Rob Nikolewski:
Public pension systems across the country may be heading toward a financial meltdown, according to a series of stress tests conducted by a respected hedge fund.
Bridgewater Associates, based in Wesport, Conn., estimates it will take about $10 trillion for public pensions to meet their financial obligations in the coming decades as an aging population retires, but according to Bridgewater’s report there is only about $3 trillion in assets to invest.
In order to cover the coming expenses, Bridgewater estimates pension plans would need to earn an annual return of 9 percent.
The report said most states’ public pension systems work on a presumption of a 7-8 percent annual return on their investments, but Bridgewater says a more realistic goal is 4 percent — or even less.
Given all those factors, Bridgewater’s report concludes that as much as 85 percent of public pension plans could run out of money within three decades.
New Mexico’s two big public pension plans — the Public Employees Retirement Association and theEducational Retirement Board — work on presumptions of annual returns of almost 8 percent.
On the other hand, New Mexico is one of the few states that have passed a pension reform “fix” to try to tackle the looming financial problem.
In the 2013 legislative session, Republicans and Democrats — working with PERA, ERB and the state’schapter of American Federation of State County and Municipal Employees — hammered out bills aimed at shoring up pension solvency.
“We haven’t let ours go completely in the cellar,” said state Sen. Stuart Ingle, R-Portales, who sponsored the ERB fix. “We tried to tackle the problem and I’m hopeful that we solved it. But our investments have to make some money. If not, we’ll have to come back and change them.”
If Social Security and private retirement plans had been done the way Galveston County Texas did, there wouldn’t be any pension money problems. They opted out of the Social Security system and set up a 401(k) type of retirement for their employees. The 401(k) hadn’t been invented yet.
Just like Social Security, the employees put part of their pay into a retirement account. The difference is that it is THIER account, and THEIR money. If they die before they retire, their beneficiaries get the money. The employees who worked there long enough are getting more money in retirement than they were earning while working. Imagine getting more money coming in AFTER retirement, than you did while working!
One way to not have a pension problem in the first place, is to do like Weston, Florida did. Try to imagine a city of 65,000 having only 9 employees. How do they do it? They contract out almost everything.
http://www.governing.com/blogs/view/How-.html
The solutions are out there. You just have to look for them, and be ready to try them, and get the government out of the way.
The best advantage of the above pension solutions is twofold:
(1) No government involvement.
(2) It is YOUR money, and you can do whatever you want with it. The whole amount is there any time you want to take some out. You don’t have to wait for a government check.
(3) If you have enough in YOUR account, you can retire at ANY age, and start drawing off of it IMMEDIATELY. You won’t have to wait for the government retirement age.
If the government would set up a retirement account like the above, by the time most individuals would be retirement age, they would have MILLIONS in their account, and could take care of their retirement, AND THEIR MEDICAL EXPENSES.