50 years of pension for 20 years of work

[meadandale]

One firefighter I know formed one of the most well known craft brewers in San Diego..Alpine Brewing Company. He brews the beer in his spare time.

When I asked him why he didn’t just quit his firefighter job so he could expand capacity (he can’t keep up with demand for his beer) he laughed and said that he was close to retirement and their was no way he was giving up his pension and benefits.

So, let’s see, booming entrepreneur who’d rather stay in a firefighter position rather than grow his profitable business? Runs a whole other business on the side (one that is VERY labor intensive) while he’s working fulltime as a firefighter? Has obviously decided that staying around for his pension is worth more than the opportunity to grow the business.

Draw your own conclusions…I know I have.

[briansd1]

[quote=pri_dk]The issue with state employee pensions is that the public does not understand just how much they cost.

Take an example of someone who retires at 50, with a pension of $80K/year (100% of their final pay, which is not uncommon.)

Now do a little finance math: If this person lives to age 75 (which is about average), they receive that payout for 25 years. Using a discount rate of 5%, the value of this pension at retirement age is $1.1 million. This is, in effect, what the state must set aside to cover the pension cost (which they are currently not doing.)

The public may be aware of state employee salaries, but few people understand that many are essentially getting a million plus dollar payout when they retire at an early age.

BTW: Do the math for military retirement and it is similar: after 20 years of service an enlisted person can get half pay forever (with COLA). With life expectancies where they are today, this is easily worth half a million dollars. Not a bad bonus for someone under the age of 40.

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

Good post and thank you for doing the math.

It would be nice if we lived in utopia and everyone could live a charmed life.

We need to pay what we can afford. As someone posted before, the real issue is spending growth.

Government spending has outstripped inflation and population growth in the last few decades. That is simply unsustainable, and some time in the future, society will collapse because we are spending more than we produce.

Personally, I would like to see some municipal bankruptcies and the state forced to drastically cut back as the voters defeat new taxes. We need that kind of catalyst to reset our priorities.

[briansd1]

[quote=pri_dk]The issue with state employee pensions is that the public does not understand just how much they cost.

Take an example of someone who retires at 50, with a pension of $80K/year (100% of their final pay, which is not uncommon.)

Now do a little finance math: If this person lives to age 75 (which is about average), they receive that payout for 25 years. Using a discount rate of 5%, the value of this pension at retirement age is $1.1 million. This is, in effect, what the state must set aside to cover the pension cost (which they are currently not doing.)

The public may be aware of state employee salaries, but few people understand that many are essentially getting a million plus dollar payout when they retire at an early age.

BTW: Do the math for military retirement and it is similar: after 20 years of service an enlisted person can get half pay forever (with COLA). With life expectancies where they are today, this is easily worth half a million dollars. Not a bad bonus for someone under the age of 40.

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

Good post and thank you for doing the math.

It would be nice if we lived in utopia and everyone could live a charmed life.

We need to pay what we can afford. As someone posted before, the real issue is spending growth.

Government spending has outstripped inflation and population growth in the last few decades. That is simply unsustainable, and some time in the future, society will collapse because we are spending more than we produce.

Personally, I would like to see some municipal bankruptcies and the state forced to drastically cut back as the voters defeat new taxes. We need that kind of catalyst to reset our priorities.

[briansd1]

[quote=pri_dk]The issue with state employee pensions is that the public does not understand just how much they cost.

Take an example of someone who retires at 50, with a pension of $80K/year (100% of their final pay, which is not uncommon.)

Now do a little finance math: If this person lives to age 75 (which is about average), they receive that payout for 25 years. Using a discount rate of 5%, the value of this pension at retirement age is $1.1 million. This is, in effect, what the state must set aside to cover the pension cost (which they are currently not doing.)

The public may be aware of state employee salaries, but few people understand that many are essentially getting a million plus dollar payout when they retire at an early age.

BTW: Do the math for military retirement and it is similar: after 20 years of service an enlisted person can get half pay forever (with COLA). With life expectancies where they are today, this is easily worth half a million dollars. Not a bad bonus for someone under the age of 40.

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

Good post and thank you for doing the math.

It would be nice if we lived in utopia and everyone could live a charmed life.

We need to pay what we can afford. As someone posted before, the real issue is spending growth.

Government spending has outstripped inflation and population growth in the last few decades. That is simply unsustainable, and some time in the future, society will collapse because we are spending more than we produce.

Personally, I would like to see some municipal bankruptcies and the state forced to drastically cut back as the voters defeat new taxes. We need that kind of catalyst to reset our priorities.

[briansd1]

[quote=pri_dk]The issue with state employee pensions is that the public does not understand just how much they cost.

Take an example of someone who retires at 50, with a pension of $80K/year (100% of their final pay, which is not uncommon.)

Now do a little finance math: If this person lives to age 75 (which is about average), they receive that payout for 25 years. Using a discount rate of 5%, the value of this pension at retirement age is $1.1 million. This is, in effect, what the state must set aside to cover the pension cost (which they are currently not doing.)

The public may be aware of state employee salaries, but few people understand that many are essentially getting a million plus dollar payout when they retire at an early age.

BTW: Do the math for military retirement and it is similar: after 20 years of service an enlisted person can get half pay forever (with COLA). With life expectancies where they are today, this is easily worth half a million dollars. Not a bad bonus for someone under the age of 40.

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

Good post and thank you for doing the math.

It would be nice if we lived in utopia and everyone could live a charmed life.

We need to pay what we can afford. As someone posted before, the real issue is spending growth.

Government spending has outstripped inflation and population growth in the last few decades. That is simply unsustainable, and some time in the future, society will collapse because we are spending more than we produce.

Personally, I would like to see some municipal bankruptcies and the state forced to drastically cut back as the voters defeat new taxes. We need that kind of catalyst to reset our priorities.

[briansd1]

[quote=pri_dk]The issue with state employee pensions is that the public does not understand just how much they cost.

Take an example of someone who retires at 50, with a pension of $80K/year (100% of their final pay, which is not uncommon.)

Now do a little finance math: If this person lives to age 75 (which is about average), they receive that payout for 25 years. Using a discount rate of 5%, the value of this pension at retirement age is $1.1 million. This is, in effect, what the state must set aside to cover the pension cost (which they are currently not doing.)

The public may be aware of state employee salaries, but few people understand that many are essentially getting a million plus dollar payout when they retire at an early age.

BTW: Do the math for military retirement and it is similar: after 20 years of service an enlisted person can get half pay forever (with COLA). With life expectancies where they are today, this is easily worth half a million dollars. Not a bad bonus for someone under the age of 40.

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

Good post and thank you for doing the math.

It would be nice if we lived in utopia and everyone could live a charmed life.

We need to pay what we can afford. As someone posted before, the real issue is spending growth.

Government spending has outstripped inflation and population growth in the last few decades. That is simply unsustainable, and some time in the future, society will collapse because we are spending more than we produce.

Personally, I would like to see some municipal bankruptcies and the state forced to drastically cut back as the voters defeat new taxes. We need that kind of catalyst to reset our priorities.

[dbapig]

[quote=pri_dk]

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

So true. Pensions got to go. We can’t sustain what’s unsustainable.

We should come up with some kind of 401k like plan with maybe higher contribution by employer (aka govt) for the govt employees.

[dbapig]

[quote=pri_dk]

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

So true. Pensions got to go. We can’t sustain what’s unsustainable.

We should come up with some kind of 401k like plan with maybe higher contribution by employer (aka govt) for the govt employees.

[dbapig]

[quote=pri_dk]

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

So true. Pensions got to go. We can’t sustain what’s unsustainable.

We should come up with some kind of 401k like plan with maybe higher contribution by employer (aka govt) for the govt employees.

[dbapig]

[quote=pri_dk]

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

So true. Pensions got to go. We can’t sustain what’s unsustainable.

We should come up with some kind of 401k like plan with maybe higher contribution by employer (aka govt) for the govt employees.

[dbapig]

[quote=pri_dk]

Do they deserve it? Many do. But can we afford it? Probably not.[/quote]

So true. Pensions got to go. We can’t sustain what’s unsustainable.

We should come up with some kind of 401k like plan with maybe higher contribution by employer (aka govt) for the govt employees.

[Coronita]

Side note…

So I have to ask, I guess some of you folks think it’s an outrage that a trader Andrew Hall is going to be paid $100million from citigroup as a bonus, right?

http://tickerforum.org/cgi-ticker/akcs-www?post=104489&page=1
http://www.reuters.com/article/newsOne/idUSTRE56R43X20090728

Just curious, do you folks think paying someone $100million is an outrage if he/she brings in $600million?

[Coronita]

Side note…

So I have to ask, I guess some of you folks think it’s an outrage that a trader Andrew Hall is going to be paid $100million from citigroup as a bonus, right?

http://tickerforum.org/cgi-ticker/akcs-www?post=104489&page=1
http://www.reuters.com/article/newsOne/idUSTRE56R43X20090728

Just curious, do you folks think paying someone $100million is an outrage if he/she brings in $600million?

[Coronita]

Side note…

So I have to ask, I guess some of you folks think it’s an outrage that a trader Andrew Hall is going to be paid $100million from citigroup as a bonus, right?

http://tickerforum.org/cgi-ticker/akcs-www?post=104489&page=1
http://www.reuters.com/article/newsOne/idUSTRE56R43X20090728

Just curious, do you folks think paying someone $100million is an outrage if he/she brings in $600million?

[Coronita]

Side note…

So I have to ask, I guess some of you folks think it’s an outrage that a trader Andrew Hall is going to be paid $100million from citigroup as a bonus, right?

http://tickerforum.org/cgi-ticker/akcs-www?post=104489&page=1
http://www.reuters.com/article/newsOne/idUSTRE56R43X20090728

Just curious, do you folks think paying someone $100million is an outrage if he/she brings in $600million?

[Author]

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