The looming battle over public pensions
Ron Lieber of the New York Times writes:
"There’s a class war coming to the world of government pensions.The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks. At stake is at least $1 trillion. That’s trillion, with a 't,' as in titanic and terrifying."
This comes at a time when governments don't have a lot of extra money to be shoveling into pension funds.
Lieber has some good advice for the have-nots and haves. For the former: "[L]et your local legislator know that you don’t want to be responsible for every last dollar necessary to cover pension guarantees gone horribly awry. After all, many government employee unions will be taking contrary positions and doing so rather loudly."
For the haves:"If you work for a state or local government, start saving money outside of the pension plan if you haven’t already, because that plan may not last for as long as you need it."
Robert Brokamp is the senior advisor for the Fool's Rule Your Retirement service.