PENSIONS: WHAT YOU WERE PROMISED MAY NOT BE DELIVERED

#pensions #retirement #RetirementSavings
Retired Teamsters are sweating.
For those covered by the Central States Pension Fund, a multiemployer pension fund, the outlook is grim.
Central States is paying out $3.46 for every dollar it’s taking in, according to Mary Sanchez, columnist for The Kansas City Star. Her column appeared in a February 2016 edition of The Atlanta Journal-Constitution.
To avert a dissolution of the fund, Central States applied to the Treasury Department, the federal Pension Benefit Guaranty Corp., which ensures pensions against bankruptcy, and the Department of Labor for permission to cut pension payments to beneficiaries, Sanchez writes.
If the plan goes through, many beneficiaries would face cuts of up to 60 percent in the payment they had spent their lives working for, believing it was guaranteed, Sanchez writes. Until 2014, it wasn’t legal to do that. But that year, the Multiemployer Pension Reform Act was attached at the last minute to a must-pass omnibus spending bill, according to Sanchez.
On its face, it’s not fair to those retirees. It is not their fault that their pension fund is losing its economic viability.
But it’s not as if this was a surprise. We’ve been warned for years that because there are more retirees than workers to support them, a pension crisis was looming.
The Great Recession exacerbated the problem because many of the workers have lost their jobs. In the case of the Teamsters, union membership has declined. There are fewer jobs, and more of the jobs that still exist are being done by non-union labor.
In fact, many employers are not including pension benefits as part of the employment package.
If you are still working, chances are very good that you are on your own to fund your retirement.
What to do?
First, especially if you are young, dedicate a portion of what you earn toward your retirement. Put that amount from each paycheck into a fund and, with the help of a trusted adviser, invest it properly. Don’t fret the gyrations of the stock market. Time usually heals such wounds, and the market, over time, has proved to increase a person’s wealth considerably.
Another solution is to find one of the many alternative ways to earn money outside of your job, and see whether it is right for you. For one of the best, visit www.bign.com/pbilodeau. If you like what you see, and do it properly over time, you may not have to worry about your retirement.
If you are currently retired, or near retirement, such Plan B options may help you live a secure retirement.
As Sanchez points out, the solution to the pension debacle will be costly. Even the Pension Benefit Guaranty Corp. is in danger, she writes.
Though making the pensioners pay the price may be unfair, it may be unavoidable.
Even if you were promised a good, secure pension, be it from the public or private sector, don’t presume those promises will be kept forever. The option of working longer may not be available. It’s best to take such matters into your own hands. Only you can assure a comfortable, secure retirement.
Peter

MIDDLE CLASS DISAPPEARING? TOO LATE FOR BLAME!

Many of us dreamed of a good job, nice house, great family and never having to worry that all that will go away.
Slowly – or perhaps not so slowly – it may be.
In August 2012, Kansas City Star columnist Mary Sanchez took a look at the problem, thoroughly examined by reporters Donald L. Barlett and James B. Steele in their book, “The Betrayal of the American Dream.”
The book details how the middle class is eroding, and how those who consider themselves part of the middle class are voting in favor of people and policies that may be against their own economic interests.
Barlett and Steele, according to Sanchez, point to 1985 as a pivotal year. From 1950 through 1985, the number of American workers with defined-benefit pension plans grew. Since 1985, employers have killed 84,350 defined-benefit pension plans.
These pensions, combined with Social Security – also in peril over time – kept the middle class in the middle class during their elder years.
One may argue that pension plans with employee contributions, combined with company matches, are even better for the employees. That certainly may be true if the employees contribute to or near the maximum allowed by law, AND the financial markets behave.
In recent years, the behavior of the financial markets has been less than stellar. Companies and other employers have had difficulty sustaining their pension plans. The Baby Boom generation is retiring in earnest, thus stressing any type of pension plan.
BLAME NOT IMPORTANT! WHAT TO DO NOW?
Who is at fault here? That’s no longer important. The important thing is what workers do now.
If you have a job in which working past normal retirement age is tenable, that’s an option. If that is not an option for you, you probably need a Plan B. There are many Plan B options out there. To check out one really good one, visit www.bign.com/pbilodeau
If you have a pension that has not gone away, consider yourself blessed. You’ve worked hard for it and certainly deserve it. However, others who’ve worked just as hard may not be as lucky. Their employers have broken their promises. Or, their employers never made the promise. Or, their employers have stopped making promises. If you have contributed toward your own pension, you will still have something. But your elder-years lifestyle, or perhaps your current lifestyle, hangs in the balance.
As many advocate less dependence on government, they are in effect advocating more dependency on employers – and many employers like that. Many employers like to see a certain amount of desperation among their staffs. They want people not to get too comfortable in their jobs. They want to maintain the right to break a promise if it proves too difficult to keep.
As an employee, there is little YOU can do about that, other than to leave. The goal becomes to hang in until YOU decide it’s time to go. That may not always be possible.
Consider carefully your own economic interests before making any decision. Don’t be fooled into thinking you’ll be taken care of, by either government or your employer, when neither may be the case. Not all pensions – even those from the government — will be guaranteed.
If you are young, PRESUME no one will take care of you. If you are older, and have been jilted by your employer, find a Plan B. Try not to work longer than you want to – easier said than done, certainly.
It’s not a matter of what’s happened and whose fault it is. It’s much too late for that in most cases. It’s a matter of how YOU solve YOUR problem, even if YOUR problem is not YOUR fault. Choose carefully.
Peter