2018 in Review: Pension Problems, Hawkish Rate Hikes, and Piles of Debt
A lot happened in 2018, and while it would be a challenge to cover them all, there are three big trends that appear to have defined this year economically. And, each of them had an impact on retirees, investors, and the overall U.S. economic picture.
Here’s a review of 2018 in light of each of these three, impactful trends…
Corporate and Public Pensions Are Sinking Fast
On a local level, a public pension “Hurricane Harvey” hit a small town in Illinois. The city that once had over 20% unemployment, and property tax rates over 5%, had a major pension shortfall. Ultimately, this small town didn’t know how to make ends meet.
But the pension problem isn’t limited to this one small corner in the U.S.
New Jersey has its own pension conundrum too. Their plan back in April was to tax everything and raise enough revenue to cover their shortfall. This month, it appears they aren’t doing too well, according to a Volcker Alliance study:
It’s a math test that New Jersey, Illinois, and even Texas are nearly failing: How to pay for billions of dollars in unfunded liabilities for public-employee pensions and retiree health care.
All in all, states topped $1.4 trillion in underfunded pensions, according to the most recent data available. The story got even more dire worldwide when Sovereign Man reported a pension savings gap approaching $400 trillion. This amount is more than 20 of the world’s largest economies.
This is indeed a crisis. And it could become a crisis for everyone else, whether you have a public pension or not. Especially, if services get cut or tax dollars for a federal bailout are needed. Plus, if tax dollars are needed to rescue failing pensions, there are a whole host of other consequences for lawmakers following that bailout “script.”
…click on the above link to read the rest of the article…
