Pension Plan Evolution

[@lylecosmopolite]

American state & local govt DB pension plans are at least 33% underfunded. If one accepts Joshuah Rauh's calculation of the amount of underfunding, these plans are 56% underfunded, a catastrophic result. Come the next major recession, states will have to cut pensions drastically.

[@lylecosmopolite]

10/2007 - 2/2009, the US stock market declined 51%. Since then, it has risen 4x. Moral: when the stock market declines, reduce expenditures as much as you can, and WAIT. The market always makes an eventual strong comeback. The ROI on the S&P500, with dividends reinvested, has been 11%/year since 1976.

[@lylecosmopolite]

Drastic medicine for IL and Chicago pensions: First 24K/year of promised pension: untouchable. Next 30K: reduce by 10%. Maximum possible pension: 51K/year. This pension, plus the pension of a spouse, plus an owned home, is adequate. Empty nesters should save as hard as they can, via Roth IRAs. All state and local govt. employees should be enroled in Social Security, NOW. End of story.