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The Suddenly Poor Life: Millions Will Lose Their Pensions

edsl48

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Illinois cities seeing operations hobbled by pension debts under new law


Loco Steve | Flickr via Creative Commons

Two Illinois cities have been forced to lay off dozens of public safety employees after the state's comptroller was required by law to redirect tax revenue owed to the municipalities to underfunded pensions.
One expert says many more towns throughout the state could see problems similar to those in Harvey and North Chicago due, in part, to a state law that was passed in a matter of hours in 2011.
“There are hundreds of cities across the state that face some sort of effective bankruptcy if they have to start paying their police and fire pension costs,” Wirepoints President Ted Dabrowski said. “It’s only a matter of time before the state starts garnishing their tax revenues.”

Illinois’ local governments have been facing growing retirement costs for employees for years. Unable to keep up, some pay what they can and hope to make up the rest later.
Illinois’ police and fire pension funds outside of Chicago are 58 percent funded, on average, according to a report by the Commission on Government Forecasting and Accountability.
Sixty-three percent of Illinois’ 651 downstate public safety retirement funds received less funding than required from their cities in 2016, according to a Department of Insurance report.
Starting this year, those fund managers can report their town to Illinois Comptroller Susana Mendoza's office for being more than 90 days delinquent on their required payments. Once that debt is certified, the comptroller must withhold all of the funds the town is owed by the state until the total debt is paid. The city of Chicago, where pension funds are more than $38 billion in the hole, is exempt from the law until 2024.
“Once it's certified, the law requires us to redirect the payments to the pension fund – the Comptroller's office has no choice.,” said Abdon Pallasch, spokesman for Mendoza.

This process is unfolding in Harvey and North Chicago now, but is likely to expand to potentially hundreds of other communities too, Dabrowski said.
Harvey underpaid its police and fire pensions by $3.2 million in 2016. The police pension fund asked Mendoza’s office in January to withhold more than $7 million in delinquent pension payments the city skipped from 2007 to 2014. The city is fighting the certification in court, but was forced to lay off 40 police and fire department employees in the meantime.
The city of North Chicago’s fire pension fund went to Mendoza’s office to retrieve more than $863,000 in delinquent payments.
They’re not alone in directing budget funds elsewhere. Kankakee shorted its police and fire pensions by more than $700,000 in 2016. Champaign underpaid by $3.7 million. Normal shorted both police and fire retirement funds by more than $1.3 million. In East St. Louis, city officials are worried about a year’s worth of funds being held under the law because the city shorted public safety pensions by more than $3.7 million.
The law, passed in less than 12 hours in 2011, was part of pension reform that was partially struck down by a court challenge.

When a pension fund’s assets are worth less than 50 percent of their total unfunded liability, it becomes exceptionally difficult to raise the funding level, said Steven Malanga, George M. Yeager Fellow at the Manhattan Institute and City Journal's senior editor.
“It’s impossible to make that up out of your budget,” he said, because the investment returns and contributions are often dwarfed by the required minimum payments.
Pensions are protected by the state’s constitution, but Malanga says bankruptcy is a federally protected right that would trump the state’s protections. Bankruptcy protection would, he said, give cities in peril of losing vital services a chance to renegotiate those contracts. Illinois currently doesn’t allow for municipal bankruptcy.
 

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Blackmail plain and simple. We get above average pay & bennies then when it goes south we scare you with no cops, fire, rescue, undrinkable water or some such BS.
 

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The Pension Crisis Gets A Catchy Name: "Silver Tsunami"




by Tyler Durden
Mon, 04/23/2018 - 22:35



Authored by John Rubino via DollarCollapse.com,

Pensions really are in crisis, but the story is so full of large numbers, obscure projections, and dry terms like “unfunded liabilities” that not many people are paying attention.

The same is true for a lot of other big trends out there, which is why those sounding the alarm eventually settle on pithy/scary (if not always accurate) terms to get people’s attention. Global warming, for instance, or nuclear winter.

Now the pension crisis may have found its hook:

(San Francisco Chronicle) – What happens when state funding improves, but local school budgets get worse? And how did we get into this situation in the first place?​
It’s simple. School systems are getting hammered by the rising costs of pension and health care commitments. Meanwhile, they are being pinched by external factors including declining student enrollment, increased competition and frozen federal funding.​
California is not an anomaly. Districts throughout the nation are facing the same squeeze.​
So why isn’t anyone paying attention? Three main reasons:​
Money is boring: And only boring people like chief financial officers talk about money and use phrases like “unfunded liabilities.” Interesting, cutting-edge people talk about “disruptive innovations” like personalized learning, or anything with the word “maker” in it.​
Money is politically messy. Everyone wants funding for their favorite education project. In this zero-sum world, no one wants to talk about making tough choices. Even fewer want to discuss sensitive topics such as pension and health care liabilities.​
Education finance has never been part of our nation’s education wars.Most of the opinion makers in education are like the Great Houses of Westeros in the HBO series “Game of Thrones.” They are much happier fighting each other to the death about issues like unions and charter schools than focusing on the more powerful forces that could destroy them all.​
In “Game of Thrones,” that force is the White Walkers. In education, it’s the “Silver Tsunami” — the tens of billions of dollars in pension and other post-retirement benefits guaranteed to retirees.​
In the olden days (before the mid-2000s), these budget problems seemed very far away. But over the past decade, millions of Baby Boomers have retired. Suddenly pension and retiree health care costs were at hand.​
Most state and local officials failed to plan for these increased costs. During good times, they sweetened already generous benefits. During bad times, such as the Great Recession, they reduced the already inadequate amounts they were socking away.​
The size of these unfunded liabilities is mind-boggling. Nationally, the estimate is $1.4 trillion. In California, it’s $97 billion for teachers and other school employees as of 2015-16. To put this into perspective, total venture capital investment in educational technology since 2010 was $2.3 billion.​
In 2013, California state leaders attempted to address the shortfall by increasing payments from districts into the pension fund to $1,600 per pupil in 2023-24 from $500. This increase will only pay for part of the state pension obligation. Billions of dollars more will come directly from state coffers and never reach education budgets.​
Just when you think it couldn’t get worse, California has more than $92 billion in unfunded health care liabilities. By 2030, Los Angeles Unified School District, serving more than a half-million students, is projected to spend half its budget on retiree pension and health care costs. Hundreds of other districts could make dramatic budget cuts or even go bankrupt.​
District and charter leaders are beginning to talk about the impact of these rising costs. Unfortunately, everyone else is making things worse. Unions, foundations, and nonprofits still live in a world where an improving state economy was a reason to advocate for salary increases or fund the latest program.
That world is gone. Winter is already here. Unlike the fantasy world of Westeros, there are no magical solutions or heroes coming to save us.


With 10,000 or so baby boomers – many of whom are public sector employees – turning 65 every day, pension imbalances will explode in the coming decade. That means life gets harder for pretty much everyone who drives, needs police protection or has kids in school. Which in turn makes politics even more unstable and unpredictable than currently.

At the same time, the weakest pension plans and their cities will be forced into bankruptcy, leading to panic among the not yet bankrupt and – now we’re getting to the systemic risk – the owners and potential future buyers of the bonds cities and states issue to keep afloat. When the muni market dies, so does much of the rest of the US financial system.


https://www.zerohedge.com/news/2018-04-23/pension-crisis-gets-catchy-name-silver-tsunami
 

edsl48

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The War between Public Pensioners and Tax Donkeys Is Heating Up

The migration is only beginning, but that's only half the story.
You know it's serious when the newspaper of record finally reports it: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash (New York Times).
It's a long article but the summary is brief: corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost.
Public pension obligations are rising so fast that even repeated tax increases can't keep up.
This is setting up a second front in the war between entitled Baby Boomers and younger taxpayers who pay most of the federal and local taxes. Public pensioners are a subset of the entitled Baby Boomers, but their pensions can't be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.
So there is a war brewing between public pensioners and the Tax Donkeys: the Unprotected who pay local property taxes on their homes, state and local taxes on their incomes, sales taxes on their purchases, junk fees on local government services, and so on.
Corrupt politicos created the war by over-promising benefits to public employees and ignoring fiscal realities. By the time the bill comes due, the politicos who rubber-stamped the unaffordable promises are themselves gorging at the public-pension retiree trough.
Not every public employee is receiving gold-plated pensions and benefits, of course, but that doesn't negate the reality that nationally, public pensions are increasing faster than government revenues and the returns earned by the pension programs.
If the stock and bond markets suffer multi-year declines, even modest declines, the pension war will move from skirmishes to open political combat.The 2008-09 Global Financial Meltdown was a taste of the reality facing public pension programs: once annual returns slip from +7% annually to -7% annually, the pension plans are soon insolvent.
Like virtually all wars, there are asymmetries between the two combatants: in the war between public pensioners and the Tax Donkeys, the pensioners can't switch pension programs, but the Tax Donkeys can move to lower-tax states.
Allow me to summarize for those who aren't too squeamish: a lot of cities and counties are going to go broke, slashing services and jacking up taxes, all to no avail. The promises made by corrupt politicos cannot possibly be kept, despite constant assurances to the contrary, and those expecting services and taxes to remain untouched will be shocked by the massive cuts in services and the equally massive tax increases that will be imposed in a misguided effort to "save" politically powerful constituencies and fiefdoms.
These dynamics will power a Great Migration of the Tax Donkeys from failing cities, counties and states to more frugal, well-managed and small business-friendly locales. I've sketched out the migration in this graphic: the move by those who can from incompetently managed and/or corrupt cities/counties/states to more innovative, open, frugal and better managed locales.
Unlike Communist regimes which strictly control who has permission to transfer residency, Americans are still free to move about the nation. This creates a very Darwinian competition between sclerotic, corrupt, overpriced one-party-dictatorship states whose hubris-soaked political class is convinced the insane housing prices, tech unicorns, abundant services, and a high-brow culture ruled by an artsy elite are irresistible to everyone, and locales that are low-cost, responsive to the Tax Donkey class, welcoming to new small businesses, employers and talent, unbeholden to a politically-correct dictatorship and conservatively managed, i.e. not headed for insolvency, are no match for their elitist fiefdoms.
Not everyone can move. Many people find it essentially impossible to move due to family roots and obligations, kids in school, and numerous other compelling reasons.
Many people who are able to move are the Tax Donkeys who are paying the most taxes: self-employed entrepreneurs, mobile creatives, those with scarce skills and those who earn substantial incomes from royalties, patents and other forms of capital.
These Tax Donkeys can live pretty much anywhere they please. They don't need to stay in NYC, Boston, L.A., San Francisco or Chicago.
This is the model for many half-farmer, half-X refugees: people who are moving to homesteads or small towns with the networks and skills needed to earn a part-time living in the digital economy. In a lower cost area, they only need to earn a third or even a fourth of their former income to live a much more fulfilling and rewarding life.
Not that hubris-soaked politicos and elites have noticed, but only the top few percent of households can afford to own a home in their bubble economies.Paying $4,000 a month in rent for a one-bedroom cubbyhole in San Francisco may strike the elites living in mansions as a splendid deal, but to the people who have surrendered all hope of ever owning anything of their own to call home--not so much.
Though this chart is based on national data, there are many regional variations. When it takes a year just to obtain a permit to open an ice cream shop (in San Francisco), how much will the insolvent "owner" have to charge per ice cream cone to make up a year in hyper-costly rent paid for nothing but the privilege of being a scorned peon in a city ruled by privilege and protected fiefdoms?
Not that hubris-soaked politicos and elites have noticed, but the Tax Donkeys are getting fed up: their local schools have been stripped of enrichment programs, the cash-strapped local governments are demanding taxpayers pass $100 million bonds to fill potholes and repair schools' leaking roofs, parking tickets now cost more than a restaurant meal for the entire family, and the increases in fees and taxes are coming fast and furious.
If the real estate and stock/bond bubbles pop, the pension bubble pops, too.Once property taxes start declining even as rates are jacked up, the public pensioners will lose the war. Once the stock and bond portfolios of the pension programs are shrinking rather than growing, the the public pensioners will lose the war. Which American Cities Will File Bankruptcy Next?
There is a feedback loop to raising taxes to pay for skyrocketing public pension obligations: the higher taxes rise, the more Tax Donkeys will migrate away from high-tax states and cities. As those paying the majority of the taxes leave, the high-tax states and municipalities have no choice but to raise taxes even more aggressively, which only accelerates the migration of high-income, entrepreneurial Tax Donkeys that are the engines of growth.
The migration is only beginning, but that's only half the story: those who can't leave for whatever reason can opt out: close their businesses, quit their high-stress, high-paying job, move back to the family home, retire and start living as close to the ground as possible.
Those who opt out are in effect moving from those contributing the most to those contributing the least.
Right now, hubris-soaked politicos and elites can entertain the fantasy that NYC, Boston, LA, San Francisco, Chicago, etc., are irresistible: they're not.
They're great for those feeding at the trough but not so great for those filling the trough. As astonishing as it will be to hubris-soaked politicos and elites, the straws that will break the back of the Tax Donkeys' will to put up with the ever-increasing burdens are many.
 

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Global Pension Gap Expected to Hit $400 Trillion: US Leads the Way


byMike Mish Shedlock
15 hrs
-edited

The global pension gap of 8 nations is $70 trillion. The US alone is $38 trillion. By 2050 the total gap will hit $400T.
The Visual Capitalist reports The Pension Time Bomb: $400 Trillion by 2050. The above image is a small section of a huge pension infographic.
  • According to an analysis by the World Economic Forum (WEF), there was a combined retirement savings gap in excess of $70 trillion in 2015, spread between eight major economies: Canada, Australia, Netherlands, Japan, India, China, the United Kingdom, and the United States.
  • The WEF says the deficit is growing by $28 billion every 24 hours – and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.
  • In the United States, it is expected that the Social Security trust fund will run out by 2034. At that point, there will only be enough revenue coming in to pay out approximately 77% of benefits.

Worse Than You Think
Lance Roberts at Real Investment Advice added to the report in his take The Pension Crisis Is Worse Than You Think.
What follows are excerpts of Roberts' excellent presentation, withoutblockquotes. His name will mark the end of his report.
Problem 1: Demographics
With pension funds already wrestling with largely underfunded liabilities, the shifting demographics are further complicating funding problems. One of the primary problems continues to be the decline in the ratio of workers per retiree as retirees are living longer (increasing the relative number of retirees), and lower birth rates (decreasing the relative number of workers.) However, this “support ratio” is not only declining in the U.S. but also in much of the developed world. This is due to two demographic factors: increased life expectancy coupled with a fixed retirement age, and a decrease in the fertility rate.



In 1950, there were 7.2 people aged 20–64 for every person of 65 or over in the OECD countries. By 1980, the support ratio dropped to 5.1 and by 2010 it was 4.1. It is projected to reach just 2.1 by 2050.
Problem 2: Markets Don’t Compound

The biggest problem, however, is the continually perpetrated “lie” that markets compound over time. Pension computations are performed by actuaries using assumptions regarding current and future demographics, life expectancy, investment returns, levels of contributions or taxation, and payouts to beneficiaries, among other variables. The biggest problem, following two major bear markets, and sub-par annualized returns since the turn of the century, is the expected investment return rate.
Using faulty assumptions is the linchpin to the inability to meet future obligations. By over-estimating returns, it has artificially inflated future pension values and reduced the required contribution amounts by individuals and governments paying into the pension system.
As shown in the long-term, total return, inflation-adjusted chart of the S&P 5oo below, the difference between actual and compounded (7% average annual rate) returns are two very different things. The market does NOT return an AVERAGE rate each year and one negative return compounds the future shortfall.

This is the problem that pension funds have run into and refuse to understand.
Pensions STILL have annual investment return assumptions ranging between 7–8% even after years of underperformance.
However, the reason assumptions remain high is simple. If these rates were lowered 1–2 percentage points, the required pension contributions from salaries, or via taxation, would increase dramatically. For each point reduction in the assumed rate of return would require roughly a 10% increase in contributions.
The chart below is the S&P 500 TOTAL return from 1995 to present. I have then projected for using variable rates of market returns with cycling bull and bear markets, out to 2060. I have then run projections of 8%, 7%, 6%, 5% and 4% average rates of return from 1995 out to 2060. (I have made some estimates for slightly lower forward returns due to demographic issues.)

Given real-world return assumptions, pension funds SHOULD lower their return estimates to roughly 3-4% in order to potentially meet future obligations and maintain some solvency.
They won’t make such reforms because “plan participants” won’t let them. Why? Because:

  1. It would require a 40% increase in contributions by plan participants which they simply can not afford.
  2. Given that many plan participants will retire LONG before 2060there simply isn’t enough time to solve the issues, and;
  3. The next bear market, as shown, will devastate the plans abilities to meet future obligations without massive reforms immediately.
We Are Out Of Time
Currently, 75.4 million Baby Boomers in America—about 26% of the U.S. population—have reached or will reach retirement age between 2011 and 2030. And many of them are public-sector employees. In a 2015 study of public-sector organizations, nearly half of the responding organizations stated that they could lose 20% or more of their employees to retirement within the next five years. Local governments are particularly vulnerable: a full 37% of local-government employees were at least 50 years of age in 2015.
It is no surprise that public pension funds are completely overwhelmed, but they still have not come to the realization that markets do not compound at an annual return of 8% annually. This has led to a continued degradation of funding levels as liabilities continue to pile up.

The next crisis won’t be secluded to just sub-prime auto loans, student loans, and commercial real estate. It will be fueled by the “run on pensions” when “fear” prevails benefits will be lost entirely.
It’s an unsolvable problem. It will happen. And it will devastate many Americans. It is just a function of time.
Lance Roberts
2050 Gap Will Never Happen
We will never hit a pension gap of $400 trillion. Instead, one of the following will happen.
Pick Your Poison
  1. Plans will have long ago defaulted or gone bankrupt with benefits slashed. Michigan paved the way for this option.
  2. Millennials, who will undoubtedly be fed up with boomer benefits will vote for massive changes. For some states, this will require constitutional changes.
  3. At the national level, we may see revised bankruptcy laws superseding state provisions.
Some may suggest a pension bailout by the Fed. I doubt that because the numbers involved would destroy the dollar. The Fed exists to bail out banks, not pensioners.
Congress could bail out the pensions, but once millennials and younger generations are firmly in control, they will not vote to screw themselves even more.
By one means or another, baby boomers counting on public pensions will not get what they mistakenly believe they have coming.
Mike "Mish" Shedlock.


 

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Pick Your Poison
  1. Plans will have long ago defaulted or gone bankrupt with benefits slashed. Michigan paved the way for this option.
  2. Millennials, who will undoubtedly be fed up with boomer benefits will vote for massive changes. For some states, this will require constitutional changes.
  3. At the national level, we may see revised bankruptcy laws superseding state provisions.
Some may suggest a pension bailout by the Fed. I doubt that because the numbers involved would destroy the dollar. The Fed exists to bail out banks, not pensioners.
Congress could bail out the pensions, but once millennials and younger generations are firmly in control, they will not vote to screw themselves even more.
By one means or another, baby boomers counting on public pensions will not get what they mistakenly believe they have coming.
4. The complete collapse of the financial system.
 

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Running On Empty

by Tyler Durden
Sat, 04/28/2018 - 14:25



Authored by Robert Gore via Straight Line Logic blog,

They dote on their progeny, then bury them alive.




Across the land, public pension and medical funds teeter on the brink of insolvency. You can ignore pending problems until you can’t. For those who prize clarity and realistic thinking, these impossible to ignore crises should be welcomed. They focus attention on an inescapable fact: the world lacks the unencumbered assets and productive capacity to redeem the promises that have been made against them. Somebody’s going to get stiffed.

With war on everyone’s minds, public pension and medical funds delineate inevitable battles lines: governments versus taxpayers, the unproductive versus the productive, the aging versus the young. Those wars are liable to be far more consequential than the ones everyone worries about in places like the Middle East and North Korea.

Nothing calls attention to the absurdity riddling the public pension system quite like the $76,000 monthly pension drawn by Joseph Robertson, an eye surgeon who retired as president of the Oregon Health and Science University last fall.

In the good old days, government employment meant low pay, but job security and a decent pension. Now such sinecures means wages in excess of those paid in the private sector plus pensions that are far more munificent…and job security. For a lucky few like Doctor Robertson, their pensions are a triple 7 jackpot. Oregon calculates pensions based not just on recipients’ government salaries, but what they receive on any non-government gigs they had going on the side. Robertson’s pension is based on his remuneration as university president and what he made operating on eyeballs.

This is what happens when actuarial tables and actual rates of return are discarded in favor of the political power of public employees and their unions, promises that can’t be kept, and taxpayers picking up the tab who have no idea what the final bill will be. Public pension and medical crises bring into sharp relief the writing on the wall: Governments Can’t Deliver.

As Charles Hugh Smith recently noted, public retirement and medical liabilities are increasing so fast that no amount of tax increases can keep up. Long before a 100 percent tax rate turns taxpayers into slaves, raising tax rates becomes counterproductive, yielding less, not more, revenues. One of the nifty things about the public pension and medical crisis is that it’s local. As such, it’s offering real world demonstrations that when local jurisdictions raise rates to fund their pensions, productive people leave.

The poster child is Illinois. The state on down to its smallest political subdivisions—like the town of Harvey—are buried beneath underfunded pensions. Illinois’ courts have ruled pensions are inviolable, which leaves governments facing insolvency with only two options: raise taxes and cut spending.

Harvey was ordered by a court to fund its firefighters’ pension fund, which is only 22 percent funded. The town’s property tax rate is six times the average rate in nearby Indiana, and Harvey is still coming up short. The state is garnishing its tax revenues, and the town has announced 40 public safety employees will be laid off. Why would anyone paying taxes in Harvey stick around for a future of ever-increasing taxes and ever-diminishing public services?

Many don’t, and Harvey and other localities in Illinois, including Chicago, are losing people. Out-migration statistics in Illinois, California, New Jersey, Connecticut, New York, and other net-loser states don’t capture the full scope of the problem. If one productive person moves out while one unproductive person moves in and starts living off state largess, there’s been no net out-migration, but the state suffers a loss (obvious to everyone except those fools and charlatans who will plump for an open-arms and open-wallet approach right up until bankruptcy).

Out-migration will get worse for net-loser states as the federal tax limitations on the deductibility of state and local taxes (SALT) kicks in. SALT has been capped at $10,000. After that, the wealthy have to pay the full measure of their high-tax states’ income, property, and sales taxes. The migration is gathering steam. It already costs twice as much to rent self-moving truck services from high-tax Los Angeles to low-tax Dallas as vice versa, and that spread will only widen.

State and local governments, their employees, and those on the dole can’t stop the productive from voting with their feet. The number who leave the US, however, is still a trickle. The federal government’s old age and medical funding problems, orders of magnitude greater than states’ and municipalities’, are no longer looming; they’ve arrived. The government could seal the borders to lock in the productive, but it wouldn’t prevent the slow-motion, but accelerating, catastrophe now underway.

The federal government’s ability to issue virtually unlimited debt and the Federal Reserve debt monetization machine mask the rot, but only create problems far larger than the ones they putatively solve. Low interest rates have destroyed state and local funds’ ability to achieve fairly safe returns, forcing them out on the risk curve to meet their rate of return targets, which are way too high. Underfunded as they are now, bear markets in stocks and bonds would obliterate them.

Encouraged by central bank debt promotion policies, individual, corporate, local, state, and federal debt has reached new records. While low interest rates have ameliorated the debt service burden, even they can’t stymie the toll debt is taking on the economy. Look no farther than real annual GDP growth, which hasn’t hit 3 percent since Bush Jr. was in office. Less growth means less tax revenues, which only exacerbates funding problems.

The older generation is pinning its retirement hopes on a younger generation confronted with huge debt, perpetually rising taxes, a shrinking economy, and dwindling opportunity. That’s not like hoping you can draw to an inside straight, it’s going all in, exchanging your hand for five new cards, and hoping you draw four aces. Good luck with that.

Oldsters like to complain that the youngsters are too preoccupied with gadgets and social media. They wish that were true. The youngsters are already questioning their impending debt servitude. The more perceptive are homing in on their parents’ generation’s self-granted benefits and unrivaled profligacy. You don’t have to search too far on the internet and social media to see the awakening.

Doting parents and grandparents who post their darlings’ every precocious moment and wouldn’t dream of letting them walking a block to school by themselves have no compunction about burying them alive under welfare and warfare state IOUs. In a world riven with conflict, the easiest war to predict is the intergenerational one.



It’s not strictly accurate to say that the state and local public pension and medical funds’ crises is the canary in the coal mine. It is but one in an aviary of canaries. The fund canary is in extremis and may well be the first to expire; the others will certainly follow. Picture the horror as the adult canaries and their fledglings wage mortal combat for those last few molecules of oxygen.

https://www.zerohedge.com/news/2018-04-28/running-empty

 

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I think we are going to see an IBM-style sea-change.

IBM simply made it IMPOSSIBLE to meet retirement qualifications around 2001 or so. Those who had already retired were OK, because the corporation put sufficient $$ in escrow for them. And they are dying off, so each year costs IBM less and less.

That model has a high probability of being propagated across the spectrum of jobs.
 

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JB Pritzker Defends Illinois Pension System Despite fact that 20 cents of every tax dollar goes into retirement funds, CBS 2's Derrick Blakley reports
 

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What happens when your pension fund runs out of money
Harry Van Alstyne and his wife Susan used to go out to dinner every Saturday night — until his pension was cut by 29% last October.
Now, they're thinking about selling their home and skipping their annual trip to Maine. They've already dipped into their savings.

This is not the retirement they planned for. After working for 30 years as a truck driver for UPS, Van Alstyne was promised $5,141 a month by the The New York State Teamsters Conference Pension and Retirement Fund.

"I hated the job from day one, but I stayed with it because I was promised a secure pension," said Van Alstyne, now 64.

When he retired in 2006, he was receiving his full pension. But the fund was hit hard during the financial crisis and never fully recovered. A 2016 report projected it would run out of money as soon as 2026.

To save it from going bust, the fund cut current retirees' benefits last year by 29%.

Van Alstyne's pension fell to $3,650 a month.

Related: 1 million Americans are counting on Congress to save their pensions

He is one of the first Americans whose pension benefit was cut after retiring.

Until now, cash-strapped plans have survived by reducing future retirees' benefits and asking employers to contribute more money.

Most at-risk funds are private multi-employer pension funds like Van Alstyne's that were negotiated by unions. These funds had a harder time bouncing back after the recession because many of their workers were part of declining industries, like manufacturing.

Some struggling employers have negotiated ways to exit the plans, or they went bankrupt, leaving remaining employers to cover unfunded liabilities.

"Understandably, the remaining employers left holding the bag haven't always been willing or able to pick up the slack," said JP Aubry, director of state and local research at the Center for Retirement Research at Boston College.

Currently, $76 billion is needed to shore up the multi-employer funds on the brink of insolvency, according to a report Aubry co-authored.

To help alleviate the problem, employers have put in more money and current workers have agreed to future cuts. A law passed by Congress in 2014 allowed some funds to reduce benefits for current retirees for the first time.

But it still hasn't been enough to make up for the shortfall for some of the funds.

Harry Van Alstyne's and other retirees' pensions were cut 29% to help keep the New York Teamsters fund from running out of money.
Related: The big myth about America's public pension crisis

Just four multi-employer pension funds have cut benefits to date, including the New York Teamsters. Some benefit reduction plans were rejected because the government found that they didn't go far enough to save the fund.

"Whatever you think of the law, it's not cutting it. There has to be another solution," Aubry said.

The question is: Who is going to pay for it?

Some proposals call for the government to provide struggling plans with subsidized loans. A bipartisan Congressional committee has been formed and charged with coming up with a plan by November.

Meanwhile, Van Alstyne and other Teamsters remain hopeful new legislation will reverse their cuts.

"When my wife and I were young and just starting out, we struggled to make a good life for ourselves. I was proud of what we accomplished. Now that we have retired, we are right back where we started — but this time we are struggling to keep what we worked so hard to achieve," he said.
 

Uglytruth

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The question is: Who is going to pay for it?
One thing is for sure........ NOT the overpaid "brokers & managers" that took all your money & ran out the door!
I have a feeling this is going to be a long and ugly thread as time passes. Broken promises, people loosing their homes, nothing to pass down to children, good hard working people going off the deep end when "it" happens to "them". Funny as I was typing this people will end up eating cat food because the liberals stole all their money.
 

gringott

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One thing is for sure........ NOT the overpaid "brokers & managers" that took all your money & ran out the door!
I have a feeling this is going to be a long and ugly thread as time passes. Broken promises, people loosing their homes, nothing to pass down to children, good hard working people going off the deep end when "it" happens to "them". Funny as I was typing this people will end up eating cat food because the liberals stole all their money.
I acknowledge the blame you lay, however, let us not deceive ourselves about the "other" cause - FedRes ZIRP.
It has destroyed or created carnage in personal savings of all kinds, all forms of insurance, all pensions, the stock market, you name it.
 

gringott

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What happens when your pension fund runs out of money
Harry Van Alstyne and his wife Susan used to go out to dinner every Saturday night — until his pension was cut by 29% last October.
Now, they're thinking about selling their home and skipping their annual trip to Maine. They've already dipped into their savings.

This is not the retirement they planned for. After working for 30 years as a truck driver for UPS, Van Alstyne was promised $5,141 a month by the The New York State Teamsters Conference Pension and Retirement Fund.

"I hated the job from day one, but I stayed with it because I was promised a secure pension," said Van Alstyne, now 64.

When he retired in 2006, he was receiving his full pension. But the fund was hit hard during the financial crisis and never fully recovered. A 2016 report projected it would run out of money as soon as 2026.

To save it from going bust, the fund cut current retirees' benefits last year by 29%.

Van Alstyne's pension fell to $3,650 a month.

Related: 1 million Americans are counting on Congress to save their pensions

He is one of the first Americans whose pension benefit was cut after retiring.

Until now, cash-strapped plans have survived by reducing future retirees' benefits and asking employers to contribute more money.

Most at-risk funds are private multi-employer pension funds like Van Alstyne's that were negotiated by unions. These funds had a harder time bouncing back after the recession because many of their workers were part of declining industries, like manufacturing.

Some struggling employers have negotiated ways to exit the plans, or they went bankrupt, leaving remaining employers to cover unfunded liabilities.

"Understandably, the remaining employers left holding the bag haven't always been willing or able to pick up the slack," said JP Aubry, director of state and local research at the Center for Retirement Research at Boston College.

Currently, $76 billion is needed to shore up the multi-employer funds on the brink of insolvency, according to a report Aubry co-authored.

To help alleviate the problem, employers have put in more money and current workers have agreed to future cuts. A law passed by Congress in 2014 allowed some funds to reduce benefits for current retirees for the first time.

But it still hasn't been enough to make up for the shortfall for some of the funds.

Harry Van Alstyne's and other retirees' pensions were cut 29% to help keep the New York Teamsters fund from running out of money.
Related: The big myth about America's public pension crisis

Just four multi-employer pension funds have cut benefits to date, including the New York Teamsters. Some benefit reduction plans were rejected because the government found that they didn't go far enough to save the fund.

"Whatever you think of the law, it's not cutting it. There has to be another solution," Aubry said.

The question is: Who is going to pay for it?

Some proposals call for the government to provide struggling plans with subsidized loans. A bipartisan Congressional committee has been formed and charged with coming up with a plan by November.

Meanwhile, Van Alstyne and other Teamsters remain hopeful new legislation will reverse their cuts.

"When my wife and I were young and just starting out, we struggled to make a good life for ourselves. I was proud of what we accomplished. Now that we have retired, we are right back where we started — but this time we are struggling to keep what we worked so hard to achieve," he said.

He retired at 52 if you can't do the math.
 

edsl48

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ONe thing to add to this is that quite often on these union type plans the members that are finally waking up to reality are the very ones that voted for their union leadership that is the root cause of many of the problems. So, after making their bad decisions they now expect , as stated in the original article" Van Alstyne and other Teamsters remain hopeful new legislation will reverse their cuts." In other words let the public pick up the tab for our bad decisions...and no doubt some politicians will trade a bailout for the unionists votes.
We now see the predictions of those who saved for retirement to be taxed for those who didn't coming into full fruitation
 

Uglytruth

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We now see the predictions of those who saved for retirement to be taxed for those who didn't coming into full fruitation
One has to wonder if that was not the plan all along....... just another way to steal from the treasury.
 

edsl48

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Chicago Fed's Answer For Illinois Pension Crisis Is A Statewide Property Tax!
By: Mark Glennon*


Federal Reserve Bank of Chicago

An audible gasp went out in the breakout room I was in at last month’s pension eventcosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.

Evidently, that wasn’t reality shock enough. This week the Chicago Fed published that proposal formally. It’s linked linked here.

It surely ranks among the most blatantly inhumane and foolish ideas we’ve seen yet.

Homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000.

Is the Chicago Fed blind to human consequences? Confiscatory property tax rates have already robbed hundreds of thousands, maybe millions, of Illinois families of a their home equity — probably the lion’s share of whatever wealth they had.

Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values.

In south Cook County they already average over 5%. Most of those communities are working class, often African-American. The Fed says maybe you could make the tax progressive by exempting lower values, but that’s very difficult to do and, if you did somehow exempt the poor and working class, the bill pushed to the others would be astronomical.

Those rates have already plunged many communities into death spirals, demanding an immediate solution, but the Chicago Fed apparently wants to pour on more of the accelerant.

Don’t they understand that nobody will build on or improve property when property taxes are that high? When taxes are 3% to 6%, that means that any value you add is subject to a perpetuity in that amount on the value of any improvements, senior to your ownership interest and your mortgage. Have they never been to our communities with countless dis-repaired abandoned homes and commercial properties, which are the result?

Get this, which is part of their reasoning: “New taxes wouldn’t affect people thinking of moving to Illinois. While they would have to pay higher property taxes, that would be offset by not having to pay as much for their new homes. In addition, current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden quickly.”

In other words, just confiscate wealth from current owners because they will pay, whether they stay or not, through an immediate reduction in home value.

This proposed tax would only address the five state pensions. What about the other 650-plus pensions in Illinois, particularly those for overlapping jurisdictions in Chicago which are grossly underfunded? The Fed was asked that at last month’s seminar and they, without explanation, said they didn’t bother to cover that.

I’ve earlier met Rick Matoon, one of the Chicago Fed authors of the proposal. He’s a smart, likeable guy who I thought had lots of interesting information. For the life of me, however, I can’t understand how he would put his name on this proposal.

Property can’t leave so seize it. That’s the basic idea.

*Mark Glennon is founder and Executive Editor of Wirepoint
 

gringott

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^^^^^^^^^^^^
Unless your home is on wheels and you can tow it out of state, Illinois is about to tax you into poverty, if they haven't already.
Think about this: If you are planning on selling and fleeing confiscatory property taxes in Illinois, who in the #$%^ are you going to sell to?
The greater fool? Sorry, I don't think there are enough of those.
 

Unca Walt

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INSANITY.

Coupled with blind ignorance.

Hey... sumbody gotta pay all the cops/clerks that retired at 50 years of age and are collecting 90% of their salary and benefits.

It's only fair, right?

What is so awful about raising taxes on the remaining working stiffs? Fuck 'em.
 

Uglytruth

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Just read an article where 800K leaving NY & Jersey and heading to the midwest.
Another article people fleeing CA, Washinton state & all the other liberal shitholes.
Now the rats are fleeing Illinois.
No place is safe anymore. Working from both coasts & the middle out they will bring drugs, illegals, degenerates, liberal ideals and destroy the country from within.
 

Joe King

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Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values.
So if my math is right, that pretty much means that every 20-30 years a homeowner would be paying an amount to the State equal to the appraised value of the property? That's f'ing insanity
...but that's Illinois. If you notice, it says right in the name that the State is ill. Always has been, as far I know.

In south Cook County they already average over 5%. Most of those communities are working class, often African-American. The Fed says maybe you could make the tax progressive by exempting lower values, but that’s very difficult to do and, if you did somehow exempt the poor and working class, the bill pushed to the others would be astronomical.
See? this is the kinda crap ya get when you quit teaching the "hows and whys" of the Constitution in the public schools.
 

edsl48

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Meet America’s next pension casualty: the inventor of chocolate sprinkles
1526044491355.png

In 1923, a young Jewish immigrant from a small town in modern-day Ukraine founded a candy company in Brooklyn, New York that he called “Just Born”.

His name was Samuel Bernstein. And if you enjoy chocolate sprinkles or the hard, chocolate coating around ice cream bars, you can thank Bernstein– he invented them.

Nearly 100 years later, the company is still a family-owned business, producing some well-known brands like Peeps and Hot Tamales.

But business conditions in the Land of the Free have changed quite dramatically since Samuel Bernstein founded the company in 1923.

The costs to manufacture in the United States are substantial. And business regulations can be outright debilitating.

One of the major challenges facing Just Born these days is its gargantuan, underfunded pension fund.

Like a lot of large businesses, Just Born contributes to a pension fund that pays retirement benefits to its employees.

And in 2015, Just Born’s pension fund was deemed to be in “critical status”, prompting management to negotiate a solution with the employee union.

The union simply demanded that Just Born plug the funding gap, as if the company could merely write a check and make the problem go away.

Management pushed back, explaining that the pension gap could bankrupt the company.

And as an alternative, the company proposed to keep all existing retirees and current employees in the old pension plan, while putting all new employees into a different retirement plan.

It seemed like a reasonable solution that would maintain all the benefits that had been promised to existing employees, while still fixing the company’s long-term financial problem.

But the union refused, and the case went to court.

Two weeks ago the judges ruled… and the union won. Just Born would have no choice but to maintain a pension plan that puts the company at serious risk.

It’s literally textbook insanity. The court (and the union) both want to continue the same pension plan and the same terms… but they expect different results.

It’s as if they think the entire situation will somehow magically fix itself.

Those of us living on Planet Earth can probably figure out what’s coming next.

In a few years the fund will be completely insolvent.

And this company, which employs hundreds upon hundreds of well-paid factory workers in the United States, will probably have to start manufacturing overseas in order to save costs.

Honestly it’s some kind of miracle that Just Born is still producing in the US. The owners could have relocated overseas years ago and pocketed tens of millions of dollars in labor and tax savings.

But they didn’t. You’d think the union would have acknowledged that, and tried to find a way to work WITH the company to benefit everyone in the long-term.

Yet thanks to their idiotic union, these workers are stuck with an insolvent pension fund and zero job security.

Now, here’s the really bizarre part: Just Born contributes to something called a “Multi-Employer Pension Fund”.

In other words, it’s not Just Born’s pension fund. They don’t own it. They don’t manage it. And they’re just one of the several large companies (typically within the candy industry) who contribute to it.

So this raises an important question: WHO manages the pension fund?

Why… the UNION, of course.

The multi-employer pension fund that Just Born contributes to is called the Bakery and Confectionery Union and Industry International Pension Fund.

This is a UNION pension fund. It was founded by the Union. And the President of the Union even serves as chairman of the fund.

This is truly incredible.

So basically the union mismanaged its own pension fund, and then legally forced the company into an unsustainable financial position that could cost all the employees their jobs. It’s genius!

Just Born, of course, is just one of countless other businesses that faces a looming pension shortfall.

General Electric has a pension fund that’s underfunded by a whopping $31 billion.

Bloomberg reported last summer that the biggest corporations in the United States collectively have a $382 billion pension shortfall.

Not to worry, though. The federal government long ago set up an agency called the Pension Benefit Guarantee Corporation to bail out insolvent pension funds.

(It’s sort of like an FDIC for pension funds.)

Problem is– the Pension Benefit Guarantee Corporation is itself insolvent and in need of a bailout.

According to the PBGC’s own financial statements, they have a “net financial position” of MINUS $75 billion, and they lost $1.3 billion last year alone.

The federal government isn’t really in a position to help; according to the Treasury Department’s financial statements, Social Security and Medicare have a combined shortfall exceeding $40 TRILLION.

And public pension funds across the 50 states have an estimated combined shortfall of $1.4 TRILLION, according to a 2016 report by the Pew Charitable Trusts.

It doesn’t take a rocket scientist to see what’s coming.

Solvent, well-funded pensions and state/national retirement programs are as rare as mythical unicorns.

Nearly all of them have terminal problems and will likely become insolvent (if they’re not already).

The unions are driving their own pensions into the ground; and the government has ZERO bandwidth to bail anyone out, least of all itself.

So if you’re still more than two decades out from retirement, you can forget about any of these programs being there for you as advertised.

But there is a silver lining here:

The government can’t fix this. The union can’t fix this. But YOU can.

YOU have the ability to take matters into your own hands and establish a robust, well-funded, tax-advantaged retirement plan.

continued with a sales pitch at https://www.sovereignman.com/trends...tes&utm_content=201859_justborn_pensioncrisis
 

gringott

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They have to do what hostess did. Go bankrupt, no more pensions for anybody, a new company starts with the same name and products, and new pension rules and labor contracts. Give the moron unions what they want. Unemployment and no pension. Too bad we can't do the same with the teacher's unions.
 

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Some Union Retirees Could See Pension Benefits Cut 90%, PBGC Chief Warns

Ted Knutson


Retirees covered by some troubled union pension plans could see their benefits slashed dramatically if Congress doesn't provide a fix, PBGC Director Tom Reeder said today Shutterstock
Some union retirees could see their pension benefits cut by 90 percent, Pension Benefit Guaranty Corporation Director Tom Reeder warned today. A retiree getting $8,000 annually now could be cut to less than $1,000.That is a danger, cautioned Reeder, if Congress doesn’t act soon to shore up troubled multiemployer union pension plans and the PBGC’s insurance program that backs them up.

A multiemployer pension plan is typically a workplace retirement savings program created by a union and companies in an industry where people often work for more than one employer in a year like trucking or construction.

Ohio Democratic Senator Sherrod Brown, co-chair of a joint House and Senate committee focused on the issue, said he thinks the chances are high a solution will be found by the time the unit is mandated to come up with a plan in December. He expects serious negotiations among the members will start in July. The Senator said he doubts if prospects for the Democrats to take control of the House and/or the Senate could spur or stop a blueprint from being drafted or alter its contents.

During the joint House-Senate committee hearing, Reeder said the PBGC’s multiemployer insurance fund was running a $65 billion deficit with only $2 billion in assets. The program, which covers 10 million participants and their families in 1,400 plans, is projected to go insolvent in 2025 without a legislative fix.

It will be soon paying out more in insurance benefits than it is taking in from employers in premiums, Reeder said. The PBGC chief said a proposal in President Trump’s 2019 budget to raise premiums for companies in the multiemployer insurance plan would likely be sufficient to shore-up the program for the next 20 years.
 

Mujahideen

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One thing is for sure........ NOT the overpaid "brokers & managers" that took all your money & ran out the door!
I have a feeling this is going to be a long and ugly thread as time passes. Broken promises, people loosing their homes, nothing to pass down to children, good hard working people going off the deep end when "it" happens to "them". Funny as I was typing this people will end up eating cat food because the liberals stole all their money.
IMO, this has to happen before society can truly fix the problem.

Sometimes you gotta get burnt to know not to play with fire.
 

TAEZZAR

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Some Union Retirees Could See Pension Benefits Cut 90%, PBGC Chief Warns
I very much hope that the PERS systems, of all states, follow closely !!!
 

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Uglytruth

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ome union retirees could see their pension benefits cut by 90 percent, Pension Benefit Guaranty Corporation Director Tom Reeder warned today. A retiree getting $8,000 annually now could be cut to less than $1,000.That is a danger,
I want to see it.
1. There has to be someone somewhere who's spouse needs the medical and they were denied. After they pass the remainder spouse has nothing to loose & takes revenge.
2. There has to be someone that takes these things as serious as we do & will extract their pint of blood through a hole they make on their own.
3. These high rent thieves can run but they can't hide from the majority.
4. If govt makes bailouts could we see a 250T debt load?
 

Buck

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Reading this thread makes me both pissed off and saddened

Who wouldn't want security?
Who wouldn't want extra money?
Who wouldn't want extra anything?
why lie about it, who wouldn't want all these things?

What if you were Promised these things?
That's a Deal! A Promise IS a Deal!
WE'VE ALL been lied to, ALL OF US!

I've got no more money for any of them, the victims, and they're livid because they ain't getting what was Promised them
Hmmmm

The Communists HAVE Won!
Unless someone comes up with a way to soothe all the players, all the sheep, without the aid of bullets and broken promises, the bottom line is:
The Communists HAVE WON, it's a done deal

So, the sheep have been shorn, who's next?

2024? LOL, that only prolongs the sheeps angony until they will be terminated with a huge tax increase or some type of further reduction in comfort/services/etc and by 2024, who the hell is going to remember the reductions we've already suffered through, and we're only in 2018

America IS DONE, until I see further proof or any evidence of anything Just, I'm relying on my instincts and declaring, I Have No Further Hope

Good Luck All, see you on the boards but what would a reset cost us all?
What would a Bail-In cost us all, especially now knowing all the banks are invested in the corrupt Stock Market, so, a "correction" (I believe them to ALL BE FAKE, seven year cycles only to wipe out YOUR savings, not theirs, BS, ESPECIALLY NOW THAT WE'VE MISSED SEVERAL OPPORTUNITIES TO HAVE ANOTHER, ON TIME EVEN, bs)
What will the growing homeless population cost to salvage them?
That doesn't include the Illegals, the Trials that keep getting promised, the fucking huge money dump to accomplish anything that will resemble making anything great again,

WE JUST DON'T HAVE IT and there are too many elitists, too much money fighting us towards Communism, we aren't going to win this, AT ALL

no hope, no doom, no gloom, just not enough money and too many selfish folks who'd kill one of us just to be able to climb up on the body, just to see a few inches further over the fence, into the party they'll not ever be invited to

yet they'll still have to pick up the cost
and the debris, when it's over

no hope, just honor

fk that hurt to type
 

Uglytruth

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Promises........... worker fulfills their obligation. Slaved away for 30 years or whatever and met requirements. Don't care if they retire at 50 or 90 a deal's a deal. The slave gets the shaft while the "professionals" lived like kings their whole lives and got their pay "up front'. Even the rank & file .gov workers..... can't blame them for expecting what was promised. I think the up front part might be the biggest lesson to us all. That's reality not a promise for the future. Not golden handcuffs that hold you hostage or take YOUR MONEY BACK if your not fully vested.

I'm big on the seen and the unseen. Workers expect their pensions, period. Yet the unseen is if they had that money up front they might have paid cash for a car or paid the house off in a few years instead of decades, or invested or started their own business or, or, or............ but then the banksters woud not make as much.
 

Thecrensh

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Reading this thread makes me both pissed off and saddened

Who wouldn't want security?
Who wouldn't want extra money?
Who wouldn't want extra anything?
why lie about it, who wouldn't want all these things?

What if you were Promised these things?
That's a Deal! A Promise IS a Deal!
WE'VE ALL been lied to, ALL OF US!

I've got no more money for any of them, the victims, and they're livid because they ain't getting what was Promised them
Hmmmm

The Communists HAVE Won!
Unless someone comes up with a way to soothe all the players, all the sheep, without the aid of bullets and broken promises, the bottom line is:
The Communists HAVE WON, it's a done deal

So, the sheep have been shorn, who's next?

2024? LOL, that only prolongs the sheeps angony until they will be terminated with a huge tax increase or some type of further reduction in comfort/services/etc and by 2024, who the hell is going to remember the reductions we've already suffered through, and we're only in 2018

America IS DONE, until I see further proof or any evidence of anything Just, I'm relying on my instincts and declaring, I Have No Further Hope

Good Luck All, see you on the boards but what would a reset cost us all?
What would a Bail-In cost us all, especially now knowing all the banks are invested in the corrupt Stock Market, so, a "correction" (I believe them to ALL BE FAKE, seven year cycles only to wipe out YOUR savings, not theirs, BS, ESPECIALLY NOW THAT WE'VE MISSED SEVERAL OPPORTUNITIES TO HAVE ANOTHER, ON TIME EVEN, bs)
What will the growing homeless population cost to salvage them?
That doesn't include the Illegals, the Trials that keep getting promised, the fucking huge money dump to accomplish anything that will resemble making anything great again,

WE JUST DON'T HAVE IT and there are too many elitists, too much money fighting us towards Communism, we aren't going to win this, AT ALL

no hope, no doom, no gloom, just not enough money and too many selfish folks who'd kill one of us just to be able to climb up on the body, just to see a few inches further over the fence, into the party they'll not ever be invited to

yet they'll still have to pick up the cost
and the debris, when it's over

no hope, just honor

fk that hurt to type

They haven't quite won yet...but they are on our 4 yard line driving the ball with less than 2 minutes left in the game and we're down by 2 touchdowns. We can do it though.
 

SilverCity

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Heard this earlier. Wonder what a sudden 10% jump in interest rates will look like...

SC
 

edsl48

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What Happens if We All Run Out of Money for Retirement?
f you're afraid you haven't saved enough for a secure retirement, you're not alone.

Americans are increasingly anxious about acquiring the financial resources and savings necessary for a solid retirement foundation. In fact, a 2016 survey of more than 3,200 Americans from the financial firm Allianz found that more than 60 percent of baby boomers fear running out of their savings more than death. So, chances are you're wondering what could happen if the so-called retirement crisis, in which people no longer have the financial capacity to support themselves, comes to fruition in the future. How will the country address Americans outliving their retirement savings and what might retirement look like in years to come?

To help you navigate the transition, we tapped experts for their insights on potential trends, along with strategies for staying prepared to ensure retirement security.

The Landscape: A Retirement Savings Gap

The 2017 Annual Transamerica Retirement Survey of 6,372 American employees over the age of 18 found that 57 percent of Generation X respondents and 55 percent of baby boomers cite outliving their savings and investments as one of their greatest retirement fears. According to the survey, 47 percent of millennials have similar concerns. The report also found that baby boomers have saved an estimated median of $164,000 in all household retirement accounts, Gen X has saved an estimated median of $72,000 and millennials have saved an estimated median of $37,000. Conventional wisdom suggests that retirees have $1 million in their bank account when they retire, but many experts have suggested that amount is not enough. Why? If you assume you withdraw 4 percent of your retirement savings every year, which is what most experts suggest, and you adjust for inflation, you would have around $40,000 to live on annually. While an adequate amount to save each year hinges on the individual and his or her lifestyle, to live comfortably, you'll likely want to aim for more than $1 million in savings.

The Future of Retirement

Last year, the U.S. Government Accountability Office prepared a report on the nation's retirement system and urged Congress to take a look at revamping how the nation saves for retirement. While Social Security is projected to be unable to pay full benefits starting in 2035, the problem goes beyond Social Security issues. Private employer-sponsored plans that offer traditional defined benefits are declining. And while pension plans that are defined contribution plans are on the rise, many individuals aren't saving enough, the report stated. Individual's retirement savings plans are "often low or nonexistent," the Government Accountability Office report stated.

Many professionals tasked with helping future retirees are pessimistic about how everyone will fare as a group. "Pensions are all but extinct, Social Security will be poorly funded for future generations and the gig economy has moved workers away from W-2 employment where retirement savings plans like 401(k)s aren't offered," says Jadon Newman, founder and CEO of Noble Capital, an investment firm in Austin, Texas.

"The burden of caring for [retirees] will primarily fall on public assistance and government entitlement programs, particularly Medicaid. With the cost of Medicaid already predicted to spiral upward over the next several decades, the cost of long-term care for future retirees will put substantial, additional pressure on the federal and state governments to rein in costs," says Kevin Fields, a financial planner who owns Fields Financial Planning in Westerville, Ohio.

It won't just be a crisis where a lot of people are hurting on an individual level; eventually, the retirement crisis will impact the nation's economy, Fields says. "If Medicaid's long-term care assistance is severely curtailed by legislators, many retirees will face a dire situation."

Fields predicts that the health care system will be significantly strained to care for retirees with chronic illnesses. He also predicts that family members will be required to provide an even larger share of long-term care. "The economic impact could be severe, as health care costs spiral out of control and family members are forced to leave the workforce in even larger numbers to provide care," Fields says.


The retirement crisis is already happening, Newman says, "As retirement financial advisors, we meet every week with clients who we must have hard conversations with about their retirement outlook."
He says that many of his clients' dreams and lifestyle goals are going to fall short of what they had been envisioning -- and some will work far longer than they anticipated. Others, he says, will have to simply downgrade the type of life they wanted to have, "particularly if they end up relying on Social Security and Medicare."
A Solution for Gaining Retirement Security
The Government Accountability Office's suggested goals that Congress should work on include promoting universal access to a retirement savings plan, removing some of the complexity and risk in retirement plans and stabilizing federal retirement plans. But for now, it's essentially every retiree for him or herself. In other words, keep saving money, and if you haven't yet grown your retirement fund, start.
For those in Generation Z who are still in school, Fields says that he'd like to see financial literacy as a required class in all public schools. "The government should also initiate an education campaign in an effort to boost the individual savings rate," he says.
But there may be one saving grace for the baby boomers who haven't yet retired. "There aren't enough Gen Xers to fill the positions that are being vacated by retiring baby boomers," says Terri Munro, president of the Financial Planning Association of Georgia, which is located in the city of Woodstock.
The baby boomers who want to remain working or in a semi-retirement phase may be able to continue making a living, Munro says. "Companies are responding by offering more flexible work roles including part-time and consulting positions that accommodate the new vision for retirement." While it may not sound appealing to work in retirement, as people live longer -- and stay healthier longer -- staying employed part time is a simple way to make decent money and avoid worrying about depleting your savings quickly.
Munro, in any case, chooses to try and look at the future optimistically. "In a way, rather than a crisis, the changes in the retirement landscape are more of an evolution, as thoughts of what retirement looks like change," she says.


The key line above ""The burden of caring for [retirees] will primarily fall on public assistance and government entitlement programs, particularly Medicaid " shows once again the Government will tax(confiscate) funds from those who have saved for retirement to take care of those that did not save for their retirement