

The administration is pushing Congress to pass legislation this year to extend health care coverage to some 50 million uninsured Americans, preferring to tackle health care before Social Security.

The trustees report is likely to set off renewed debate over Social Security and Medicare. Critics have charged that the Obama administration has failed to tackle the most serious problems in the budget -- soaring entitlement spending.

The administration on Monday revised its federal deficit forecasts upward to project an imbalance this year of $1.84 trillion, four times last year's record, and said the deficits will remain above $500 billion every year over the next decade.

----------------------------------the above article was adopted from Yahoo! Finance----------

Social Security is the equivalent of EPF (employee provision fund) in Malaysia, while Medicare to Our SOCSO. However the management style of the US counterpart are so different from the one in Malaysia, at least the one in our country is not that obvious.
Without the Medicare that comes to par with the US counterpart, it would be wise for malaysian to have their own medical backup fund to go through the hardship of enduring a disease or an emergency hospitalization, whatever the cause may be, you need to settle the hospital bill if you have been admitted into it. So, the ultimate question would be, do you want to spend your hard-earned money on the hospital bill? If your answer would be a normal and common 'NO', then you should begin to analyse what do you have as the alternative precautionary step.

"Recycle and Conserve" our Money

With the cries to get people involving in 'Go-Green' movement getting louder and louder nowadays, Great Eastern Life has launched one saving plan that enables people to RECYCLE MONEY, meanwhile, it also CONSERVE our money.

How do we recycle our money? Does this sound absurd at the first hearing? Not at all, this is the mechanism that explains the how.

Example illustrated by Miss V, age 24 yr-old, who has decided to recycle her money and conserve her money, in order to make this plan work, Miss V will put aside RM 200 each month as saving for her retirement fund; this saving plan has a time horizon of 30 years.

For 30 years, Miss V would each month put aside RM 200 thanks to her disciplinary determination, so after 30 years, Miss V will have saved RM 72,000 into her retirement fund, right?

This plan will recycle Miss V money by giving Miss V RM 3675.4 in every two year, which means that in that 30 years of time, Miss V will have received RM 3675.4 x 15 times = RM 55,131, the amount of money that been recycled to Miss V, so far so good right?At the end of the day, when Miss V retires30 years later, She will receive RM 60,400 as retirement fund, this is the money that has been conserved.

Look at the Gloss total of money Miss V has
saved aside, RM 72,000;
received ( Recycled Money), RM 55,131.00
( Conserved Money), RM 60,400.00

Total Received : RM 115,531.00
Projected Interest Rate : 5.34 % p.a, isn't this more attractive than the conventional saving plan,
'when we recycle, we get more'
In these days we find that we need to have more cash in hand, but we are also spending the cash in hand because we find that there're things that we must spend money for, hence, with this attractive and lucrative plan, we can have a way to recycle our money, as well as conserving it to realize our financial dream.

* the illustration is based on terms and condition that person participating in this saving plan needs to fulfil. Time Horizon ranging from 15,17,18,21,23,25,27 and 30 years.

Go-Green Saver Saves the Earth

Go Green is the trend that is being widely accepted and promoted by all kinds of people, no matter who you are, where you live, or what you do, because we are all becoming more and more aware of the condition in which the planet we live call earth is getting worse courtesy to the by-product of human evolution and revolution..
Today, we can even start to save our money with programme launched by Great Eastern Life to contribute to the well-being of our beloved planet, earth!
An impressive saving plan namely Great Multicash, is a programe aimed to promote ‘GO-Green’, as well as to promote proper and good saving habit to allow one to realize financial goal.
As an simple yet realistic example,
Mr N, age 25, decides to contribute to the environment today by signing up this saving plan, would save RM 2400 per year into this account, in order to prepare retirement fund for 30 years later.
In participating in this plan, Mr. N would have to put RM2400 into this account for 23 years, and when the 30th year arrive, Mr. N would harness his retirement fund figured around RM 126,222.00.

Taking a closer look at this scenario, it means Mr N has saved into this account RM 55,200.00. In case catastrophe befalls onto Mr. N inside this 30 year time frame, Great Eastern Life would take over the responsibility of saving RM 2400 from Mr N, and Mr N would still get the big sum of money in the 30-th year.

So how does Mr N contribute to the environment?Easy.
The company would put aside a certain percentage of money as corporate social responsibility to contribute and do funding for events that promote ‘Go-Green’, and it is in this way we give our contribution to the environment, because two is always better than one, and by having a pool of fund, we can contribute more than if we were to do that alone.

In a nut shell, this is a saving plan that allows one to realize one’s financial dream, and also offering a sacred chance for one to contribute to the ‘Go-Green’ revolution!

Singaporeans want to Retire Abroad

Nearly two-thirds of Singaporeans polled in a recent survey said they have considered retiring in another country that offers a slower pace of life and lower cost of living.

The survey on ageing polled some 300 people from 21 yr-old to 55 yr-old, with 75% of them were between 21 and 34 yr-old. The survey which was commissioned by non-profit organization, The Tsao Foundation, also found that:


- 58% are prepared for ageing and feel confident.

- 80% say they have started saving for retirement.

- 92% do not expect their children to live with them in their old age.

- 90% want to spend their old age at home, and not in a nursing home.

- 79% feel they will be financially independent and do not see the need to rely on children or
social support.

- 50% feel comfortable with the physical and social support in the country.



Seeing the results that concluded 80% of the subjects have already begun saving for retirement (exclusive EPF) and 75% of the subjects came from group with age 21-34 yr old, it is clear that people in Singapore realized the importance of saving money for retirement. Is this the similar scene in our country, Malaysia?