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Retirement—Part II—Pensions

by Ken Vincent, Featured Contributor

AFTER A RECENT POST about retirement needs, several people contacted me indicating that they had public sector pensions and therefore were in good shape.  So I thought I would share some information with the millions in that position and nearing retirement.

The Bridgewater Associates, a highly respected hedge fund for many years, recently issued their findings on public sector pensions.

1018476_the_futureIt seems there are $3 trillion in assets against $10 trillion in liabilities in these funds.  Their opinion is that to meet those obligations a return of 9% would be needed over the next 30 years.  No one really believes that to be realistic with most projections settling on 4% as somewhat optimistic.  If that is the reality then 85% of public pensions will fail within 30 years, many of them much sooner.  So, those under the age of 60 have a very high potential of being caught in those adjustments at the time they are most needed.

We have already seen pension funds being altered or eliminated by many levels of the public sector, including school systems.  The latest and most glaring is the situation in the Detroit bankruptcy matter.  In that case one scenario has public sector pensions being cut in half and medical coverage all but eliminated.

One has to wonder about the ethics of those in public entities and the participating unions in promising future benefits they were either unable or unwilling to fund.

Many pension funds in the private sector are in no better shape.  Companies are scrambling to find ways to either increase their funding or to alter the plans.

Clearly a lot of people are taking these situations to heart.  Other data shows that 80% of parents with children under 18 are shifting savings more to retirement accounts and less to future education costs.

Do you agree that pension funds are in jeopardy?  What can and should be done about it?


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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