Opinion What's going to happen when the local and state pensions in America go bust?

[boingyman]

3% is a bit much for a pension IMO, many Cali Police Officers get that as their pension

even the military only gets 2% now, down from the old 2.5%

I agree. I use to work for the CA state as a safety position and I got 2.5%. If I stayed at that job till this day I would be at 15 years (37.5%) and counting. On the otherhand you don't pay into social security and there is no match to their 403b/457 plans. If you have a high paying career like a psychiatrist at a state hospital that's a good gig, especially since you can max both plans without significantly denting your salary. Military can also be a great gig, especially as an officer.

I am a federal employee and we get 1% (1.1% if retire above 62), but get 5% TSP match and pay into social security. So pension is fair, yet we have multiple layers of retirement income. The question is do I stick it through in the next 25 years.

 

[HunterSdVa29]

I agree. I use to work for the CA state as a safety position and I got 2.5%. If I stayed at that job till this day I would be at 15 years (37.5%) and counting. On the otherhand you don't pay into social security and there is no match to their 403b/457 plans. If you have a high paying career like a psychiatrist at a state hospital that's a good gig, especially since you can max both plans without significantly denting your salary. Military can also be a great gig, especially as an officer.

I am a federal employee and we get 1% (1.1% if retire above 62), but get 5% TSP match and pay into social security. So pension is fair, yet we have multiple layers of retirement income. The question is do I stick it through in the next 25 years.

no match for the 403b does change things but i'm in the same boat as you
1% for pension, match 5% into my 401k (i chose to keep 401k in lieu of TSP when switched over from NAF)

 

[86'd]

Yes, that’s what’s happening in nearly every blue state. Unions are Covaid 20 and Bubonic Plague birth child.

I mean, why shouldn’t gumbint workers be fucking entitled to guarenteed pay for life while everyone else lives paycheck to paycheck with little to save for retirement.

private sector offers an average of 2% 401k match yet Teachers, firefighters, cops, admins get up to 100% of their highest pay. Seems about right

I'm in the private sector and I still belong to a union and have a pension.

 

[nostradumbass]

dude
whether or not his net worth is liquid obviously makes no difference as he can afford whatever the fuck he wants - and means of payment are irrelevant

are you honestly shilling for richest guy on the planet?

Um, no, I'm not. I don't know why you Bernie bros think everyone is "shilling" and wrecking your fantasy by telling you how money works.

Net worth is not your bank balance, it includes assets, which are not taxable income. Bezos pays taxes for his taxable income, and Amazon's dividends are paid in shares, not cash. If Jeff Bezos cashed out shares to buy stuff, he would then pay taxes on that amount.

 

[superpunch]

nm

 

[Strategery]

All pensions should be eliminated. Convert from defined benefit to defined contribution. That's exactly what the Canadian private sector has done.

 

[wufabufa]

Coronavirus could still wipe out a high percentage of people currently receiving pension.

 

[Last Samurai]

Just watch Illinois. It’ll hit us first

Illinois Seeks a Bailout From Congress for Pensions and Cities

Illinois needs more than $40 billion in relief from the federal government because of the coronavirus pandemic — including $10 billion to help bail out its beleaguered pension system, according to a letter the Illinois Senate president sent to members of Congress.

The letter, sent this week by State Senator Don Harmon, also seeks a $15 billion grant to “stabilize the state’s budget,” $9.6 billion in direct aid to Illinois’s cities, $6 billion for the state’s unemployment insurance fund, and hardship money for hospitals and nursing homes, among other things.

The letter said the outbreak had caused economic havoc in the state, which has been under a stay-home order since March 21. Economic activity has frozen up across the country, causing tax collections to evaporate while spending has soared.

https://www.nytimes.com/2020/04/17/business/dealbook/illinois-pension-coronavirus.html

 

[ElKarlo]

With this whole event and how long it takes, will we monetize debt? That's basically the natural step after Quantitative Easing. Can we do it just this once and pretend it never happened afterwards and punish anyone who games the system?

 

[Fugazy]

What makes you think Coronavirus won’t solve the pension crisis? (Bad humor.)
The problem you highlight (pension insolvency) is certainly true and isn’t an isolated issue. Many aspects of our economy-hell, Capitalism period-are built on perpetual growth. You state 7.5% being unrealistic: even 3% is unrealistic. The longer the time period the less the realistic rate of return. Compound interest, in a way, is a fiction.

I try to illustrate this to friends I help understand investing with an example; imagine you had a friendly ancestor 1,000 years ago. He decided to invest $1 for you; just a one-time $1 investment. You get a modest 3% return; congratulations, you now have more money than everyone else on Earth.

This is why our economy has become so financialized; we had to develop new ways to “make” money, so complex derivative markets were developed. We had reached the limits of real growth, or near enough for our needs. The problem is that derivatives are nonsense.

TS, I realize none of that answers your question. To answer: we will probably have to have a sort of global “debt jubilee” where all debt everywhere is simply mutually agreed to be erased. This might just take the form of global hyper-inflation. This will save it and prop up the system for a while longer. Hopefully your pension is indexed to increase with inflation!

I've argued at length with people that perpetual growth of the economy and population are both unrealistic and unnecessary and I always come away shaking my head.

 

[ObamaPhoneLady]

Obviously people paid in and should get something, but if you were an adult during the 60s, 70s, 80s, 90s and weren't able to buy several houses and become essentially landed gentry you're probably a bit of an idiot. It's insane how easy that generation had it.

 

[JuniorSonGoku]

More homeless people

Now, back to your scheduled tax cuts for billionaires . . .

 

[Deleted member 159002]

Illinois Seeks a Bailout From Congress for Pensions and Cities



https://www.nytimes.com/2020/04/17/business/dealbook/illinois-pension-coronavirus.html

I noticed that @HockeyBjj liked this post. He called me a name for opposing the government bailing out people with student debt, because he thinks his wife is entitled to a bailout since she chose to be a school counselor (where she'll make 'way less' money) instead of a private practice counselor. I asked if she gets a pension and hockeybjj refused to answer the question. Because if school counselors only work 3/4 of the year (they do) and get pensions, then the difference in their compensation vis a vis private practice counselors in negligible.

 

[Hadron90]

The same thing that always happens.

 

[HockeyBjj]

I noticed that @HockeyBjj liked this post. He called me a name for opposing the government bailing out people with student debt, because he thinks his wife is entitled to a bailout since she chose to be a school counselor (where she'll make 'way less' money) instead of a private practice counselor. I asked if she gets a pension and hockeybjj refused to answer the question. Because if school counselors only work 3/4 of the year (they do) and get pensions, then the difference in their compensation vis a vis private practice counselors in negligible.

My like for this post was because the person quoted me when I said a while ago in this thread “watch for the pension crisis to hit Illinois first” and then here it is hitting Illinois first. So more of a recognition.

And lol at thinking they only work 3/4 of the year. She literally meets with the more at risk students over the summer and has

Kinda balances out to like having 4-5 weeks of vacation, but you can only use 1 week over Christmas and the rest in the summer months. Can’t take time off not for sickness or death of a family member during the school year.

And no pension. It’s like a 403b thing. Hard to keep tack tho as this is our 3rd different state and each does it differently.

And the public student loan forgiveness is after 10 years of on time payments. Only the balance of the loan remaining after that, and the amount forgiven is taxed like income. Not like it’s a magic Bernie poof gone thing.

But hey, be butthurt about it enough for me to be in your mind.

 

[Deleted member 159002]

My like for this post was because the person quoted me when I said a while ago in this thread “watch for the pension crisis to hit Illinois first” and then here it is hitting Illinois first. So more of a recognition.

And lol at thinking they only work 3/4 of the year. She literally meets with the more at risk students over the summer and has

Kinda balances out to like having 4-5 weeks of vacation, but you can only use 1 week over Christmas and the rest in the summer months. Can’t take time off not for sickness or death of a family member during the school year.

And no pension. It’s like a 403b thing. Hard to keep tack tho as this is our 3rd different state and each does it differently.

And the public student loan forgiveness is after 10 years of on time payments. Only the balance of the loan remaining after that, and the amount forgiven is taxed like income. Not like it’s a magic Bernie poof gone thing.

But hey, be butthurt about it enough for me to be in your mind.

Just because she has some duties over the summer doesn't mean she doesn't for all intents and purposes have the summer off. How many hours per week of the summer does she spend meeting with these at risk students? 40?

And I'm surprised she only has a 403b. That's not a limitation on the work she chose itself though, just the particular vacancy she filled (assuming you're telling the truth). According to this, school counselors qualify for the Illinois teachers pension:

https://www.trsil.org/sites/default/files/documents/2Membership_0.pdf

Which would be pretty sweet, considering:

That is still the case. The average TRS benefit in fiscal year 2019 was $54,268. The average Social Security benefit in 2019 is $17,532.

https://www.trsil.org/news-and-events/pension-issues/illinois-teachers-and-social-security

 

[HockeyBjj]

Just because she has some duties over the summer doesn't mean she doesn't for all intents and purposes have the summer off. How many hours per week of the summer does she spend meeting with these at risk students? 40?

And I'm surprised she only has a 403b. That's not a limitation on the work she chose itself though, just the particular vacancy she filled (assuming you're telling the truth). According to this, school counselors qualify for the Illinois teachers pension:

https://www.trsil.org/sites/default/files/documents/2Membership_0.pdf

Which would be pretty sweet, considering:


https://www.trsil.org/news-and-events/pension-issues/illinois-teachers-and-social-security

We live on border. we live in IL and I work in IL but her school is across the state line

 

[JohnnySagebrush]

I've argued at length with people that perpetual growth of the economy and population are both unrealistic and unnecessary and I always come away shaking my head.

I don’t understand how there is an argument. You don’t need any historical knowledge or to pay any heed to current events, you only need some mathematical understanding. That’s it.

 

[HomeCheese]

Lots of state pensions guarantee absurd rates of return like 7.5% forever. Lots of these pensions are only 60% or 70% funded, leaving many unfunded with no real plan to make up the difference.

IMO as the boomers continue to retire, eventually these plans are going to go bust. What will happen? Will they shift their unfunded liabilities onto state taxpayers? Will the federal government bail them out? Will the retirees just not get their promised money?

Everybody would like a defined benefit plan but it's total bullshit that mostly it's only government workers that these lifetime type benefits. The tax payers are footing the bill for benefits rarely available in the private sector. Healthcare for life is killing tax payers as well. One of the ways to mitigate this is to have universal health coverage. The money in current healthcare trust funds could be use to supplement the unfunded liability for pensions. Moving forward no more pensions or lifetime benefits for public sector.

 

[Deleted member 159002]

We live on border. we live in IL and I work in IL but her school is across the state line

Oh, so your wife doesn't work for an Illinois school? Then why did you post the salary data of psychologists in Illinois to argue that your wife is being compensated way less than if she worked in private practice? (That of course is on top of the fact that you cited salary data to juxtapose private practice psychologist salaries with school counselor salaries, even though psychologists and counselors are not the same thing, the former making more money).

I’m not sure if that mental health counselor link you found there included interns or what, but this says 92k average for a psychologist with a masters degree. That aligns with our friends in the private field who make in the 80ks. (We’re late 20s, so lesser on the experience than an average one)

https://www.salary.com/research/salary/benchmark/psychologist-salary/il

school counselor with masters in 50s sounds right