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The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

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Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#41

Post by lr4444lr »

torstenvl wrote: post #14
pzone wrote: post #6

Comparing stock variables (Pension liability shortfall) vs. flow variables (GDP, a rate of annual output) is a mistake that peeves me to no end. That said, the pension shortfall is a disaster playing out in slow motion. We're just waiting for the hard cash constraints to bite - when they do it's not going to be pretty.

But it's not a real comparison. It's just contextualizing. If I say that a brachiosaurus was the size of a house, I'm not saying that your current dwelling is comparable to a 65-million-year-old pile of death and dust. Huge numbers are essentially meaningless to the human mind. But "all economic output of Japan in a year" is something that most people can wrap their heads around a little more easily. We know it's a f…

His argument isn't about conception of scale, it's about a fallacy of units. The analogy would be comparing the annualized diameter increase of a tree to the width of CO2 molecules in a conversation about inputs to environmental policies. The CO2 molecue simply doesn't grow. You have to compare the rate of CO2 release.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#42

Post by miles »

abledon wrote: post #31

How much money does one need to live in retirement? If they are doing daily exercise(1-2hr), cut out most processed foods and sugar , no alcohol , cook all their food from scratch using cheap staple ingredients , entertain themselves with books , community , local events and cut out expensive vacation plane trips (only an invention of the past century). An ‘uncomfortable’ lifestyle shift but doable for a human. [edit…

That reminded me of this quote from Arnold Bennet[0]:

"Nothing that really helps towards perfection costs more than is within the means of every person who reads these pages. The expenses connected with daily meditation, with the building-up of mental habits, with the practice of self-control and of cheerfulness, with the enthronement of reason over the rabble of primeval instincts--these expenses are really, you know, trifling."

[0] https://books.google.com/books?id=XKcyIXBVALsC&pg=PA99

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#43

Post by saosebastiao »

0x00000000 wrote: post #8

>For the past century, a public pension was an ironclad promise Let's not pretend like this was ever seriously going to be sustainable. It's just a big middle finger to future generations while an opportunistic generation got to suck the system dry in prosperous times then peace out.

Yep, just like college tuition, social security, health care, war funding, and housing prices. Pension promises have always been a way for boomers to get the things they want while making future generations pay for it.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#44

Post by jimjimjim »

abledon wrote: post #31

How much money does one need to live in retirement? If they are doing daily exercise(1-2hr), cut out most processed foods and sugar , no alcohol , cook all their food from scratch using cheap staple ingredients , entertain themselves with books , community , local events and cut out expensive vacation plane trips (only an invention of the past century). An ‘uncomfortable’ lifestyle shift but doable for a human. [edit…

unless you get injured.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#45

Post by jstewartmobile »

toomuchtodo wrote: post #10
0x00000000 wrote: post #8

>For the past century, a public pension was an ironclad promise Let's not pretend like this was ever seriously going to be sustainable. It's just a big middle finger to future generations while an opportunistic generation got to suck the system dry in prosperous times then peace out.

> Let's not pretend like this was ever seriously going to be sustainable. There’s a bit of nuance to it. Predictions were made based on historical market returns we’re only now discovering are unrealistic going forward (7-8% historically, 4-5% predicted going forward). The only issue is that no “relief valve” was constructed in the event predicted returns turned out to be inadequate to fully fund the system, triggeri…

> based on historical market returns we’re ---only now--- discovering are unrealistic

This is a crisis that has been unfolding in sloooooow motion. They had been warned, and warned, and warned some more--for decades!

Boomers decided to add it to the credit card anyway.

edit: Also, I don't know a single sane person who ever believed that 7-8% was long-term maintainable.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#46

Post by lovich »

abledon wrote: post #31

How much money does one need to live in retirement? If they are doing daily exercise(1-2hr), cut out most processed foods and sugar , no alcohol , cook all their food from scratch using cheap staple ingredients , entertain themselves with books , community , local events and cut out expensive vacation plane trips (only an invention of the past century). An ‘uncomfortable’ lifestyle shift but doable for a human. [edit…

Just because something's technically doable for a person doesn't mean that the government is going to be able to enforce that on a population eho was expecting a different and, more importantly, a better life than that. That's how you get rebellions or voted out of office if you're the politician trying to enact such legislation.

We have a problem in the US where no one wants to be told what to do my the government but they also expect government handouts regardless of their behavior, and this is a bipartisan issue so it's not some minority of the population that needs to be convinced

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#47

Post by underwater »

Apparently it’s common for police to stack their final few years of work with excessive overtime to inflate their pensions for the rest of their lives. I wonder how much that contributes to budget problems. It certainly seems to be something that could throw off projections. http://www.courant.com/opinion/editorials/hc-ed-police-overt...

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#48

Post by xeromal »

spullara wrote: post #22
betterunix2 wrote: post #9

The choice is raising taxes, reducing spending elsewhere, or demanding workers give up the pensions they were promised. Somehow I doubt anyone is going to agree to pay more in taxes to cover pensions in their state or city. After all, why should the government keep its promises (especially if it means we have to pay for it)?

You could increase the taxes on pensions to return them to sane levels.

I feel wary of doing this because I feel this is what's going to happen with my IRAs. I was promised that if I pay my taxes now I don't have to pay them when I'm old, but supposed the next generation decides they want to change the rules. Do I just pound sand and give up?

Pensioners were given a promise and now we're changing the rules. It feels wrong even if the promise was unrealistic.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#49

Post by AnimalMuppet »

toomuchtodo wrote: post #10
0x00000000 wrote: post #8

>For the past century, a public pension was an ironclad promise Let's not pretend like this was ever seriously going to be sustainable. It's just a big middle finger to future generations while an opportunistic generation got to suck the system dry in prosperous times then peace out.

> Let's not pretend like this was ever seriously going to be sustainable. There’s a bit of nuance to it. Predictions were made based on historical market returns we’re only now discovering are unrealistic going forward (7-8% historically, 4-5% predicted going forward). The only issue is that no “relief valve” was constructed in the event predicted returns turned out to be inadequate to fully fund the system, triggeri…

Were predictions made based on historical market returns? Or were the predictions optimistic even when they were made?

My understanding (which is from a distance, and could easily be wrong) was that even when made, the estimated returns were optimistic - not necessarily wildly optimistic, but toward the top end of the historic range of returns. This reduced the burden of funding the pensions at the time they were defined, making funding them less painful for the people running things at the time they were granted.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#50

Post by sp332 »

abledon wrote: post #31

How much money does one need to live in retirement? If they are doing daily exercise(1-2hr), cut out most processed foods and sugar , no alcohol , cook all their food from scratch using cheap staple ingredients , entertain themselves with books , community , local events and cut out expensive vacation plane trips (only an invention of the past century). An ‘uncomfortable’ lifestyle shift but doable for a human. [edit…

The point is that these people worked under a contract that promised them a certain pension for a certain amount of work. Even if the amount was unrealistically high, reneging after the person has put in all the work is basically fraud, or theft of wages.
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