RNATB, I get your point about the magic of compounding. But NJ didn’t do that - where’s the giant lump sum, which giant safe is it in, from where to pay all the pensions and healthcare for retired staties?
My point is that this governor is finally some adult supervision to a state that has badly needed it since the days of Kean. Hopefully he can pull Trenton back from the brink.
The employer is the government - so this is kind of the point, right?
Yeah.
That’s the sort of attitude I want teaching my kids. Let’s not aim to motivate people to become teachers. Give those lazy losers a penny above minimum wage and if they don’t like it tell them to fuck off.
Because educating the next generation isn’t all that important. Screw the little kids. Book learning never did anything for George W. Bush so who needs it!
You’re an idiot. Maybe if you’d had a halfway motived teacher that might have been otherwise but I fear it is obviously too late.
Believe it or not some of us aim higher than Texas or Mississippi when it comes to education. And that means that you pay for it. Or you get a Republican governor who raises your taxes AND cuts funding to the schools.
Yeah.
Um… ok. Please, go ahead and put more words in my mouth. As another poster on SDMB has said, I hope you have clean hands.
I never said it doesn’t pay to invest in the next generation through higher quality education, although the gap isn’t as bad some say. We’re comparable to most of the OECD and trail Hong Kong, Singapore, Taiwan, Japan, Russia, England and a few others.
What I said was, NJ doesn’t have the money, thanks to overly generous pension and health benefits (for retirees - not ‘serving’ teachers and state workers) to continue this nonsense. The previous govs put Christie in this position. He now has to make the hard choices to pay for the sins of the (mostly Dem, you’ll be happy to know) past governments.
The state needs to pay a benefits package on par with private industry. Even a uber-partisan like yourself must see the need for that. If current salaries need to be adjusted upwards to compensate, in order to attract talent, then fine, do that. But that money is pay-as-you-go. It doesn’t postpone judgement day by putting one’s hands up to one’s ears and humming Stars and Stripes, as Corzine and others have done.
Teachers and state/muni workers are part of the (global) market for labor. I’m sure the messiah complex you are bringing to this thread doesn’t like to hear that, but so be it.
PS My education is just fine, thanks, unless an undergrad and two masters from pretty highly regarded schools isn’t up to par in your eyes.
I don’t want to defend all of RNATB’s numbers, but it’s worth pointing out that just as the $125K investment was spread out over an entire career, so, too, is the $3M disbursement. It doesn’t make the numbers add up, but there’s a big difference between $3M today, and $3M in nominal dollars paid out over the course of 25 or so years. I’m just guessing here, but I would wager that Governor Christie wasn’t talking about the present value of that teacher’s retirement benefits when he threw out the $3M number.
New Jersey doesn’t have the money because the Republicans feds ruined the economy not because we pay public servants halfway decent wages.
Christie’s “hard choices” consist of lowering taxes on people making over $400,000 a year and raising them on nearly everyone else including people like myself. That’s not a hard choice. That’s screwing over the middle class or Republican governance at its most blatantly ideological and truly ugly.
He’s trying to turn this fine state into another Mississippi. He’ll be out on his ear in another four years if he keeps it up.
Don’t blame me. I voted for Kodos.
Shouldn’t New Jersey be Pit-exempt, just automatically?
I mean, it’s like Pitting Somalia!
Hardly. The private sector generally matches at least a portion of employee contributions. The point is that New Jersey is somehow unusual in doing so.
The point is, NJ workers evidently contribute very little or nothing to their retirement (and healthcare in retirement… who gets that anymore???). The state picks up the whole tab. Those days are gone, and should be gone.
That is the point you’ve attempted to make, but it isn’t supported by the facts.
With compounding, employer matching, and assuming Christie’s numbers are presented the way MilTan suggests, he doesn’t appear to be getting a better deal than the average private sector worker.
No, it really *does *make a difference whether or not you’ve been starting with a lump sum or contributing as you go.
~$125k total investment, $4,167 per year for 30 years at 10% interest: $753,991.25
$125k total investment, lump sum at the beginning, 30 years at 10% interest: $2,181,175.28
So yes, IMO, it *is *disingenuous to say that a $3m payout is “the same” as someone would get if they were contributing the same amount spread over the course of their career.
All calculations done with this thing, since I haven’t had a math class since AP Calc almost ten years ago, and hell if I remember how to do compound interest.
Apparently you missed the part about employer matching. And MilTan’s point about how the disbursement is probably staggered too, but presented in final-year dollars.
How much did this guy make? Let’s say his employer has a fairly generous match of the first 4% of his income. (Oh, and did you notice that the $124k total *included *what he’d paid toward his health benefits? But we can’t tell how much of that was retirement contributions and how much was, say, insurance premiums, so we’ll just assume it was all retirement.) For that $4,167/year to be 4% of his income, he’d have to make $104,175 a year. Whiiiich I somehow doubt. But let’s go waaaaaaaay out on a limb and assume that this guy really is making six figures, contributing 4% of that income to a 401(k), and getting a company match on the entirety of his contribution. That bumps it up to:
$8,334/year, 30 years, 10% interest: $1,507,982.50.
*Still *only $1.5 million with ridiculous assumptions.
Now, I’m not arguing that he’s not entitled to the payout he’s getting; I’m just saying that you’re using terrible numbers to prove your point. Because this is *not *the same payout he’d be getting with an equivalent (or even much richer) contribution in the private sector.
You still left out MilTan’s point. Do you think New Jersey is giving its employees 3 million dollars as a lump sum when they retire?
Of course not. They get staggered pension payments. You are calculating this assuming that the money suddenly stops earning interest on retirement.
The existing money will keep earning interest, but disbursement has started and no new money is being added. I take your point that the total will be more than what you have at the 30-year mark, but it’s hard to say exactly how much more.
The problem is that we’re working with a bunch of hypotheticals here, and we don’t know any real details. What was his salary? What percentage of his salary did he contribute? What of the $124k was retirement and what was health care? What kind of rate of return would he have gotten if he invested? How long did he work? When did he retire? What are his monthly pension payments? How is the balance of the retirement money invested? How long is he expected to live?
I moved from NJ to the low property tax paradise of California. My taxes were lower than they were in NJ on a more expensive house, and they haven’t gone up much in the 14 years I’ve been here. Just a few problems.
My kids had one fewer period of school a day than they did in NJ.
They got either science or languages, not both, in intermediate school.
The school nicked and dimed you for any after school activity - not that I blame them, they didn’t have the money.
Back then at least teachers in NJ didn’t have to buy their own supplies.
My eighth grade daughter found herself almost a year ahead of her California class, just because tax cutting morons hadn’t ruined the school system.
And things were better then. Our formerly great state colleges are a total disaster. And our budget is still a mess. But we’ve got lots of people in prisons!
Let’s assume that his pension was equivalent to his previous yearly income. Obviously, it’s significantly less than that, but that’s beside the point. I happen to have a copy of the Florida Workers’ Compensation Handbook here on my desk, with a handy-dandy actuarial table that tells me that a white* male aged 50 (today) will live 28.5 years, give or take.
We have no idea when (calendar wise) Christie’s guy actually retired, of course. However, it’s safe to assume that life expectancies are not significantly greater today than whenever dude got his gold watch. So let’s say he lives 29 years.
The formula you used to calculate the return on his contribution should work the same backwards as forwards, yes? So over 29 years, his retirement account/pension/whatever should be worth a bit less than twice as much as it was when he retired. $2.8 million, let’s say.
We know some of those things. According to the article Mr S cited, he retired at 49- so my life expectancy figure is more or less bang on.
However, you’ve gotten to the crux of the issue: we have no idea what the answers to the rest of those questions are. Christie is using him as an example of the ridiculous cost of the state employee benefits package but the example tells us nothing at all about the cost of the New Jersey state employee benefits package.
Mr Smashy quoted the article/Christie as evidence for his argument. I simply pointed out that a $3.3 million dollar payout for a $129,000 personal contribution is really not that big a deal.
Keep in mind that Christie used this guy’s numbers to push his own agenda. If you were doing the same, which would you use- a street sweeper, or a state attorney? Hell, for all we know, it could have been Terry Shea, who was the head coach of the Rutgers football team until 2000.
Those are fair points - the numbers don’t sound all that outsized when you run the math. But can anyone really expect >9% returns these days, as a ‘new normal’? I know that historically they may have done that, but the Dow isn’t that much higher than it was 9 years ago.
More importantly - we cannot assume that NJ actually put the money aside to pay these pensions. Private companies must do this (as per ERISA, to stop guys like Kirk using TWAs pension fund as a piggie bank), but states (and w/SS, feds) underfund their pension funds all the time. Clearly NJ was running a Ponzi scheme over the last decade or two, and now the chickens have come home to roost.
I suspect one can put up numbers like this for any pension plan. It’s not peculiar to NJ.
1.4 million over 25-30 years is around 46k-56k per year, which is probably at the lower end of mid-middle class for NJ. Nice to have, but hardly scandalous or excessive. Health insurance premiums over the same time is ~7200-8600 per year. That’s not a whole lot, either.