James:
I just read Warren Buffett’s comments about municipal bankruptcies on the rise. (See: Buffet Says Muni Bankruptcies are Set to Climb [1].) Much of the problem is the super generous retirement plans available to many state, federal and local government workers. As always, a bit of common sense would help cushion the impact of this largess.
After 30 years of service workers are allowed to retire with a full pension. Many retiring workers are still in their early fifties. In many cases pensions are being paid out for 10-15 years before the workers are eligible for SS. To put this into perspective, this results in pension payments (for this calculation I arbitrarily used $500 a month-still way too low) of between $60,000 to $90,000 in benefits paid before the workers goes on Social Security. If the present pensions were kept (still far too generous) and the workers required to begin receiving their pension benefits at age 65 (or whatever the Social Security retirement age is) it would cushion the impact of the insane pension costs.
An ex-government worker in my neighborhood is 82 years old and has been retired from his government job for 29 years.
BTW, I recently read that California’s pension plans are underfunded by $62 billion dollars. There is no way that this deficit can be made up. The most logical scenario is that, when the younger workers reach retirement age, there will be no pension for them. – Bob G.