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One other area in desperate need of reform is the "double" and "triple" dippers- and almost all of them are politicians or connected to politicians. How many of our politicians get salaries and pensions from multiple public patronage jobs that they hold AT THE SAME TIME. They will retire from one patronage job and take their pension and turn right around and start working for another patronage job. I've noticed most of the people doing this are not the lifetime municipal, county, or state worker working one job, but the political hack who gets a cushy high paying job and stays just long enough to qualify for the pension. Can anyone say "Port Authority".
This is also a good point. But if you step back, the real issue is the government. I realize that may make people's eye glaze over like "oh, one of THOSE people." But consider, the government is supposed to serve the people. Instead, it's the opposite. Most of us, who are not in government, just go to work and pay our taxes. Meanwhile, look at what government is doing to "serve" you. They make more than you, they get pensions for life and benefits for life, and nobody is happy with the work they do. Meanwhile, they play these games where they dole out cushy jobs to friends, double dip, and generally just find ways to get more money for themselves.
Here's just an example. Ask yourself what a mayor does. Heck if I really know. I'm almost positive it's essentially a figurehead job. Basically, the title itself and the honor attached to it should be the reward. You're telling me that if your mayor died today, your town would immediately fall into chaos and blow up? But I bet your mayor gets paid a very nice salary. I could go down the line. Your police department does not function because of the "top cop." It's a ceremonial position, but one that probably has a close-to-or-above-six-figure salary with an equally bloated pension. I could go into most government offices and probably eliminate an average of half of the workers at a minimum based purely on observing what they do.
paperboyo- the amount I contributed to the pension plus the 4% of my salary the State was supposed to contribute with the actual rate of return the fund earned on a year by year basis was more than enough to pay my pension for the length of time someone my age is expected to live.
Those numbers are all provable because they are based on real numbers that have actual occurred.
The real benefit of a contributory pension over a 401k is that you are protected from outliving your money. The downside is you can not leave any money beyond your spouse. On average if the plan sets the formula correctly those two balance out. Some people live longer than the average some do not. That means some people (not all) get more from a pension than they would from a 401k while others die earlier and do not leave money to heirs like they could with a 401k.
Another benefit is pensions are professional managed so the return/risk ratio is better than for individuals managing their own 401k.
paperboyo- the amount I contributed to the pension plus the 4% of my salary the State was supposed to contribute with the actual rate of return the fund earned on a year by year basis was more than enough to pay my pension for the length of time someone my age is expected to live.
Those numbers are all provable because they are based on real numbers that have actual occurred.
Out of curiosity, what's your pension, if you don't mind saying since you're anonymous. What percentage of your salary and what is the amount per year? If you don't want to say, that's understandable.
By the way, when you keep saying that things "average out," I think you're not understanding what that means because you're using that incorrectly. Pensions aren't calculated based on age. In other words, it's not like a pension is supposed to last you until you're 70 and some people die at age 68 and others die at 72 and it "averages out." There's no "actuarial table" like insurance, either. It's a rate and percentage decided solely based on people striking repeatedly. That's why it doesn't follow any logical or sustainable formula, regardless of you insisting it does.
Your pension wasn't set by actuarial tables any more than government salaries were set by the market. For example, if a private business pays a worker $40,000, that's fine. If they paid too much, they'll go out of business. If the government pays someone $40,000, it's probably almost arbitrary and has no relationship to supply or demand. You'd be comparing apples to oranges.
I have no problem giving you the data. If I retire 01/01/15 my pension would be $56,000 a year. I would be 57. The average age for someone 57 to die I believe is now 84. How much would my account have to have in it to collect $57,000 for 27 years leaving a balance of zero at the end?
Now also understand that the average large pension fund had earnings of 8.5% over the last 50 years. By the way the NJ pension prior to being privatized and while managed by State workers averaged higher than that but for arguments sake we will use an average return of 8.5% for my account.
Going forward what number do you want to use for an average return 5%? So how much would my account need to be worth to draw down $57,000 again leaving zero at the end.
I started in the pension system in January 1980. I have had steady promotions and salary increases. No spiking.
The pension formula does use actuarial tables because if you choose to leave part of your pension to your spouse it reduces your pension to account for the extra time it will pay the benefit. The more you want to leave your spouse the greater reduction.
I have no problem giving you the data. If I retire 01/01/15 my pension would be $56,000 a year. I would be 57. The average age for someone 57 to die I believe is now 84. How much would my account have to have in it to collect $57,000 for 27 years leaving a balance of zero at the end?
I have no idea off the top of my head. I'm thinking it would have to be in the millions of dollars, off the top of my head. Also, I'm sure you also get benefits for that length of time.
That's the point. You're getting basically someone's actually salary for the length of your life. And you could retire at age 57. And you don't read that and go "huh, that's ...weird." Again, I get that you feel that you earned it and you were promised it and nobody's expecting you to turn it down. I'm just saying that if you were a third-party, any reasonable person would immediately recognize how unsustainable it is.
The pension formula does use actuarial tables because if you choose to leave part of your pension to your spouse it reduces your pension to account for the extra time it will pay the benefit. The more you want to leave your spouse the greater reduction.
No offense, but that's not an actuarial risk. Insurance companies function using actuarial tables, as in they figure out when you'll probably die and charge you accordingly. A pension will robotically pay you regardless of anything. If you lived to be 120, it would just keep sending the checks. It has no connection to risk tables at all.
But to get that you do not need $1.5 million in your account do you? Remember I have also put money in the fund for 35 years.
I am telling you my account would fund my pension if it was set up as a 401k.
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