I’m not a fan of the “greed is good” mentality of Wall Street investment firms. But the next financial crisis that rocks America won’t be driven by bankers behaving badly. It will in fact be driven by pension funds that cannot pay out what they promised to retirees.According to one pension advocacy organization, nearly 1 million working and retired Americans are covered by pension plans at the risk of collapse.
The looming pension crisis is not limited by geography or economic focus. These including former public employees, such as members of South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — and is a staggering$24.1 billion in the red. These include former blue collar workers such as roughly 100,000 coal miners who face serious cuts in pension payments and health coverage thanks to a nearly $6 billion shortfall in the plan for the United Mine Workers of America. And when the bill comes due, we will all be in very big trouble.
It’s bad enough to consider the philosophical fallout here, with reneging on the promise of a pension and thus causing even more distrust of bankers and retirement planners. But I’m speaking about a cold, numbers-based perspective that causes a drag on many parts of the American economy. Consider the following.
Pensioners have no flexibility
According to a Bureau of Labor Statistics report from 2015, the average household income of someone older than age 75 is $34,097 and their average expenses exceed that slightly, at $34,382. It is not an exaggeration, then, to say that even a modest reduction in retirement income makes the typical budget of a 75-year-old unsustainable — even when the average budget is far from luxurious at current levels. This inflexibility is a hard financial reality of someone who is no longer able to work and is reliant on means other than labor to make ends meet.
Social Security is in a tight spot
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They will promote a national retirement plan by saying it's unfair for white people to have 401 k's and minorities don't because of white privilege and then take them away and give you what they think you deserve.
ReplyDeleteThey take a hundred dollars every two weeks from my check and I pay taxes on this every year under ST Pickup on my W2. If this happens, there will a lot of pissed off state and federal employees! At the least I should get back what I have paid into the system. We are forced to pay this and have no choice. I would rather it be put into my 401K that I had from my previous employer. Of course even that is in jeopardy if the stock market collapses.
ReplyDeleteNot to Mention that the Democrats Want to Take Your 401(k) and IRA Money Away, too. First, they Destroy the Economy so that company's are no longer able to offer us Pensions, then they create 401(ks) and IRAs for Us to Save for Our Own Retirement, and then they plan to take it away to pay for Things like Investments in Solar Power Company's and environmental stuff. We are frankly Very Lucky that President Trump is On Our Side and will not let these traitorous DemonRATS get away with this!
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