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Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years
invite response
2017 Sep 20, 4:44pm 17,534 views 57 comments
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"their" as in Republicans are in charge.
It's all on them if things don't change or get worse.
FortWayne
2017 Sep 20, 11:58pm
Strategist says
socal2 saysCalifornia has some of the highest combined taxes in the country, but also the highest poverty rate, worst performing schools, and the worst infrastructure.
http://www.politifact.com/california/statements/2017/jul/11/travis-allen/mostly-true-californias-taxes-among-highest-nation/
How does that happen?
Could it be...........wait for it............we have total Democrat political control that pisses too much of our tax dollars away on gold plated government salaries and pensions instead of providing us good schools, services and infrastructure?
Welcome to the Socialist Republic of California. No more need to be said.
zzyzzx
2017 Sep 21, 9:06am
As long as those Republicans that aren't retired realize they may not have a pension in the future,I'm happy.
How many Rep/Con/Nazis are waiting to receive their big govt. pension after working in govt. jobs,all their lives?
If they can't be great free market entrepreneurial successes,they deserve nothing.
SOCIALISTS living on someone else's tax dollar because they are failures.
Heraclitusstudent
2017 Sep 21, 12:19pm
Now you have an unfunded liability in the range of $7–8 trillion.
You don't get it. Just add that to the national debt. $20 trillions or 27... who cares.... It's just a meaningless statistic.
FortWayne
2017 Sep 21, 12:22pm
Zimbabwe taught the world that lesson, painfully.
Heraclitusstudent says
Blurtman saysNow you have an unfunded liability in the range of $7–8 trillion.
You don't get it. Just add that to the national debt. $20 trillions or 27... who cares.... It's just a meaningless statistic.
Democrats are willing to let cities burn to the ground with bankruptcy, crime, shitty schools and failing infrastructure to keep their corruption feedback loop going with the unions and public sector bureaucracy.
It is wrong to assume that only D's do that. R's are no different. Ft Worth in TX is R but they have the same problems: http://dfw.cbslocal.com/video/3707215-fort-worth-facing-pension-crisis/
Pensions are used to buy votes from public unions and both parties do that.
It is wrong to assume that only D's do that. R's are no different. Ft Worth in TX is R but they have the same problems: http://dfw.cbslocal.com/video/3707215-fort-worth-facing-pension-crisis/
Pensions are used to buy votes from public unions and both parties do that.
I believe several of previous Fort Worth mayors and City Councils were Democrats. You can point to a few odd examples, but it is a stretch to believe that Republicans are in the pockets of public sector unions. All the right-to-work states are run by Republicans. Unions declared war against Scott Walker for his union reforms a few years ago. All the states with the worst pension liabilities (Illinois, Connecticut, California, Washington, Oregon) are as blue as the sky.
A city or state can fully fund their pensions if they are willing to tax the shit out of the people and provide very little quality services like new infrastructure, good schools, business friendly climates, affordability.....
- give me, give me, give me, tax the rich, tax the rich, tax the rich, give me, give me, give me... strangle the "greedy" private sector, give government golden pensions. Very much like North Korea, where government is the monopoly and those closer to the center have all the money and power, while private sector is dead turned into a local ant colony of slaves that serve the government.
yep, that liberal stupidity knows no end.
Strategist
2017 Sep 21, 6:38pm
- give me, give me, give me, tax the rich, tax the rich, tax the rich, give me, give me, give me... strangle the "greedy" private sector, give government golden pensions. Very much like North Korea, where government is the monopoly and those closer to the center have all the money and power, while private sector is dead turned into a local ant colony of slaves that serve the government.
yep, that liberal stupidity knows no end.
And yet many liberals are communists. All this evidence showing communism has never ever worked and always results in disasters, and yet we have liberals who think communism is the greatest thing since sliced bread.
I met someone a couple of months ago who visited Cuba, and thought it was a wonderful place with happy people. He also said he does not want to live there. LOL. They have no freedoms.no elected governments, no opportunities, cannot travel, and not even access to the internet. Great place to visit just to see how people lived in the 50's, but that's about it.
All the right-to-work states are run by Republicans.
And they all have the lowest standards of living in the nation and have the greatest dependency on Federal aid have the highest rate of unmarried teen pregnancy.
marcus
2017 Sep 23, 12:58pm
http://www.publicsectorinc.org/2014/10/why-pension-plans-are-left-unfunded/
The biggest joke of the costing and funding process is the so-called annual required contribution (ARC) that the actuarial valuation is supposed to determine. In reality, there is nothing “required†about the ARC – most jurisdictions can contribute absolutely nothing and face no legal repercussions, at least in the short run. And when state and local governments don’t make the ARC, they rarely look at, let alone disclose, the long-term cost of postponing the payment and how much more expensive the benefits become as a result. Just look at Illinois, New Jersey and Pennsylvania, which owe some $300 billion in unfunded liabilities between them, or at the sad condition of once glorious cities like Philadelphia, Chicago and Detroit, teetering towards or already in bankruptcy.
Until after the last financial crisis, some public pension plans assumed annual returns as high as 9 percent, thus significantly reducing the money governments had to contribute. Investment fees and other expenses are commonly swept under the rug when projecting and reporting on performance benchmarks. Pay raises and COLAs are routinely underestimated.
Funding schedules mapped out with these flawed assumptions are further rigged to fail. They often promise graduated payments and push the full-funding deadline decades out, thus eroding overall investment returns and inflating costs.
:
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When all other avenues for postponement are exhausted, states pull a particularly entertaining smoke-and-mirrors trick: they work around the actuaries and legislate their own required contribution.
In Massachusetts, the dollar values of state contributions for years ahead are written directly into the pension law without reference to the ARC. Not surprisingly, those values are well below the actuarial determination or what the law mandates for municipalities and other pension systems in the commonwealth. Illinois has repeatedly declared “pension holidays†for itself and helped bury Chicago deeper into its current fiscal hole by keeping pension-payment requirements for the city way below what they should have been.
I think it's probably true that some republican politicians are more likely to laugh as they postpone funding to pension funds, knowing full well that they can blame the greedy workers for expecting compensation promises to be kept.
Interesting that only when California had had simultaneous governor and legislature controlled by democrats that they started to seriously address pensions fund problems.
Strategist
2017 Nov 1, 8:38pm
Yes, people need to be fed, medicated, clothed, and sheltered. They need to do it themselves. You can't expect the government to change your diapers.
RWSGFY
2017 Nov 2, 10:48am
That applies to the Russians and the Chinese, but not to the North Koreans as they do not have the capacity to destroy us just now. The idea is to never let them have that capability.
What's your solution?
Clamp down on Russia hard. These are the fucks who're enabling little Kim. All this new nukes and missiles he sudenly unveiled are coming from them. Fucking Russians need to be put into the world of economic pain. Pronto.
The government is not your daddy. The government is not your mommy.
But the government should pick and choose winners and losers?
Ceffer
2017 Nov 2, 11:39am
Strategist
2017 Nov 2, 12:32pm
http://nypost.com/2014/01/05/us-is-the-greatest-threat-to-world-peace-poll/
LOL. Means nothing. 100% of Muslims think Islam is a peaceful religion. How right are they?
Strategist
2017 Nov 2, 7:12pm
If Muslims are maniacs who kill people for no reason, why aren't they bombing Chile?
Because all Muslims are not maniacs. But all of Islam is violent and dangerous.
Know your real enemy.
Strategist
2017 Nov 2, 7:31pm
Do Muslims give the campaign donations and cushy job promises to the elected officials? Do Muslims call for Middle Eastern wars and run Wall Street, Hollywood, and the media?
Know your real enemy.
"Do Muslims call for Middle Eastern wars"
Duh! Why would they call for wars against their own countries?
"Wall Street, Hollywood, and the media?"
No, they are too stupid to run businesses. They run mosques and terror organizations.
Why don't you tell me Who calls for Jihad?
Who promotes the terrorism we encounter?
Who demand the implications of horrible sharia laws?
curious2
2017 Nov 2, 7:48pm
anon_acf85 saysDo Muslims give the campaign donations and cushy job promises to the elected officials? Do Muslims call for Middle Eastern wars and run Wall Street, Hollywood, and the media?
Know your real enemy.
"Do Muslims call for Middle Eastern wars"
Duh! Why would they call for wars against their own countries?
First two questions:
"How Saudi Arabia captured Washington"
"Hillary Clinton, The Podesta Group And The Saudi Regime"
See also Nixon's disastrous deals with KSA, switching the USD from the gold standard to the Petrodollar standard.
Last question:
Because Islam is a word that means literally submission, and a plan designed, fabricated, and optimized to conquer and subjugate as many people as possible. Islam hates people. In Muslim countries, the Muslims-in-Charge use Islam to conquer their enemies and to subjugate everyone, e.g. KSA Petrodollars to crush the Shia heresy based in Iran. In non-Muslim countries, Muslims (e.g. Linda Sarsour) fool useful idiots into spreading Islam. Combining the two, you get MSM mass hypnosis misleading useful idiots to mistake KSA for an ally, and to obsess over Iran as 'the' enemy in the Muslim world (when in fact the real enemy in that part of the world is Islam itself).
curious2
2017 Nov 2, 7:53pm
Strange how Muslims weren't bombing the USA in 1930.
Duh, they didn't have Petrodollars back then. They do now. Pakistan has nuclear weapons, and is already using them for traditional Islamic extortion and terrorism, and Erdegun can take the American missiles stationed in Turkey, thus joining in the same game.
anon_acf85 says
The reason they over here is because we are over there.
Ugh. More idiocy, useful only to apologists. Read about the Islamic conquest of India, for example. Read about what's happening in the Pacific archipelagos. None of those countries ever invaded the desert land of the dead charlatan Mohamed, but they have nevertheless been conquered mercilessly by his deluded followers.
Strategist
2017 Nov 2, 7:57pm
The reason they over here is because we are over there.
LOL ROFL. The reason they are over here is because we let them in.
Strategist
2017 Nov 2, 8:20pm
anon_acf85 saysStrange how Muslims weren't bombing the USA in 1930.
Duh, they didn't have Petrodollars back then. They do now.
They were living in tents and milking camels back then. They gained petrodollars since then, but still lack intelligence.
It's very difficult to civilize low IQ people.
Strategist
2017 Nov 2, 8:23pm
One wonders if US wars lead to terrorism, refugees, debt, and tyranny.
If you have to wonder, you must need a lot of help.
MisdemeanorRebel
2017 Nov 3, 12:38am
I think you guys are arguing with a propaganda bot.Ceffer says
You know the US is doomed when Americans would rather attack those who defend freedom instead of criticizing the government that is enslaving them.www.youtube.com/embed/nNzkIgGpsAw
Only by investing in GPUs to mine Bitcoin, and refusing to drop down from 90 to 40 in a school zone, can America forge a bright future.
That, and buying Iraqi Dinars (that scam is STILL going). People who don't think Gold is going to $20,000/oz next week are part of the problem, or that Hitler/Stalin/Genghis Khan is right around the corner, are sheeple.
How come nobody ever brings up Timurlane anymore? "You can't vote for X, he could be the next Great Khan of the Golden Horde! He likes horses!"
curious2
2017 Nov 3, 12:44am
I think you guys are arguing with a propaganda bot.
Yes, it has posted exactly the same comments elsewhere on PatNet:
anonymous says
One wonders if US wars lead to terrorism, refugees, debt, and tyranny.
anon_acf85 says
One wonders if US wars lead to terrorism, refugees, debt, and tyranny.
Americans think the answer to tyranny is surrender.
Clearly its watching This is Us and gorging Triple Caramel Chunk and half pound bacon cheeseburgers.
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You read that right—not doubled, tripled, or quadrupled—quintupled. That’s nice when it happens on a slot machine, not so nice when it’s money you owe.
You will also notice in the chart that much of that change happened in 2008.
Why was that?
That's when the Fed took interest rates down to nearly zero, meaning it suddenly took more cash to fund future payments.
According to a 2014 Pew study, only 15 states follow policies that have funded at least 100% of their pension needs. And that estimate is based on the aggressive assumptions of pension funds that they will get their predicted rate of returns (the “discount rate”).
Kentucky, for instance, has unfunded pension liabilities of $40 billion or more. This month the state budget director notified local governments that pension costs could jump 50–60% next year.
That’s due to a proposed reduction in the system’s assumed rate of return from 7.5% to 6.25%—a step in the right direction but not nearly enough.
Think About This as an Investor: How Can You Guarantee 6–7% Returns These Days?
Do you know a way to guarantee yourself even 6.25% average annual returns for the next 10–20 years? Of course you don’t. Yes, some strategies have a good shot at doing it, but there’s no guarantee.
And if you believe Jeremy Grantham’s seven-year forecasts (I do: His 2009 growth forecast was spot on), then those pension funds have very little hope of getting their average 7% predicted rate of return, at least for the next seven years.
Now, here is the truth about pension liabilities. Let’s assume you have $1 billion in funding today. If you assume a 7% compound return—about the average for most pension funds—then that means in 30 years that $1 million will have grown to $8 billion (approximately).
Now, what if it’s a 4% return? Using the Rule of 72, the $1 billion grows to around $3.5 billion, or less than half the future assets in 30 years if you assume 7%.
Remember that every dollar that is not funded today means that somewhere between four dollars and eight dollars will not be there in 30 years when somebody who is on a pension is expecting to get it.
Worse, without proper funding, as the fund starts going negative, the funding ratio actually gets worse, sending it into a death spiral. The only way to bring it out of the spiral is huge cuts to other needed services or with massive tax cuts to pension benefits.
The Situation Is Dire Even in the Best-Case Scenario. But What If…
The State of Kentucky’s unusually frank report regarding the state’s public pension liability sums up that state’s plight in one chart:
The news for Kentucky retirees is quite dire, especially considering what returns on investments are realistically likely to be. But there’s a make or break point somewhere.
What if pension plans must either hit that 6% average annual return for 2018–2028 or declare bankruptcy and lose it all?
That’s a much greater problem, and it’s a rough equivalent of what state pension trustees have to do. Failing to generate the target returns doesn’t reduce the liability. It just means taxpayers must make up the difference.
But wait, it gets worse.
The graph we showed earlier stated that unfunded pension liabilities for state and local governments were $2 trillion. But that assumes an average 7% compound return. What if we assume 4% compound returns?
Now the admitted unfunded pension liability is $4 trillion.
But what if we have a recession and the stock market goes down by the past average of more than 40%? Now you have an unfunded liability in the range of $7–8 trillion.
We throw the words a trillion dollars around, not realizing how much that actually is. Combined state and local revenues for the US total around $2.6 trillion.
After the next recession (whenever that is), the unfunded pension liabilities for state and local governments will be roughly three times the revenue they are collecting today, and that’s before a recession reduces their revenues.
Can you see the taxpayer stuck between a rock and a hard place? Two immovable objects meeting? The math just doesn’t work.
We are starting to see cities filing for bankruptcy. That small ripple will be a tsunami within 7–10 years.
It Goes Beyond a Financial Crisis. It’s a Social, Political Catastrophe
Many state and local governments have actually 100% funded their pension plans. Some states and local governments have even overfunded them.
What that really means is that the unfunded liabilities are more concentrated, and they show up in unlikely places. You think Texas is doing well? Look at some of our cities and weep.
Look, too, at other seemingly semi-prosperous cities all over the country. Do you think the suburbs of Dallas will want to see their taxes increased to help out the city? If you do, I may have a bridge to sell you – unless you would rather have oceanfront properties in Arizona.
This issue is going to set neighbor against neighbor and retirees against taxpayers. It will become one of the most heated battles of my lifetime. It will make the Trump-Clinton campaigns look like a school kids’ tiddlywinks smack down.
http://www.mauldineconomics.com/editorial/americans-dont-grasp-the-magnitude-of-the-looming-pension-tsunami-that-may/zhb#
#NoPensionForYou