The Real Pension Issue

I have written at length about the coming collapse of Social Security as well as all of the defined benefit pension plans. If you are expecting to collect "what you are owed," pay attention before it is too late.

The numbers just do not work. In a few years there are going to be more people retiring than at any previous time in history. When you look at the Social Security Trust Fund you will immediately notice that there is no money in the fund. The government "borrows" that money to help meet current obligations. In a few years there will be no more money to borrow. The fund will be upside down. In other words, paying out more money than they take in.

Does that mean you will not get your money? No, but here is the kicker, the money you receive will be money that the government has created out of thin air by selling debt to the Federal Reserve system. We are already running the presses full speed ahead to pay for the huge budget shortfalls and trade debts that we have created and continue to create.

What happens when the government continues to create money? The purchasing power of the dollar continues to fall. It is falling right now. Have you noticed? Gasoline is higher, food is higher, medical insurance is higher; a lot of the things we consume on a regular basis are higher. Have all of those goods and services increased in value? No, the dollar has lost purchasing power.

How will you live on a pension of $2000 per month when gasoline hits $5.00 per gallon and medical insurance costs you $1000 per month? Let me help, you will not be able to survive on your pension alone. You will have to continue working. That is, unless your company out sources your job to India or China.

I got a letter from the Public Employees Retirement Association (PERA) the other day. It was from the top guy and the subject of his letter was to soothe the jitters about the financial stability of PERA. Right now PERA is in better shape than Social Security, but they are still projecting a $13 billion future shortfall that could grow based on the investment income of the fund.

Why not be up front with folks and tell them the painful truth about future benefits? Because they do not want current workers to cash out. They want to keep the game going as long as possible. After all, the folks who run these pension plans need jobs too.

For this reason, you must have a plan to take care of yourself when you reach retirement age. If you are going to quit working, you must have enough set aside to pay your monthly expenses and grow as the dollar declines. Do not depend upon your pension plan or the government to take care of you in your old age.