The
Chicago Tribune recently made available a chart showing the unfunded pension
liabilities of all
the states. That number alone is almost one trillion dollars.
States
like California, Illinois, Ohio, Pennsylvania and New Jersey have $50 billion
or more shortfalls
with California topping out at over $131 billion.
This
kind of information has been floating around for several years. It seems like back in 2008 that the pundits
were saying that if the market comes back there would not be a problem. (Wait, I thought the markets were in record territory.)
Why
will this only get worse and NEVER get better? Because states can’t print
money. They can only raise taxes or lower benefits or do a combination of both.
Even if you get your entire pension, if they raise taxes and maybe even specifically
raise taxes on the pension itself, you receive less benefit. Yes, you read that correctly, a writer for
the Chicago Tribune has proposed the solution to Illinois' $94.6 billion shortfall
is to tax the pension itself. (See May 14th issue. I would give you a link but the Tribune is in
desperate need of subscriber money and makes it hard to view the article.)
So you
tell me; should employees who work for government entities completely depend on
their promised pensions? Probably not! The follow up question every government
employee should be asking is; “Should I build some additional retirement income
on my own to replace income that probably will not be paid as promised?”
I can
only help people if they want help and ask for it ahead of time. If you wait
until the promise is broken it will have a devastating effect on your quality
of life.
