Monday, May 7, 2012

National Debt Crisis: Will You Still Have a Pension from the State?

Do you think that you or your spouse's state pension fund for retirement will be affected by the national debt crisis? The United States Office of Management and Budget is forecasting fiscal year 2012 to have a gross national debt of 16.2 trillion dollars. Similarly striking statistics reveal that our nation's state pension funds owe workers up to 3 trillion dollars. Many states will not be able to pay its government workers their earned retirement pensions and the Federal Government is not in any position to assist these states with their obligations. One can only hope that these nearly 15 million local and state government employees throughout the country have a backup plan when their state advises them that they will not be receiving their state pensions.
There are many hard working government employees within our nation including those who protect our safety and well being, respond to emergencies, and educate our children. In exchange for their service the employee receives a salary and benefits package which often includes a pension. Most government employees contribute a portion of their salary to the pension fund and the state or local government is required to also contribute to the fund in order for the employee to receive an income once retired. Although there may be far too many state government employees in our nation not once has it been reported that a government employee has not paid their contribution into their pension fund. Unfortunately, some states have not made their required contributions to these pension funds and many of them are underfunded in the tens of billions of dollars.

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State Governments Struggling with Debt

It is hard to believe that almost all of our nation's states have debt levels in the billions of dollars and yet the accounting practices of these states are so inaccurate that the discrepancy between how much they claim to owe the pension funds and the actual amount owed to these funds is over two trillion dollars. The public sector accounting methods fail to take into consideration that when a state invests the pension money in stocks, bonds, and other investments that it will not always receive forecasted rates of return. Fortunately, there is a push for government agencies to begin utilizing more accurate accounting practices but these changes cannot happen soon enough.
Unfortunately most people do not begin to realize how important it is for them to have a backup plan. They probably think the federal government will bail out their state pension fund if the pensions cannot be fully paid. It is not wise to make this assumption. The United States is already in debt approximately 15 trillion dollars and the Federal Reserve does not plan to assist states with their pension funds. Many people will not be able to understand why the United States can send billions of dollars to other nations year after year yet not assist their own working citizens who have worked for the government for decades.
When millions of people are told they will not be receiving their pension incomes they will wish they had not put all of their eggs in one basket. More people need to realize that state pensions are a thing of the past and begin educating themselves on how to make a living without promised government pensions. Our nation will see their government employees lose their pensions as they exist today but it is not too late for state and national government to begin more accurate and transparent accounting practices which will benefit everyone. It is also not too late for existing and retired state workers to begin adding additional sources of income in order to protect themselves from massive layoffs, devalued pensions, and the national debt crisis
Government employees should strongly consider educating themselves on the stability of their current pensions and seek more modern sources of passive income which does not rely solely on government agencies to protect their livelihoods. American state government employees can cast blame and point fingers at government agencies regarding their lost pensions but that will not help matters. Waiting until the pension is totally gone and then saying "This isn't fair" will not make things any better. All states should adopt more transparency regarding pension liabilities and other budgeting processes. Likewise, more state employees should embrace change even if their devalued state pension fund is not their fault.
Jay Rogers wants more people to see how F.A.C.T. based budgeting can provide state governments with linked accounting and budgeting systems which helps ensure a less indebted nation and its states.
Learn how state government employees who rely on their pensions can bailout of their underfunded pension and create passive income for life.

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