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tony

The Pension Gamble

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This video is 54 minutes long (YIKES) and I watched it in bits and pieces today. PBS once again does a great job with it Frontline programing. I think its worth watching and very applicable to teachers.

 

"The Pension Gamble" goes inside the volatile fight over pensions that’s playing out in one state, and examines the broader consequences for teachers, police officers, firefighters and public employees everywhere.

 

https://www.pbs.org/video/the-pension-gamble-hzokyh/

 

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This was great thanks for posting it.  I’m a NJ teacher who has been questioning what will become of my pension when I am set to retire 20 years from now.  Last I read, NJ was slightly worse off than Kentucky in regards to un-funded liabilities.  As of the last report by Pew Charitable Trust NJ was around 30%!

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Jeb

If I remember correctly you brought up this pension issue before on this site. I hope this gives you a heads up on what might/ could happen.  Even as I am retired now and collecting my pension I worry for what changes might come to others and how devastating it could all be for you all .  Make sure you work on supplemental savings beyond the pension just in case it all goes wrong. Its easy to assume it will never happen but there are plenty of people in industry who were once promised pensions and you know what happened.  Too many teachers out there not saving because they think their pension will always be there as it is currently presented. 

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Thanks Tony. I read up further on Kentucky.  What’s more frightening here is that these teachers don’t pay into Social Security!  This is awful.  I feel like one more 2008 could fast forward this crisis for a lot of states.

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11 minutes ago, jebjebitz said:

Thanks Tony. I read up further on Kentucky.  What’s more frightening here is that these teachers don’t pay into Social Security!  This is awful.  I feel like one more 2008 could fast forward this crisis for a lot of states.

I think you are so right on that point. I think there could be  a gradual reduction in pension benefits again for teachers in some states if the next recession is another harsh one and budgets get stretched.  That is why a quality 403b plan is so important going forward for teachers. Teachers though must recognize that they might not be able to count on their pension as a stand alone and  they  must  start grabbing the bull by the horns by developing some level of financial understanding. and demanding better 403b options. Plus many teachers will never stay in the profession long enough to claim a full benefit which makes a good 403b option even more important.

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The FI and FIRE movements assume that pensions and SS will not be there in 20-40 years, and a these young people's future of excessive spending with bills, expensive and useless things, and new car payments with a stressful job to pay for it all is totally rejected! 

If they are wrong, they will be in good financial shape.

If they are right, they will be in good financial shape. 

Funny how it works that way. Having a good relationship with money during the working years with saving, investing, living a simple life within your means, answers so many problems while you are working, not just for retirement. 

I believe Bob Brinker on his radio show (or one of his guests) said that doing all of the above makes you a better more compassionate person.  I AGREE 100%!

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3 hours ago, sschullo said:

If they are wrong, they will be in good financial shape.

If they are right, they will be in good financial shape. 

I believe Bob Brinker on his radio show (or one of his guests) said that doing all of the above makes you a better more compassionate person.  I AGREE 100%!

 
  •  

That is a good way to look at it.  Thumbs up on those  points. 

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2 hours ago, jebjebitz said:

So, if a pension looks like it will fail, does an investment in annuity make sense?

I say not in the accumulation stage of your life because the high fees hold you back. No to what these sharks are pushing in k12 as they are more of a benefit to the salesperson and company selling them.. Once retired if you need cash flow  as a result of changes in pension then maybe yes but even then you need to do your research. I would for your current situation work on saving as much as possible on a steady basis in a low cost index fund  portfolio or target fund.  I think Vanguard sells retirement annuities but not sure.

Here is some info  https://www.fool.com/retirement/2016/12/29/retirement-annuity-worth-it.aspx

 

 

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Thanks Tony for posting the link to the Frontline program on pensions! It got me interested in doing some rereading on the subject:

WA State’s TRS 3 plan which is a hybrid pension plan, part defined benefit (DB) and part defined contribution (DC). The following states have adopted hybrid teachers retirement plans for new hires: Indiana, Oregon, Florida, Ohio, Michigan, Rhode Island, South Carolina, Alaska, Washington and West Virginia. https://caldercenter.org/sites/default/files/wp-81.pdf  It seems likely that states have been added to the list in the last 8 years.

And rereading John Bogle’s 2011 book and the chapter on our retirement system:

“I would argue that the shift from DB plans to DC plans is not only an inevitable move, but a move in the right direction in providing worker retirement security.”

Bogle, John C.. The Clash of the Cultures: Investment vs. Speculation (Kindle Locations 4469-4470). Wiley. Kindle Edition.

Bogle lists many advantages of DC plans over DB plans. Very interesting!

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6 hours ago, tony said:

I say not in the accumulation stage of your life because the high fees hold you back. No to what these sharks are pushing in k12 as they are more of a benefit to the salesperson and company selling them.. Once retired if you need cash flow  as a result of changes in pension then maybe yes but even then you need to do your research. I would for your current situation work on saving as much as possible on a steady basis in a low cost index fund  portfolio or target fund.  I think Vanguard sells retirement annuities but not sure.

Here is some info  https://www.fool.com/retirement/2016/12/29/retirement-annuity-worth-it.aspx

 

 

Thanks Tony

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