How Big Is Your State’s Share of $6 Trillion in Unfunded Pension Liabilities?

[Happyhorn52]

Despite a solid year for investment returns, the unfunded liabilities of state and local government pension plans increased by $433 billion, the most recent estimate from the American Legislative Exchange Council shows.

According to ALEC’s report—which uses more appropriate assumptions on investment returns than the plans use themselves—state and local governments’ unfunded liabilities now exceed $6 trillion.

That’s a whopping $18,676 for every man, woman, and child, or nearly $50,000 for every household in America.

http://www.heritage.org/budget-and-spending/commentary/how-big-your-states-share-6-trillion-unfunded-pension-liabilities?utm_source=facebook&utm_medium=social&utm_campaign=thf-fb

[earthdome]

2 hours ago, Happyhorn52 said:

Despite a solid year for investment returns, the unfunded liabilities of state and local government pension plans increased by $433 billion, the most recent estimate from the American Legislative Exchange Council shows.

According to ALEC’s report—which uses more appropriate assumptions on investment returns than the plans use themselves—state and local governments’ unfunded liabilities now exceed $6 trillion.

That’s a whopping $18,676 for every man, woman, and child, or nearly $50,000 for every household in America.

http://www.heritage.org/budget-and-spending/commentary/how-big-your-states-share-6-trillion-unfunded-pension-liabilities?utm_source=facebook&utm_medium=social&utm_campaign=thf-fb

At some point in the future the piper will come calling. The benefits provided to government employee's are not sustainable and at some point either benefits will have to be drastically reduced, large increases in taxes, or both. If you are receiving your pension from a government public employee institution, especially in states like CA, NY or IL make sure you have other sources of income than your pension. Federal pensions aren't as at risk because the federal government, unlike the US states, can just print the money, though it may in the end be worthless.

Happy New Year!

[Snowy79]

As an outsider I think it will take a brave President to sanction cuts to pensions. I don't know how much of your wages goes towards your pension but in comparison to the UK state pension you are extremely well compensated. 

[earthdome]

2 minutes ago, Snowy79 said:

As an outsider I think it will take a brave President to sanction cuts to pensions. I don't know how much of your wages goes towards your pension but in comparison to the UK state pension you are extremely well compensated. 

There isn't just one pension system in the USA. There is the federal social security system which almost all employee's have to pay into (there are a small number of people who work in government jobs who are exempt). That system provides a very small pension which if that is all you have is barely enough to get by on. Then most individuals can contribute to their own private investment funds with money that doesn't get taxed until you withdraw it after retirement. These are called 401k, 403b and 457 IRA  individual retirement accounts. Years ago large corporations provided retirement pensions but very few do that now and employee's use IRA's. Then there are public (government employee's) pensions. Whether they work for the federal, US state or local government, they tend to be very generous. Those are the pensions that the OP was referring to.

For me, I have a mix of four sources of wealth/income for my retirement. A small pension from a public university where I worked the last 17 years before I retired. IRA investment accounts I can draw money out of. Federal Social Security retirement which I start drawing on next year. Finally, the wealth I have accumulated over the years like my house, regular investments, etc.

[JJReyes]

What the  politicians will do is label pensions as an Entitlement program. This will permit cuts in benefits. They don't care if you have been paying all your life into the system. Latest news is the Republicans want to cut Social Security and Medicare benefits to help pay for the tax reductions for the very wealthy.

Another strategy is to increase inflation. This is a form of taxation. You are paying out using cheaper currency. 

[Reboot]

 I read that 80% of taxpayers get an income tax cut. I ran the numbers and for me it will be something like 13k saved next year. As for SS and Medicare they are funded seperately through payroll deductions.

Edited December 28, 2017 by Reboot

[earthdome]

1 hour ago, Reboot said:

 I read that 80% of taxpayers get an income tax cut. I ran the numbers and for me it will be something like 13k saved next year. As for SS and Medicare they are funded seperately through payroll deductions.

I also will benefit from the tax cut. Doubling the standard deduction and doubling the child tax credit helps me a great deal since I don't have enough deductions to benefit from itemizing. I will likely pay around $2500 less in federal taxes next year.

[bows00]

2 hours ago, earthdome said:

Federal pensions aren't as at risk because the federal government, unlike the US states, can just print the money, though it may in the end be worthless.

This is true, but they are chipping away at it.  Just this past year, a strong proposal came out to eliminate the Cost of Living Allowance (COLA) to the Federal pension.  In other words, your pension at the start of retirement will not be adjusted to inflation - which would eventually be worthless.

[Old55]

Just to be clear..... Sate workers pensions are not in any way connected to the federal social security administration program.

 

[scott h]

4 hours ago, bows00 said:

adjusted to inflation

And that is why a lot of us retire to the Philippines