Day of Reckoning for American Pensions Is Fast Approaching
The Daily Sheeple
July 18th, 2015
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For decades, local and state governments in the United States have made promises to their employees that they cannot keep. They guaranteed a certain level of income to retirees at a time when America was its most prosperous, and when most people didn’t live as long as they do now. Those lucrative pensions they promised are starting to catch up to them in a big way.
Earlier this week, Moody’s cut Chicago’s credit rating to “junk,” largely due to their $20 billion pension shortfall, and they put the City of Houston on notice. Many of the major pension funds use the stock market to bolster their savings, but despite record profits on Wall Street, it doesn’t seem like any of them reached their revenue goals. California’s Public Employees Retirement System only reached a third of the annual revenue they projected, and the state’s teacher fund failed to reach their goal. Overall, Moody’s found that the 25 largest public pension funds in the US have a $2 trillion budget shortfall.
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So what will happen?
I’d look at Greece and, closer to home, the Delta Pilot’s pensions.
The Federal “Pension Benefit Guaranty Corporation” does not insure plans offered by federal, state, or local governments.
So, I’d expect a severe “haircut”. Pensions, if we use the PBGC limits, would be reduced to about 57K per year.
I can imagine the riots when it happens, but happen it will.
If I was planning on a pension for my golden years, then I meet with a fee-based register financial adviser to revise your plans.
Hard times ahead.
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