Sustainable Retirement Finance

When assessing the financial sustainability of any government administered plan to provide retirement security to their citizens, it is important to consider two factors, (1) the nation’s overall population demographics, and (2) the economic model of the plan. In-turn, when evaluating the economic model of the plan, it is important to consider the plan’s sustainability apart from reliance on returns from passive investments. It is important to assess how well a government-funded retirement benefit plan can be supported via a pay-as-you go system, where each year, tax assessments on current workers are used to pay retirement benefits for retired workers.

In the United States, there are two government operated financial systems that administer our collectively funded, i.e., taxpayer funded programs to pay retirees a certain amount each year that they may live comfortably. One may assume a great range of thresholds to define “comfortably” but in any event these two systems are very distinct, in ways that are fairly easily explained. They are social security, for which about 80% of the U.S. workforce participates, and public employee pensions, for which about 20% of the U.S. workforce participates.

Social security is based on the assumption that participants work, on average, from the age 25 to 65, then are retired from age 66 to 85, i.e., there are two participants in the work force for every one recipient who is retired. Social security, on average, also may assume that payments to retirees average one-third what earnings are by workers. On this basis, on-sixth of a worker’s wages, or about 16%, are required to be additionally assessed in order to fund payments to retirees on a pay-as-you-go basis. Social security clearly can remain sustainable, as long as it maintains the current two-to-one ratio of workers to retirees, and also pays on average one-third in retirement benefits compared to what current workers earn.

This relatively sanguine outlook for the future of social security is supported by that other key factor, demographics, particularly in the United States. For people born between the years of 1956 through the present, there about 20 million citizens for every five year age-group, from zero to 5, through 50 to 55. This means these projections will not be undermined by an aging population. The United States has a serendipitously even stream of people insofar as every age group is equally represented numerically, from today’s babies through baby-boomers born in the 1950s (ref. Funding Social Security vs. Public Pensions).  America’s social security system as it is currently formulated is financially sustainable, and unless it dramatically changes its benefit formulas, will be for at least the next 50 years based on existing age demographics; probably much longer. The formula of 16% withholding for one-third average earnings in Social Security payments is eminently sustainable, without reliance on investment earnings.

When one considers the average years retired vs. worked, and the average annual pension as a percent of average annual per worker earnings, and compares public sector pension benefit formulas with social security benefit formulas, a completely different picture emerges. Public sector pension benefits, when evaluated on a pay-as-you-go basis – wherein current workers support retirees via current assessments – require far more withholding from total compensation. Here’s why:

The average public sector workers enjoys a one-to-one ratio of working years to retired years, unlike the social security system, which only provides a benefit based on a two-to-one ratio of working years to retired years. Public sector workers on average work from age 25 to 55, then are retired from age 55 to 85 years, one-to-one. Private sector social security recipients work from age 25 to 65, then are retired from 65 to 85, a two-to-one ratio. But the disparity doesn’t end there.

The average public sector worker – averaged based not on formulas for safety vs. non-safety workers, but at a blended rate incorporating the collective reality of all government workers – enjoys a retirement pension that is not, on average, one-third of what the average worker earns, but is instead two-thirds of what the average worker earns, twice as much. So if public sector worker retirement systems were funded via pay-as-you-go assessments, with each worker being responsible for supporting one retiree, they would have to have the system allocate an amount equivalent to 66% of their salary, an additional two-thirds on top of what they make, to be paid out to a public sector pensioner.

The financial sustainability of public sector pensions depends on 66% of each worker’s earnings being simultaneously paid out to a public sector retiree, the financial sustainability of social security depends on 16% of each worker’s earnings being simultaneously paid out to a social security recipient, less than one-fourth as much. No wonder public sector pension funds have become a collection agency for Wall Street, as their aggregated 401K plans tumble and toss upon the speculative waves of global finance, and are chary to simply ask for twice as much or more to be collected, from the taxpayers, now and forever to sustain public employee retirement pension payouts. As it is, about $250 billion per year of new money pours into Wall Street via public sector pension fund collections from state and local government payrolls (ref. The Axis of Wall Street & Unions).

It is ironic at best how spokespersons for public sector employee unions (also known as “associations.”) and even spokespersons for public sector employee pension funds are fond of accusing taxpayer groups and others concerned about unsustainable public sector pensions of “throwing us to the same fate as those private sector workers and their underwater 401K retirement funds.” Don’t they realize these taxpayer-funded public sector pension funds are themselves still merely gigantic 401K plans? Don’t they see the irony of holding private sector taxpayers accountable not only for our own losses at the hands of those Wall Street sharks, but also holding private sector taxpayers accountable for public employee pension fund losses at the hands of those same Wall Street sharks? Are government workers and their associations, however well-intentioned, complicit in or at least condoning this sustainability disparity because they like to retire collecting twice as much money for ten extra years?

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41 comments to Sustainable Retirement Finance

  • oz

    Ed-

    I agree that Social Security will be able to pay some benefit for many years to come, but you stretched your numbers quite a bit.

    So you support a ~30% increase in payroll tax (from current ~12% to 16%) and a ~20% cut in SS benefits (from ~40% to 33%)?

    I understand your point about many public pensions needing reform, but if you increased pension contributions 30% and cut benefits 20% like you did with your SS numbers, many public pensions would go to well
    beyond 100% funded.

    Let’s reform both, not just keep arguing about the differences.

  • Ed

    Oz – going from 12.4% to 16.0% withholding in order to guarantee social security is not a catastrophic price to pay – I’d be interested in your source for 40% vs. 30% as the average social security payout. The median may be 40%, but because of the progressive nature of social security benefit calculations, higher wage earners get percentages well under 20%, often much less. You could avoid going all the way to a 16% withholding by raising the ceiling on social security withholding – but in any case I think the average – as opposed to the median – percentage of average income paid back to a social security retiree is closer to 30% than 40%.

    In any event the ability to pay-as-you-go, rather than rely on Wall Street investments, for social security is one-fourth as much as it is for public sector employees, based on fairly conservative assumptions: a two-to-one ratio of workers to retirees for social security participants vs. a one-to-one ratio of workers to retirees for public employee pension plan participants, and a one-third of current salary average contribution for social security participants vs. a two-thirds of current salary average contribution for public employee pension plan participants. This translates into a 16% contribution for social security and a 66% contribution for public employee pension plans. The point is only this: To suggest we need to radically remake social security before we address public sector employee pensions is to conflate a minor challenge of incremental adjustments (to keep social security solvent) with a completely unsustainable situation where – because long-term returns on investment funds can no longer be projected at 4.75% per year (after inflation), and therefore the solvency of public employee pensions depends more on pay-as-you-go collections from taxpayers and less on harvesting the bounty of generous returns on pension fund investments. Discussions of retirement security in the United States need to center on the sustainability of public employee pensions, which – notwithstanding the speculative gains possible through public employee pension fund payments to Wall Street brokers – cost taxpayers four times as much per worker to fund compared to private sector workers, quite simply because compared to social security recipients, public sector workers, on average, retire 10 years earlier and collect twice as much in retirement benefits.

  • oz

    Ed-

    Currently 39%, not 30%.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/09/04/AR2010090400096.html?hpid=topnews

    If you cut public pensions that much, you could fit into a more conservative actuarial assumption. And unlike SS, which will likely have to phase things in gradually, public pensions can adapt more readily. (The question is can they be persuaded to do so…)

  • Tough Love

    This situation is so beyond “sustainable” an is so unfair to Private Sector taxpayers …..

    There should be a guiding principal for ALL Civil Servant Pension and benefit Plans …… If the Private Sector Taxpayers don’t TYPICALLY get this (benefit/provision) than neither should Civil Servants.

    Here’s a FEW of the MANY areas of taxpayer ripoff:

    (1) Post retirement COLAS;
    Civil Servants- ROUTINE
    Private Sector – NEVER
    (2) Unreduced pensions when collecting before age 62:
    Civil Servants- ROUTINE … sometimes even in the low 40s !
    Private Sector – NEVER
    (3) Free or near free retiree healthcare:
    Civil Servants- very common
    Private Sector – NEVER

    OTHER CIVIL SERVANT (Unfair/Unjust) PLAN ADVANTAGES:

    (4) Higher formula per year of service
    (5) basing pensionable compensation on the final 1 year instead of 3 or 5 years of service
    (6) arbitrary end-of-career promotions or excessive raises to “spike” the pensionable compensation
    (7) allowing the soon-to-be retired to load up on overtime includable in pensionable compensation
    (8) including payouts of unused vacation, unused sick days, uniform, parking, and other miscellaneous “allowances” in pensionable compensation, etc.

    It’s no wonder these Plans are near bankrupt ….. ALL of these differences are VERY expensive. That’s WHY Private Sector employers do NOT offer them … as it’s THEIR money (not taxpayers’ money).

    We REALLY REALLY REALLY need to put an END to ALL these excesses …. and for CURRENT, not just new Civil Servants.

  • For STATE non-safety employees

    (1) Post retirement colas, the actual increase in the consumer price index or 2%, which ever is less.
    (2) Unreduced pensions when retireing before 62. Never.
    (3) Free or near free retiree healthcare. True for State, however, not for some counties which only pay three years after retirement. Medical after that.
    (4) Higher formula per year of service True
    (5) basing pensionable compensation on the final 1 year instead of 3 or 5 years of service True
    (6) arbitrary end-of-career promotions or excessive raises to “spike” the pensionable compensation Untrue
    (7) allowing the soon-to-be retired to load up on overtime includable in pensionable compensation Untrue, OT does not count
    (8) including payouts of unused vacation, unused sick days, uniform, parking, and other miscellaneous “allowances” in pensionable compensation, etc. Not allowed
    “If the Private Sector Taxpayers don’t TYPICALLY get this (benefit/provision) than neither should Civil Servants.”
    So increase the pensions of private.

  • Tough Love

    Responding to Charles Sainte Claire…

    Inclusion of a COLA provision ALONE increases the cost of an otherwise equal pension w/o the COLA provision by from 50-100% depending on the age at retirement, future inflation, and the existence of a cap on the annual COLA increase.

    The 2% cap on your Plan likely make the value of your COLA provision in the lower range …. closer to the 50%.

    So assuming the “typical” full-career (non-safety pension is 65% of pay vs say 35% for a comparably paid Private Sector worker…. do to the much lower private sector formula), when we adjust for Your COLA provision (which virtually no private sector plans include), the comparison (on an apples-to-apples NON-COLA basis) is your pension (150% x 65%)= 97.5% of pay vs the 35% for the Private sector worker.

    So WHY should …. an apples-to-apples basis should YOU (and all other Civil Servants) get such larger pensions … 80-90% of which are funded by Private Sector taxes?

    And THIS increment was just using ONE of the enumerated differences which make Civil Servant pensions larger.

    And PLEASE…. it is totally disingenuous for you to say ..”So increase the pensions of private.”. Private Sector employers aren’t stupid. They know your pensions are completely unaffordable and would bankrupt them in short order.

    Fairness dictates that Private Sector taxpayers fund pensions for Civil Servants no greater than their own.

  • Ed

    Oz – I read the Post article that references a 39% payout for social security, where 39% represents the average benefit expressed as a percentage of the average salary. As I started to note in an earlier comment, I would be surprised if that number is not high, for the following reason:

    If you review the information directly from the Social Security Administration regarding benefits here:
    http://www.vaughns-1-pagers.com/economics/ssa-monthly-payments.htm

    You will see that the 30% figure applies to a normal benefit payout for someone with a recent salary history of $55K per year. You will also see that the 39% figure you reference is for someone with a recent salary history of about $30K per year. Now if you review the following data from the Bureau of Labor Statistics, you will see the average private sector worker in the U.S. earns about $55K per year ($27.64 per hour times 2,000 hours per year):
    http://stats.bls.gov/news.release/ecec.nr0.htm

    So while the source you reference suggests the payout is more than about one-third, the data I’m looking at seems to support the 33% estimate. But what if you’re right? I would argue it still wouldn’t alter the ratio. My primary assertion, that public sector worker pensions are twice as much – when expressed in terms of average salary – as social security is probably still true, even if social security were to average 39% of average private sector pay. Because public sector pensions probably average more than 60% of average public sector pay. It would not be unlikely, at least here in California where we are focusing, that 78% of average pay for a career public employee would be an accurate average for their pension benefits.

    Remember that public sector pension formulas are not progressively reduced as pay goes up, as social security does, and as they should. For example, a social security recipient who makes $125K per year will collect the maximum social security benefit, which is only 17% of their salary. At $105K, a salary rate at which 100% of earnings are subject to social security withholding, the beneficiary will only get a social security payment equivalent to 23% of their recent salary average. But in the public sector, if you got your 80% or 90% pension, it applies no matter how much you make. This should be fixed as part of the solution to public sector pension solvency.

    In general, I am comfortable with the facts supporting these assertions:

    1 – social security benefits 80% of the retired population with benefits that on average are one-fourth what public sector pensioners receive, because they pay out 1/3rd vs. 2/3rd of recent salary, and because they begin payments 10 years later than public pensions.

    2 – the absolute dollars necessary to pay social security to 80% of our retired population are therefore approximately the same amount as the absolute dollars necessary to pay public sector pensions to 20% of our retired population.

    In my opinion, the issue of pension fund investment returns is a sideshow to these basic realities. As these pension fund managers begin to agree that their projected rates of return are too optimistic for the age we live in, discussions such as this – what is a sustainable pension based on pay-as-you-go instead of reliance on investment returns – will become increasingly relevant towards finding a solution that is equitable and financially sustainable for all taxpayers.

  • In the free enterprise system people will choose the career that benefits them the most. Cut benefits in the public sector and you will have to raise wages or hire less valuable employees.

  • going galt

    Charles wrote:
    “In the free enterprise system people will choose the career that benefits them the most. Cut benefits in the public sector and you will have to raise wages or hire less valuable employees.”

    Not today! You could fire every public worker and rehire at half the wage and no benefits. You will have a line outside the door of people willing to take the job. It would do good for a lot of public workers to get out into the real world and learn what it’s like to work.

  • Going galt: Is it your desire to turn CA into a third world country? That’s what you get if you fire every public worker and rehire at half the wages and no benefits. I can tell you that I was a public worker, and I live in the real world just like you, and I know what its like to work. I’d like to watch you at your job. You need to get off that high, stick horse.

  • going galt

    SeeSaw: It no longer maters what I or anyone desires for Ca. Goverment has gotten to big and we can’t afford it anymore. It will have to be cut by half, and very soon. That’s just the truth of the math.

  • SkippingDog

    Anyone who claims to be “going galt” has nothing relevant to add to the discussion.

  • going galt

    SkippingDog: Very good, shows you have read a book or two in your life. Look at the numbers and tell me how we fix this. You can’t keep spending more than you bring in. Goverment has got to be cut. People need to realize that the system is broken and very painful changes are going to be made.

  • Charles Sainte Claire

    Going Galt.
    “Today’s” ecomony will not last forever. If you want well qualified public employees you will have to pay the price.
    Persons who are willing to trade more salary now for benefits in the future. It is simply a matter of supply and demand. Most people will go to work where they see the most advantage to themselves. Simple.

  • going galt
    September 13th, 2010 at 5:03 pm
    Charles wrote:
    “In the free enterprise system people will choose the career that benefits them the most. Cut benefits in the public sector and you will have to raise wages or hire less valuable employees.”

    Not today! You could fire every public worker and rehire at half the wage and no benefits. You will have a line outside the door of people willing to take the job. It would do good for a lot of public workers to get out into the real world and learn what it’s like to work.

    If you fired every civil engineer in California gpvernment service and hired others back at half price with no benefits you certainly would get exactly what you deserve. Give it a try.

  • Public employees guessed right and private employees guessed wrong in view of the last two years. For the forty years before that it went back and forth in a tossup. Do you want more wages now or a more secure future? I made my choice and am happy with it. I am sure in the next decades it will go up and down again.
    Take your pick, but don’t cry about it, life is a gamble.

  • going galt

    Charles you seem like a smart guy. I’m not trying to piss you off but, you need to take a look at the outside world. There are a lot of engineers that can’t find a job right now and would be more than happy to get any job at any wage. (I know two) As far as “Today’s” ecomony will not last forever, Your right! It’s going to get a lot worse and will be many years before we see it getting as good as we have it today. Public Employees that leave or are fired will not have an easy time the jobs are not there. Tax income is falling fast. Wages are going to fall with them and public pensions will be cut. That is the hard truth. Like you said “It is simply a matter of supply and demand”

  • going galt

    For SkippingDog to be relevant to add to the discussion the following. Get out of debt. Don’t count on your pension being there. Learn to live with a lot less. The sooner you accept that the game has changed, the more time you’ll have to prepare. It is different this time.

  • going galt
    In all honesty I can’t disagree with what you had to say. The future looks bleak.
    As far as looking at the outside world? My office phone used to ring a lot with what we called “headhunters” looking for people with California highway engineering experience. I was tempted, but didn’t take it.

  • Ed

    Deficit spending should be for real assets – rail, road, utility corridor, dam, catchment, aquifer, aqueduct, harbor, port, terminal, runway or power plant. These will enable basic infrastructural necessities are installed with dispatch, and yield lower cost-of-living indexes in land, energy and water, attracting industry and enabling productivity growth and genuine free-market prosperity.

  • going galt

    Ed Ring
    I agree that if you are to spend money you don’t have, spend it on stuff you can at least see. What is needed is for goverment to get out of the way. Cut the taxes and 99 out of 100 of the regs. Old man Ford would never have been able to build car one in today mess. To many BS rules and regs that only bloat goverment rolls.

  • Ed

    Charles – your latest comment underscores the upside of merging public and private pension plans – social security and public sector pensions. After all, both are defined benefit retirement plans. Why should private industry suffer, unable to attract skilled workers from the public sector, because they cannot possibly afford themselves to pay for the benefits public sector workers receive? Of course no public sector worker would ever risk a private sector job – nor should they – but we are all lessened for this. Taxpayer-funded government retirement program incentives should apply equally to public and private sector workers, enabling crossover synergies, in addition to basic equity.

  • going galt

    Ed: “Why should private industry suffer, unable to attract skilled workers from the public sector, because they cannot possibly afford themselves to pay for the benefits public sector workers receive? Of course no public sector worker would ever risk a private sector job – nor should they – but we are all lessened for this.” You just said it. The taxpayers of this country can no longer afford the goverment we have. Private sector pays for the public sector. Cuts to goverment can no longer be avoided

  • Ed

    Galt – of course you are correct, but what government spending – especially deficit spending – still remains must be optimized. Here is where your comment “if you are to spend money you don’t have, spend it on stuff you can at least see” is precisely descriptive. Fund cost-effective, open and competitively bid public infrastructure investments that make basic resources cost LESS – land, energy, water and transportation, to name the obvious.

  • going galt

    Ed- Government spending is now just taking us deeper into a hole. It needs to stop. I don’t need three guys with a truck and a cop to direct traffic to fix the pothole in front of my house. I can fix it myself with a bucket of asphalt. The private sector will always be able to do it better and cheaper than the government. We need the government to get out of the way. Cost effective, open and competitive, those are words that long ago left the government.

  • When the private sector is spending government funds they are quite adept at wasting money. I have seen a lot of it. I am not talking about California highway contractors. There is a many decades old process for controlling that kind of spending.

  • Mr. Ring

    ” Why should private industry suffer, unable to attract skilled workers from the public sector, because they cannot possibly afford themselves to pay for the benefits public sector workers receive?”

    They can afford it, the private sector has been ripping their employees off for nearly 5 decades. The upper 1% moneywise in this country have increased their wealth by 231% while wages in the middle class have been stagnent since the early 70s.
    Private sector employees need to organize and get back what they once had. The private sector won’t go out of business. Perhaps less travel in the Lear jet and no trillion dollar bailouts while they collect their contracted bonuses out of Federal funds.
    By the way, public employee pensions are also contracts as part and parcel of the whole wage plus benefits package, which is what you look at when you accept employment.
    If you were playing poker none of the other players would allow you to change the rules in the middle of the game.
    I have been playing by the stipulated rules since 1969 and finally am receiving what was contracted.
    Contracts are protected by the first article of the US Constitution. I can’t quit making my house payment because I overcharged by credit cards, so why should California government? Gut the US Constitution Contracts clause and you throw the legal and financial system into total anarchy.

  • going galt

    Charles said “Gut the US Constitution Contracts clause and you throw the legal and financial system into total anarchy.” And this is why we are so screwed. Debt at all levels is off the charts, it will never be paid back. We’re playing a new game now. Charles I do feel sorry for you, and everyone that is going to get thrown under the bus in the coming months.

  • oz

    Ed-

    The post article is correct and even states that the rate will have to
    slide from 39% to 31% over the next TWENTY years. If I understand how you viewed your stats, you looked at the BLS statistics related to total compensation, not wages.
    The average worker makes 55K in total compensation, not wages.

    Anyhow, I agree with your basic point, some reform needs to occur,
    and delaying is not helpful. However, another point you are making whether
    you intend to or not, is that a DB plan (if properly run) will always outperform
    SS because it holds real dollars which can be invested. All it has to do is beat
    inflation and it can deliver a better benefit than SS.

    So how much better can this benefit be? If 3x better benefit than SS and 10 years earlier
    is a problem, what about 2x better and 5 years earlier? By definition, It should
    be able to do at least as well as SS even if it went to a straight ponzi apparatus, no?

    DB plans also, do not have the expensive ancillary benefits of SS either including
    unpaid for spousal benefits and survivor benefits. (Yes some DB plans offer spousal benefit, but it is usually prepaid at full cost by the annuitant).

    To the other responders-

    To say that government has a unfair advantage in recruiting is true, but it is not SPECIFICALLY true. ANY employer, whether public or private, that offers any form of investable pension plan has some kind of advantage over one that does not, because
    any plan will be able to offer a benefit that is better than SS.

    As far as private industry suffering, they have the same recruiting tools available to them also, and they work… If you don’t believe me, walk up to any UPS driver and ask him or her what gets them out of bed on a workday. Try it.

    Pensions are a good tool, let’s fix them for everyone.

  • Oz
    I agree, fix pensions for everyone.

    Girard Miller has some good ideas in
    Governing Magazine

    http://www.governing.com/columns/public-money/hybrid-vigor-pension-evolution.html

  • Russell Buckley

    An excellent and informative article. Thanks. I think the imbalance between public and private sector is even worse than you claim. Not only do public sector employees collect twice as much, for 10 extra years – they receive it for doing 10 years less work!

  • Mr. Buckley

    I can’t disagree with you. However, those were the rules for the 40+ years I worked for the State.
    It is a known fact that five years ago State enginers were being paid 35-40% less than other California public engineers and nearly 50% less than private engineers during the good times. This is proven by Department of Administration wage surveys, and they certainly had no vested interest in being on the side of State engineers, in fact quite the opposite.
    Well now the bad times are here. For a while. And that will change as it has for the entire financial history of California since World War II
    Public vs. Private, defined benefit vs. 401k, it is all a guess.
    I wanted my family protected, so I took less in the present for something in the future.
    Kind of like buying life insurance. You are betting you will die and the life insurance company bets you will live. The life insurance company can’t cry foul, and neither can you.
    Rather macabre if you think about it.
    Nevertheless, I will take what I and the State agreed to those many years ago. Some say that the 1999 pensions bill increased pensions by 50%. Not for me, more like 13.5%.
    I keep reading these articles about how the Legislature didn’t understand that if PERS earnings dropped, more tax money would be required. What a joke. I am just an engineer but my understanding of finance is better than that. The State of California enjoyed a pension holiday in the early 2000s and spent lots of money on whatever they wanted. OK now they owe some back.
    Private emterprise employees need to think about what they need in the way of benefits.

  • While we are this subject I would like to comment on Cost of Living increases. Calpers allows 2% per year or the actual increase in the CPI, whichever is less. That means increases are always less than or equal to inflation and retirees lost money or barely stayed even.
    There is no automatic increase, each dollar is worth less and less and costs the taxpayer less and less in REAL dollars.
    Would anyone argue in private enterprise that if inflation went up 5% per year and they received a 5% raise each year that they had been the recipients of preposterous wage increases, or would they not say this is just even, status quo?

  • going galt

    I know that I’m starting to sound like a broken record but the politicians have sold out both the public and private workers. There is no money to pay for all the promises that our elected officials have made. Our standard of living as a country is going to drop. The only thing we can do is to prepare for the changes that are coming. We are all going to have to learn to do with less. If you think that you are going to get the full value out of the pension that was promised you, you are a fool. And denying it will catch you unprepared. Look at how much debt the state has and honestly ask yourself where the money is going to come from. I got news for you it’s not going to come from the private sector or from the rich. They are not going to pay. If it comes from the Feds, then by the time they are done printing… your dollars are not going to be worth crap. We’re screwed, there is no way to fix this. Like a hurricane coming you can only batten down the hatches and prepare to clean up the mess.

  • Tough Love

    Quoting “going galt” … “We’re screwed, there is no way to fix this.”

    But their is and Gov. Christie just today proposed changes that (certainly won’t “solve” it, but) WILL make a BIG dent in NJ’s unfunded pension.

    Just I as I have strongly advocated for, he is proposing reductions in the pension formula and increases in the years of service (from 25 to 30) for an unreduced pension and, these changes are for future years of service for CURRENT (yes CURRENT) employees. He is also proposing that all employees, instead of paying the current 8% of healthcare costs, that they pay 30%, just like those in the Private Sector.

    FINALLY, a leader with the cohonas to confront the greedy Unions !

    If he pulls this off, it will be Christie for President.

  • going galt

    It still comes down to this:
    “If you think that you are going to get the full value out of the pension that was promised you, you are a fool”.

  • Tough Love
    Great idea! “reductions in the pension formula and increases in the years of service (from 25 to 30) for an unreduced pension”

    I worked 40 years for my pension and it was reduced by 22% for retiring four years early! Maybe I will live another 20 years. Not the 30 years working and 30 years retired I keep hearing about. More like 40 working and 20 in retirement.

    It will be about 7 years until my money plus earnings on my cash is exhausted . After that, Calpers won’t run out of money from investments alone until I am 90 or so. Except I highly doubt I will still be here.
    I keep seeing that employees in the public sector should not get more than the private sector in benefits. OK get into your time machine and give me back the 40% cut in wages I lived with for about 35 years. I bet I can buy a retirement with that. Thanks.

  • Tough Love

    Charles Sainte Claire, the Christie article wasn’t 100% clear, but only police can now retire at 55 with 25 years of service with 65% OF FINAL PAY (anD no reduction in the pension). I believe that’s what is going to become 30 years and age 60, but still with 65%.

    You’re an odd case, having worked for 40 years. And don’t take EVERY comment as applying to YOUR situation. With 40 years you’re likely at the bottom of any list for reductions ….. but still possible WHEN (not IF) the “S” hits the fan.

  • going galt

    Sorry Charlie, It’s not going to happen. Within 24 months you’ll find that everything that you have been promised is total bull. I say this as someone who wants to help, prepare now, you are not going to get what has been promised to you. The money is just not there.

  • Going galt

    The only way I can “Within 24 months you’ll find that everything that you have been promised is total bull.” Is if the money is stolen.

  • going galt

    Charles: “The only way I can “Within 24 months you’ll find that everything that you have been promised is total bull.” Is if the money is stolen.”
    Not Stolen, just was never there.