CNBC has a very interesting (and, depending on where you live, a potentially devastating) article showing the liability of residents of each state to pay off the current shortfall in that state's unfunded debts, pension shortfalls, and so on. Here's a helpful chart to show where you stand.
There's much more information at the link. It's important and highly recommended reading - and remember, the figures above exclude federal government debt and privately held debt, which together amount to far more. Frankly, if you live in one of the worst-performing states on that list, it may be time to do anything and everything you can to get out of there before things get worse!
Peter
Given California's pension crisis, I'm surprised that we don't rank much higher.
ReplyDeleteAnd given CalPers rather . . . creative . . . earnings projections for investments (its improved - their current projections are only double, rather than triple, their performance over the last few years), I'm not certain that we shouldn't be higher up the list.
I'm also surprised that New Jersey ranks at the top - we haven't heard much about their problems, while we've heard a lot about Connecticut, Illinois, and even Hawaii.
It's amusing to count the number of Democrat run states at the top of the list and the number of Republican run states at the bottom of the list.
ReplyDeleteThank God I live in Nebraska.
ReplyDeleteThe accounting on defined benefit pensions ought to be illegal for the moral hazards that it intrinsically creates.
ReplyDeleteThe thing is that California actually pretends that they adjust the required yearly payments to the fund by the participants and the city/county/state agencies that are members based on inflation and projected earnings.
ReplyDeleteBut they consistently assume that - next year - the'll hit a rate of return 2-3 times greater than they did over the previous 1-5 year period, so the required contributions are minimized. And, inevitably, the deficit grows greater each year, so the cost - monetary and political - of honest accounting grows with it, so they continue to kick the can down the road.
After all, it's FAR better to have a catastrophe that bankrupts the state and leaves tens of thousands penniless after the current crop of politicos are out of office than it is to have a few of them fail of reelection now.
Java is right, and I think that holds true for 'most' dem led states!
ReplyDeleteI'm surprised there is that much debt in Alaska. What happened to all the oil money?
ReplyDeleteWe chose to retire in Louisiana, so I don't see us moving anytime soon.
As I understand it, the oil income to Alaska dropped with the oil prices, but state spending did not.
ReplyDeleteCalPer also invest with politics instead of eye towards returns. I lived in California but in the private sector. You can bet I'm paying for all of it.
ReplyDeleteAs BigFire noted, "fiduciary duty" seems to be an unknown concept to CalPers. Much better to divest politically unpopular (but legal, sound, and high paying) investments and give the money to "green" and "minority owned" companies.
ReplyDeleteThough I may choose to donate money to charities, *I* want to make the choice of where and how much. I want my investment managers to be a bunch of cold-hearted analysts whose only concern is to make sure my money grows as much as possible with reasonable safety.
I live in California, but work in private industry. No private pensions, but at least most employers offer a 401K that we can invest in. Given their track record, I'm just as happy not to be in a privately funded defined-benefit pension plan. And they'd arrest a private company's pension managers for the kind of investment chicanery that CalPers is famous for.