As I see it, the pension crisis is already upon us. There’s no way we have enough money in the next 50 years to pay off all the social security, government retirees, private company retirees, etc.
And here’s a website with a billion statistics to back this up:
If there’s a way of explaining how we can get out of this mess, or better yet, that there is no mess, please tell me. BTW, if you want to blame anyone: W, liberals in congress, unions, please blame away. Maybe that will help us understand how we got here.
Also, some full disclosure. I’m in my 50s, counting on savings, investments, 401K, and SS. Also I intend to work until I die, so there may not be any retirement in my future. No company pension expected, unless I get a job this week and stay a long time. But if there were a fair plan put forth where people my age give up half of their SS in order to make the country solvent for the next generations, I’d vote for it in a heartbeat.
It’s not exactly a tsunami, but it will be rough, and it will be big, and it will last a good long while. The biggest problem is actually the public sector, because governments tend to promise huge retirement pay compared to private sector, and government is very, very bad at investing.
Plus, many governments decided the best way to fix this was to invest in higher-returning portfolios. Guess what?! Higher return, in market terms, is basically the same damn thing as higher risk. Guess what just happened to the market? And by the transitive property, what happened to the retirement portfolio?
Edited: Looking at your situation, you’re probably fine. 401K’s and savings and investments are still there (and investments will recover in a several years). Social Security? God knows what will happen with it. probably they’ll just slap another patch on it and pretend it’s a workable solution.
Likewise, while I admire your fiscal sense, it won’t happen. The AARP would start suicide bombings by elderly great-grandmothers in walkers before they let Congress reduce benefits. Of course, a lot of the problem is Medicaid.
Hmm, this doesn’t ring true to me. The State of Washington, where I live, employee pension system is well funded. Additionally the actuarial assumptions that they use are very conservative. As for the private side, Warren Buffet says that because of the effect it has on reported income, that publicly traded corporations are using “Crazy Assumptions” concerning return on investment for there pension funds. You can read about it here. As for the quality of investing, I would be interested in reading about a pension administrator that is counting on beating the market to make good on pension obligations.
As for the OP, yes it’s going to be bad. I’m a CPA and I do a lot financial planning. I have consulted with many folks in their fifties that have a little equity in their house and under 100K in there IRA. It’s too late. They will need to work to late in life… if they can. I believe that we will have a large population of the impoverished elderly. I will look around to see if I can get the info on how many of these folks are out there. I believe that the number are staggering.
In California’s case, it’s the state budget which is in trouble, not the worker’s (or in particular, the teacher’s) retirement fund, which is doing fine. The fund is a separately invested pot of money.
Calpers (the public retirement fund of which i am a member, as are teachers) is doing fine… It did lose like 18 mil in a day, but it is currently (this is a semi-recollected guess as I don’t specifically recall…) over 4 billion ahead of it’s own original projections, so even if you do several weeks/months of 20+ negative millions, we are fine…
Sorry, just wanted to note that this is the reason every f***ing gov’r wants to loot the fund…
Can’t let’em stay ahead to stay ahead for such reasons.
And while it may be a bit off top- the only reason to have a problem with unions is because you don’t have one, or the contract you have sucks- so join a good one or form one! The unions realize they have it better, that is why they exist! become a union and take a voice! I was a member of a company who treated us so well that we didn’t need a union. Then we were sold to an asshole N00b company named @(ss)-0-ell, and we had no recourse for anything except hiring a lawyer, which we could not afford. It is insurance, if nothing else…
Calpers was ahead bu that much projecting through what year? They have more than enough currently to fund through several decades…
Either you are looking at incorrect data, or you dont understand how marketshare/stock vs pension works…
a minor (=not negative balance) DOESN’T FUCKING MATTER in the stock market.
Anything which does not shut down the company is a minor setback. How old are you?