The Economic Collapse
The Tip Of The Iceberg Of The Coming Retirement Crisis That Will Shake America To The Core
What is going on in Detroit right now is a perfect example of what will soon be happening all over the nation. Many city workers stuck with their jobs for decades because of the promise of a nice pension at the end of the rainbow. But now those promises are going up in smoke. There has even been talk that retirees will only end up getting about 10 cents for every dollar that they were promised.
Needless to say, many pensioners are extremely angry that the promises that were made to them are not going to be kept. The following is from a recent article in the New York Times...
Many retirees see the plan to cut their pensions as a betrayal, saying that they kept their end of a deal but that the city is now reneging. Retired city workers, police officers and 911 operators said in interviews that the promise of reliable retirement income had helped draw them to work for the City of Detroit in the first place, even if they sometimes had to accept smaller salaries or work nights or weekends.But Detroit is far from an isolated case. As Detroit Mayor Dave Bing said the other day, many other cities are heading down the exact same path...
“Does Detroit have a problem?” asked William Shine, 76, a retired police sergeant. “Absolutely. Did I create it? I don’t think so. They made me some promises, and I made them some promises. I kept my promises. They’re not going to keep theirs.”
"We may be one of the first. We are the largest. But we absolutely will not be the last."Yes, Detroit's financial problems are immense. But other major U.S. cities are facing unfunded pension liabilities that are even worse.
For example, here are the unfunded pension liabilities for four financially-troubled large U.S. cities...
Detroit: $3.5 billion
Baltimore: $680 million
Los Angeles: $9.4 billion
Chicago: $19 billion
When you break it down on a per citizen basis, Detroit is actually in better shape than the others...
Detroit: $7,145
Baltimore: $7,247
Los Angeles: $8,437
Chicago: $13,355
And many state governments are in similar shape. Right now, the state of Illinois has unfunded pension liabilities that total approximately $100 billion.
There are some financial "journalists" out there that are attempting to downplay this problem, but sticking our heads in the sand is not going to make any of this go away.
According to Northwestern University Professor John Rauh, the total amount of unfunded pension and healthcare obligations for retirees that state and local governments across the United States have accumulated is 4.4 trillion dollars.
So where are they going to get that money?
They are going to raise your taxes of course.
Just check out what is happening right now in Scranton, Pennsylvania...
Scranton taxpayers could face a 117 percent increase in taxes next year as the city's finances continue to spiral out of control.A 117 percent tax increase?
A new analysis by the Pennsylvania Economy League projects an $18 million deficit for 2014, an amount so massive it outpaces the approximate $17 million the struggling city collects annually
What would Dwight Schrute think of that?
Perhaps you are reading this and you are assuming that your retirement is secure because you work in the private sector.
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