pension funds

Discussion in 'Economics' started by morganist, Jun 4, 2010.

  1. This is something i have worried about for some time. Regardless of the ageing demographic, in itself a huge problem, the falling stock market value is hitting and will diminish the return on pensions. However this is just the tip of the iceberg. What I am really afraid of is the large default on loans that will grow as employment rises and the working population declines. The worrying thing is not so much the loss of pensions but the cost to the government if they have to support such numbers of elderly people. On top of that boomers have not sufficiently saved for retirement putting even greater stress on the government.

    Not a good time to be a pensioner.
  2. MattF


    I got a friend who thinks he can retire at 40 (in about 10 years) after working at a state job for some 20+ total.

    Good luck when that pension runs out sometime after. He'll be broke and likely back looking for work...or continuing to work because the pension won't pay enough :D
  3. That assumes the pension will not collapse and all the capital is lost, this is now becoming a potential scenario. especially as it is a state pension which is dependent on iland revenue proceeds, which will decrease. Even if that is not the case the likely rise in essentials will devalue the pension.
  4. MattF


    Exactly. Most states have been borrowing for quite some time now to pay their pensions as is.

    I'm not saying it'll necessarily go "broke" before his retirement in 10 years, although the way things are going now there is an outside likelihood.

    It's more likely that retiring at age 40 and expecting that "payout" for the next 20, 30, 40+ years of your life is where it won't happen...or be reduced/devalued where you end up having to either go back to work where you were (if something is available i.e. a desk job) or finding something to supplement elsewhere.

    I do also worry a bit about my father...he's been working in a state job for a few years now as well and is due to qualify/retire in the next 2-3 years at age 65 with what should be a basically full pension. Not so sure that will be supportive down the road either.
  5. The worrying thing is not so much the loss of pensions but the cost to the government if they have to support such numbers of elderly people.

    So Morgan, you're a young guy, what's your retirement plan if the gov't fails to provide or private pensions go bust?

    What irks me is pension planners et al toss out the inflation factor on what you need to live on, hmnnn... least of anyone's worries if pensions reduce benes.

    The only thing to beat inflation is income. Hype about "returns" to beat inflation seldom pans out and the future looks dire.

    Retirees can negate the effect of energy inflation by going to bed early and quit driving. Ta da. Next up, food inflation, all old people eat are donuts. Get my point. I think these people would rather have a gaurenteed income rather than a 401k that shit the bed trying to maximize returns to beat inflation over the years.
  6. precious metals. but that works for few people.
  7. heypa


    You cannot predict the future.
    You cannot realistically prepare for retirement.
    You cannot realistically predict what the gummn't will do tomorrow let alone ten to forty years from now.
    I take that last statement back.
    You can safely predict that the gummen't will find a way to take your expectations away by either taxes or deliberate inflation.
    The dollar I put away for retirement in the 1950's is worth how much now? To steal a quote from McCain " I'm older than dirt.
    You just gotta become filthy rich to make it.
    Maybe the best you can do is just croak the day after you retire.
    For the majority of folks retirement is just desperate existence waiting for the anomaly that wipes you out.
  8. That's insane. No state should be paying retirement benefits to 40 year olds. Hell, I was kinda pissed when I heard recently that cops in my city get to retire at 55 with full benefits.
  9. MattF


    It's the idea not so much of the age, but the experience/time spent there...then the pension % goes up a bit with each year beyond it spent working. 20 I believe is the minimum one can start collecting.

    Since he started at 19/20 (high school, then 2 years community college) and has been there since...40 would be the first year.

    State is Connecticut by the way...and in I think it's in 2012 the state budget (right now) is projected to be 3.6 billion in the red...

    Of course there's just concessions, or layoffs/buyouts instead as we see in enough union negotiations. I don't think it would happen in as much in his union, but it could be one of those (relative) across-the-board deals with all unions or else...

    He has no retirement budget or planning either. Not exactly a sharp knife to begin with as is :D but is married, 2 kids, and bought a home last year...
  10. If he is prepared to downsize he might be alright.
    #10     Jun 5, 2010