Actually, the death knell for PERS was the 3% COLA that was completely unfunded and that was done when at least the leader of the house at least was a boomer. Guessing a plurality of the legislators were.
OT: Is it possible to kick the fiscal responsibility can down the road ad infinitum? (PERS related - financial wizards weigh in)
- Thread starter horshack.sixpack
- Start date
$1.35 Trillion is >33% of 2021 federal tax revenue. That is not nothing, but yes, if you spread it over 50 years, it would only be like 1.14% of annual tax revenue. But one problem is that's just statewide pensions. There are also plenty of municipal and other pensions that are also unfunded and then the federal government itself has a $5.3 trillion (net present value) of shortfalls of social security over the next 75 years. So put just the statewide pensions and social security shortfall for the next 75 years and amortize them over 75 years, and you end up with annual payments that are 5.6% of tax revenue. It would not be painless to cut out 5.6 percent of tax revenue from spending or to add 5.6% to tax revenue. But of course, we're not on a sustainable spending path right now ignoring those issues. so we'd have to get our annual deficit back to something around 3, maybe 4% on average, and then find a way to cut another 5.6% of tax revenue out of spending.
So even if you say 17 medicare recipients, 17 pensions that aren't state wide, you still end up with some pretty painful adjustments even if you assume we flipped a light switch tomorrow and started acting prudently regardless of the political realities. Of course we're not going to start acting prudently until we have no other choice and we're not going to cut medicare spending to match revenue. Doubt we're going to leave non-statewide penions out to dry while bailing out statewide pensions, but it's at least possible.
Full retirement isn't nearly as big of a problem as setting the retirement pay based on your high 3 (or 4 or whatever it is now). Either contributions have to be actuarily set (meaning if you get a 30% raise for the last 3 years the contributions need to be astronomical to fund that 30% increase in annual payments for the next few decades with only 3 years of contributions) or the pay needs to be based on average pay, not high 3.
There are so many relatively easy and painless changes that could have been made to make PERS sustainable. THe problem is too many of hte legislators that could have made the changes wanted to take advantage by working for a PERS participant employer for a few years after office at 6 figures so they can bank a $60k a year pension (with annual increases) without ever having to save or contribute to it. It would have been better to just make SLRP give all those benefits only to former legislators and make PERS sustainable.
If I can find time to get to the crossroads and sell my soul before the filing deadline, I will.***
Yep! And that high 3 game is well established and all state agencies work together to make sure that as people get close to retirement they get special consideration for "high" level jobs for their last 3 years. I'm sure some people retire from the job they worked forever, but many find their way up at least 1 tier for their last 3 years. I think they see that, plus the "13th check" as their reparations for being underpaid for 20+ years.
A leisurely retirement for the average American is a relatively new thing, only a couple of generations old. Up through WW2 most people worked (or contributed in some way) as long as physically able and many lived with one of their children during the last stage of life. With the crazy costs of health care for seniors, nursing homes, elder care, longer life spans, more materialism, etc., Gen X may be the last generation with a real retirement.
My sister in law and wife are dealing with this now with my mother in law. They’re having to try to take care of her and work and it’s not pretty. She’s borderline for needing to be put in a nursing home but they can’t force her to do it.
I was thinking SLRP is separately funded from PERS and the PERS shortfall was in addition to any SLRP shortfall? However irresponsible SLRP may be, it's probably manageable for the state just because there are so few legislators at the end of the day.
I think the legislators pay both sides of SLRP? Not sure, but my buddy has a theory that all the special sessions called during the year are just a ruse to fund it and put mo' money in the pockets of the representatives.
It's amazing how quickly retirement at 62 came to be seen as an entitlement rather than a luxury. Had a relative retire recently after her financial advisor told her she needed to keep working for another few years to at least get to full retirement age for SS. Relative just said she didn't want to wait and she'll figure it out later. Figuring it out apparently means she's going to continue her current standard of living for now and eventually have a drastic change when her money runs out. I get feeling like she wants to retire while she feels young and she can just sit in her house and live off social security when she's older, but not sure her older self is going to be happy with the tradeoff and her family has a history of longevity, with lots of relatives living to late 80's and early 90's, and mostly staying pretty active through their 70's.
Nearing retirement with a nice state pension. Our system protects the elderly at the expense of the young. Young Americans don't seem to know how to change this nor do they seem all that interested in doing so. It's easy to distract their attention with the next absolute moral certainty about some new identity group that needs protecting.
It's going to be interesting to see when the working population just says 17 it. The boomer population is going to be so big, it may take civil disobedience to stop younger workers from being basically indentured servants paying back "debt" older retirees promised themselves younger workers would have to pay.
Semi-OT:
finance.yahoo.com
Chicago’s Shaky Pension Funds Face New Hit From Looming Downturn
(Bloomberg) -- As 2022 unfolded, Chicago’s long-troubled pension funds faced a new shortfall: A delay in property tax receipts left the system without enough money to pay the city’s retirees.Most Read from BloombergSouth Korea Sends Drones to Kim Jong Un’s Airspace in Unprecedented MoveChina...
We spend trillions on foreign wars. I suspect the federal govt is going to bailout some pension funds. It's already doing so under Biden (Teamsters pension). It's a good idea to keep an eye on Wall Street so that we don't have another meltdown like in 2008.
My mother did the same thing. She's 87 now and we have to kick in a lot to support her. Her mother lived to 96 so my mom likely has 10 more years left. She could have worked many more years, so she left a lot of money on the table. She still wants to live like she did while working, where as her mother was very content just setting home, working in her garden and gossiping on the land line.
Yeah. My mother’s side of the family has had lots of relatives live to the 80s.
My father’s side though, men die in their 70s of prostate cancer.
And that means my retirement plans are…
Full retirement should have been at the very least set at 30 years before I started in PERS in the mid-90s.
But you play according to the rules that are set in place at that time.
Sure, created in 1952 but mismanaged by boomers for around a solid 30 years.
It should also be based on the average earnings over that 30 years weighted for inflation. Instead, you have people that work at the top level for 3 years, pad their stats with one foot out the door the entire time. Why must their entire retirement be based on the highest 3 year salary level.... My isn't. No one's is.
If anything, my retirement is heavily based on my lowest production years when I first got out of school because of compounding interest gains over time.
I honestly don't even think about retirement. I put what i can aside (401k/IRA/Brokerage) and keep working. My contemporaries are always talking about their "number" so they can retire. I don't have a number. I also like my job, which I realize helps my disposition. If I remain mentally and physically able to work, and have skills that continue to be relevant, I could see me considering retiring at retirement age.
I qualified for PERS retirement not long ago & while I’m not going to retire from working now, I’ve found that it’s become freeing because I finally have options.
For several years previously, I’ve felt trapped & staid because I’ve advanced as far as I can and so-called PERS lateral moves meant that I would have to go two steps back financially which I didn’t want.
Man, if I were looking at a potential 30 year retirement that was going to be funded by PERS, I'd really be looking at options to start taking PERS payments now and getting a non-PERS job somewhere. I don't think PERS is at risk of any eminent default, but if we keep kicking the can down the road another 2 decades, we could get to the math is not optional point. I just don't know what happens when PERS is suing the state for payment and the legislature is in the position that they can't politically cut any more services or raise taxes any more.
I started and am grandfathered in on the 25-year plan which means 50 percent of the average of the highest 4 years would be what folks would get.
I’m not actively looking for a non-PERS job but if one comes up and preferably in Mississippi (got family considerations), I'm going to at the very least look at it.
I didn't say it's what I would do. I was answering the question on if it was possible. I am the exact opposite with my finances (save 75% of what I earn and invest it conservatively).
This goes beyond Jackson. Just keep re-electing the same people to the Senate and House in DC. Eventually Mississippi will have someone become Chair of Appropriations and Mississippi will be in the good old days of Thad Cochran again
That was the genesis of my OP. I saw that JJ post and thought to myself, PERS has been a mess for decades. How long can it be a mess and nobody have to pay the piper. My wife is a teacher so I'm interested in the topic personally.
I think you were being sincere, and I agree. I know a guy, not me, who gives away 90% of his income with a goal of 95%. Older. Wealthy. But started years ago intentionally working toward being able to give more away and has stuck to it. Not everybody lives the same way or has the same view of money. I'd like to be more like the 90% guy, but I wouldn't be able to eat. Maybe one day...
I was definitely being sincere. Saving is something I’ve made a conscious effort to improve on the last few years. I saved very little the first about 10 years out of college. Playing catch up now. To live off 25%, you’d have to be bringing in fishwater money.
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