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Classic Videos: Retirement Armageddon

by John Rubino on June 19, 2010 · 17 comments

Here’s a wake-up call from Gary North of the Ludwig von Mises Institute on why our idea of retirement will turn out to be a cruel joke. A few quotes:

Social Security will go bankrupt…The average American is going to have a miserable retirement. There’s not much a recent retiree can do. They’ve walked into the trap and it has sprung on them. The greatest losers will be widows, who are almost completely unprepared for what will take place. For most children there will be no inheritance, and parents may become an economic liability on them years before they’re prepared.

First, North runs the numbers on America’s main social programs and shows that they’re doomed. Then he explains what this means for typical citizens — which of course is horrendous. Then he offers suggestion for avoiding this fate.

A lot of people on the sound money side of the spectrum already know much of this, at least in general. But for those who think everything is basically okay and expect a comfortable government-funded retirement, the next 90 minutes could be a life saver.

The linked image below will take you to the page with the video:

  • Robert Missen

    Dear Garry,
    Aged 66 i am still working Live in Australia
    I feel i have still got a lot to offer and have forgotten more than some of our staff know
    I am the Quality Assurance Manager at the Manufacturing Group where i work on turning 65 i consulted my Doctor who advised me to continue on as staying led patienteshe consults become bored, obese , blood pressure high and they are worse in health (prior to retirement in good health) but the point is i want to enjoy a life style and put money into investments for the future Your talk was spot on we sit back here in Australia and see all the monet been printed and worry sick about your future as a country but also as humans and the dignity you all deserve in your later lives ” God bless America”

  • Bill Arrington

    Thank you Gary for the wise words,

    I started in the workforce in the 70’s and by the early eighties had lost faith that my comfortable retirement was secure unless I insured it myself. You may want to include another simple retirement program in your lecture:

    I worked 30 years, most of the time 2 jobs, and saved and invested approximately 20% of my income. I retired at 47 years old and I have more liquid and hard assetts than I did when I retired. I would have to spend twice of what my income was when I retired, each year, to use up my money by the time your tables said I would most likely pass away. Simple program of pretending you make less than you actually do and living on 80% of your income. This also allowed me to put both my kids through 4 years of college and my son through his master’s at a top 10 business school, as well as own my farm outright and have no loans on our vehicles, farm eqipment or any other item.

    This all came to pass because, like you, I did not want to depend on SS or any other retirement program. It will be another 10 years until I can draw my SS and retirement, but until then I hope to live comfortably off less than My investments increase.

    Why would a person want to work in the workforce for 60 years when they can work in it for 30 years, and then live the next 30 years doing what they like doing?

    I enjoyed your video and reveiwing my plan,


  • Robert Happek

    It all comes down to the following question: How many years can the average worker realistically spend in retirement without busting the economic system? I think that long term, we will have to get used to the idea that the number of years we spend in retirement is closer to zero than to twenty years. That was the case when Social Security was introduced under FDR. The coming years will be years of steady adjustment.

  • Brad Thrasher

    WARNING: This post is extremely long as I’m responding to a 90 minute video.

    I have many problems with Mr. North’s argument. I don’t dispute his numbers. Those come from the much respected CBO. My beef is with his analysis.

    First and foremost, any analysis of SS and Medicare alone is shortsighted and incomplete as to the entire Federal Government budget.

    The USA has been successful in rebuilding Japan and Europe following WW ll. We have again been very successful in developing Asia, India and virtually every other country that sought to emulate, at least in some part, our model.

    Yet we have maintained, without much contribution or shared burden, the entire cost of safe passage of goods and services among the world’s trading partners. Those costs, essentially our defense budget, is running about $800 billion per year, not including the wars in Iraq and Afghanistan.

    For all that America has provided to the world, notwithstanding relatively free and unfettered access to our markets absent reciprocity; it’s past time the beneficiaries of our generosity began to pay some share of our common interest cost.

    Which brings me back to Mr. North. He is quite wrong in suggesting that the U.S. government has just “3 ways of generating revenue.” North identifies those as taxes, borrowing from the private sector and borrowing from the Fed.

    I do remind the believers of the Austrian School of which Mises is a part, that all through your beloved 19th century, the Federal government received most of its revenue from tariffs.

    Due to our trade agreements, we are limited by how we impose tariffs. However by another name, a value added tax or VAT, we can achieve much the same thing. Additionally, the VAT is imposed on our exports by China, Japan and Europe as a means of protecting their own.

    Again, we remain generous to a fault.

    As to Mr. North’s special knowledge absent any fact to backup his notion that the “interest earned” is a mere accounting gimmick, we have no choice but to rely upon Uncle Sam’s promise to pay. Perhaps Social Security and Medicare beneficiaries sue in a class action.

    Given the current standard of public policy immunity our governments and our courts have granted onto itself; such a complaint would most probably fail. Unless of course some brilliant lawyer were to convince the courts and the government that those exemptions are unconstitutional.

    Personally, I believe most public policy and private immunity exemptions are unconstitutional under the theory “equal before the law” but that argument has been tried and failed on numerous occasions. It will take a better mind than mine to solve this legal issue.

    And yes, if you’re wondering that perhaps an avowed Keynesian liberal as myself can also be strict contructionist consitutionally, I plead guilty.

    However, accounting gimmick or not, Mr. North and all the others who have made a similar claim, doesn’t dispute that the interest earned money is in fact owed. To take it out because it hasn’t been set aside is for Mr. North to engage in Enron accounting.

    Regarding Medicare Mr. North gave his address one month before HCR was enacted. Part of HCR addressed the Medicare deficits. To the Medicare issue Mr. North’s points are dated and irrelevant.

    North’s unsupported allegation that “SS and Medicare combined will produce a deficit of $85 trillion over the life of the programs” is false on its face. First his speech and information predates HCR and second “life of the program” is infinity.

    In Part 2, Pensions, Mr. North paints a stark picture. He accurately points out that for most SS represents 40% of our retirement needs. As most Austrian School adherents, Mr. North then ignores the 60% that has lost half it’s value during this Greater Recession and castigates government for mishandling SS.

    The fact is, going forward, some part of Social Security and government pensions are most likely to be there while private pensions are discharged in total via bankruptcy and or socialized in total via the pension insurance fund.

    In Part 3, Can You Afford to Retire, the facts are that the majority of Boomers didn’t save enough for retirement due to the simple fact that wages have not kept pace with inflation. For those who did save enough initially, they had no idea that their pensions would either be discharged in bankruptcy or reduced in value by The Greater Depression.

    But again, Mr. North’s bias toward government permits to see only part of the picture.

    Additionally, North completely ignores the relevant fact that since the crash we have become a nation of savers to the tune of 8% and that is up from a negative savings rate.

    I will not address Part 4, “Do You Have Enough” because I am not a licensed Broker of any kind, CPA, CFP or Actuary and thus not qualified to speak to those issues. I have confined myself to the public policy issues presented by Mr. North.

    I do agree that we have a pension crisis. However, my acknowledgment of the crisis is in significant part for reasons Mr. North failed to address and the failed analysis as critiqued in this post.

    There is no disagreement among Keynesians and those of the Austrian School that the U.S. needs to restructure. The economic devastation is evident to the extent even the IQ Challenged recognize we live in tough economic times.

    However I repeat the solution is NOT to toss the baby out with the bathwater as many either predict or advocate for our social safety net.

  • Pablo-Escobar

    You are at least wrong on one point Thrasher. The VAT is imposed on internal goods just the same as on imported goods. The VAT is also imposed on work and services done. Here in Holland taxes are heaped upon taxes, and then the taxes are also taxed.

  • Hugh Thomas

    Was there an audience, or is this sort of fake? I never heard a cough or a sneeze in the whole thing. What’s with the suit?

  • Brad Thrasher

    Perhaps you unaware Pablo-Escobar, Americans have a reputation and impressive track record for ingenuity and creativity. We don’t necessarily follow models. We tend to tweak when we borrow from others.

    And if you or others doubt we’ve lost our mojo, look no further than HCR, which provides for a much better balance between private and public opportunity and responsibility than does the European model.

    Now, if we could just figure out some way of recapturing the Euro’s share of our massive public research and development costs in medicine and pharmaceuticals.

    Perhaps, we negotiate some modest royalty paid to our Treasury from the benefits of publicly funded R&D.

    All the best,

  • jean techet

    1933: soc. sec ret. age set by committee (not serious research).
    now ppl survive longer. Some nations already increase taxes,
    raise retirement age, raise the minimum N. of years of work. . .
    See “its the (total amount, too hi) debt, stupid” etc.

  • tyler

    Thanks for posting this video I was aware to an extent of social securities troubles but this added to my knowledge. I think they should make a wage limit for people to collect. Some people will rely on soc. security as their only income others will have five different incomes and not really need soc. security. However everyone has paid into it so the rich should be given the exact same amount they put into it and not get paid more than that.

  • Bruce C.


    I know this isn’t a very grown-up thing to say but that guy’s delivery is brutally boring, and I don’t even watch much television or play video games. I can only take about 20 minutes before starting to lose it. His tempo is just toooooo slow for my nervous system. I’ll persevere, however, since I suspect some new and useful information will be forthcoming in due time.

  • Arctic guy

    Boring is right. The 90 minutes could have been compressed to 20 minutes of slow talk, 10 minutes if briskly done.

    “Social Security and Medicare are broke, here are the numbers, so plan on working longer.”

    I thought I was going to need Medicare before he finished.

  • Brad Thrasher

    @ Arctic Guy, Bruce C. & Henry Thomas,

    Are you fellas review critics or policy wonks? Seems we have some budding Roger Ebert types on the board 😉

  • Tom

    Yeah, he is boring. Who is this Adolph Hitler guy? He is really exciting, and he
    sounds like he knows what he is talking about. Lets go with him in a time of
    financial collapse. I know, I know, he doesn’t like Jews, etc., but I’m sure he
    doesn’t mean it. What this country needs is a train that runs on time.
    Lets all give up all our power to the new Presidential King! Clinton/Bush/Obama,
    either way, it all amounts to an incipient fascism coming down the block since
    Clinton went to war in Bosnia, Bush in Iraq, Obama in Pakistan, and now leaning
    on BP for 20 billion instead of going to Congress to seize 100 billion. But why would he?
    BP gave Obama 1 million in his election campaign (sure, he gave McCain 2 million, same thing),
    and paid for Rahm Emanuel’s rent-free apartment on Capitol Hill for five years.
    Ignorant sheep, say rah! Rah! Go republicrats, Go demoblicans. Pure American idiots,
    deserving of what is coming to them.

  • Tom

    The “much respected CBO”. HAHAHAHAHA!
    The SEC’s chairman’s kids went to school with Madoff’s kids, fools.

  • Arctic guy

    RE: “Roger Ebert types.”
    The problem is, from my P.O.V. is that North is trying to “drag it out” to 90 minutes in order to be able to market the DVD. I could be wrong, maybe this is not the case. The set he is using is just a set in my view, there are no people, that is, no audience, no movement of chairs, coughing, russling sounds, etc. With this in mind, notice he looks from side to side, as if to be looking over an “audience” that does not seem to exist.

    This in itself is fascinating. Since North is obviously Social Security age, I wonder if this type of thing is his alternative to government assistance. I suppose this falls under his “digital” business model. I’ve been seeing North out there for about 25 years or maybe longer, can’t remember. Years ago, there was Harry Browne, Gary North, the Adrian Sisters, and a few others I can’t remember that were “sound money” people. When gold and silver went into a twenty year funk, they all seemed to quitely vanish. Best of Luck Gary.

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  • skidly

    Scary Gary,

    I don’t read or listen to his stuff after his hysterical fear mongering y2k fiasco.

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