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Chicago is in the hole for nearly thirty billion dollars. They have been floating the idea of a ten billion dollar bond with the debt structured in a way which

Chicago is in the hole for nearly thirty billion dollars. They have been floating the idea of a ten billion dollar bond with the debt structured in a way which lets current politicians escape the fallout from its payment and not having to raise property taxes. The state of Illinois is not well off either with debts estimated at the low of one hundred thirty billion to two hundred fifty billion. An Illinois proposal just to fix state pensions would result in a forty four percent property tax increase for thirty years. Chicago has a narrower group of people to draw from so besides tourist and sin taxes they have to go after any product consumed by residents of the city and that includes digital. Why is this all happening, because there is a well hidden largess in government employee payroll and worse in their pension system. Illinois alone is estimated to have over twenty three thousand retirees pulling down one hundred thousand dollars a year or more. A lot of this is from the higher end positions in city and county governments but you can find police and fire there too. People complain about the disparity in corporate executive level pay to employee should also take a look at the disparity between the same in state and city governments let alone the disparity in retirement to even every day workers in the state. A 100k retirement not counting full benefits is equivalent to nearly forty eight dollars an hour. So expect more digital taxes in your future. PS: the Chicago debt is only for pensions, they are down tens of billions more in deferred maintenance and similar debts.

gfodor 7y ago
Pulling or cutting the pensions of retired public service workers (many of whom who risked their lives to protect the public) would, beyond the ethical questions, eliminate the credibility of the city's promises to those who sign up for such jobs and hence would likely greatly reduce the quantity and quality of recruits.
- SOLAR_FIELDS 7y ago
  The current proposed solution is just to cut back benefits on new job offers - though obviously if they cut back too much no one decent will want to work there.
  - Phlarp 7y ago
    Because there is some glut of smart qualified people gunning for those public sector jobs?
    - vkou 7y ago
      I've met plenty of idiots who worked in well-paid private sector jobs, and plenty of smart people who worked in government jobs.
  - czbond 7y ago
    Not true - if it were, every minimum wage, overworked job would go unfilled.
    - closeparen 7y ago
      Minimum wage overworked jobs have a hard time attracting people with alternatives.
- outside1234 7y ago
  Just pay them market rate and give them 401ks like everyone else - what am I missing? Why do we keep doing this to ourselves with government jobs?
  - hn_throwaway_99 7y ago
    > Why do we keep doing this to ourselves with government jobs? Because the politician who agrees to the largess will be long gone before the bill comes due. Not sure how to fix this, but generally I think some sort of additional checks and balances should be required whenever government takes on huge future liabilities.
    - lotsofpulp 7y ago
      Easy to fix, ban long term compensation agreements. If a union wants an annuity, they can go buy it from an insurance company. No need to negotiate anything other than cash salaries. Unfortunately, not enough taxpayers vote to offset the government workers voting themselves benefits as a bloc.
      - malandrew 7y ago
        And sadly every time we grow the size of government by assigning more responsibilities to government, the larger that voting bloc grows. In states favoring big government, this can only end badly. Although they can always raise taxes to address shortfalls, this has limits as it eventually drives those paying the most taxes to low-tax states.
  - deleted 7y ago
    [deleted]
  - chrisco255 7y ago
    A lot of states do this. Florida Retirement System for public employees is mostly paid for through managed assets.
  - lostphilosopher 7y ago
- lotsofpulp 7y ago
  I would think quality recruits are already avoiding Illinois in general due to the future share of tax revenues that will need to be diverted to pay for prior years' labor, meaning less resources for today and the future's quality of life.
  - moorhosj 7y ago
    On the flip side, Chicago pays their teachers, police and fire fighters pretty good annual salaries. I imagine that outweighs their analysis of future benefits as a share of tax revenue.
- scarface74 7y ago
  The whole idea of policemen “risking their lives” is not statistically accurate. Only 144 policemen died in the line of duty in the entire United States last year (https://www.npr.org/2018/12/27/680410169/more-police-officers-died-from-gunfire-than-traffic-incidents-in-2018-report-say https://www.npr.org/2018/12/27/680410169/more-police-officer...) The Chicago police department isn’t exactly what most people would call “quality”.
  - aswanson 7y ago
    It's not even in the top 10 most dangerous occupations: https://www.ajc.com/news/world/these-are-the-deadliest-jobs-america-study-says/pKusOItm8JG6m0P4SCrXuN/ https://www.ajc.com/news/world/these-are-the-deadliest-jobs-...
    - throwawaymath 7y ago
      It strikes me as a bit disingenuous to say it's not even in the top 10 when it's number 18, according to that list. At that point we're talking about a difference of degree, not category. If anything your citation supports the idea that police officers endanger their lives.
      - scarface74 7y ago
        It would be disingenuous if he said “it wasn’t in the top 10” when it was #11. #18 is nowhere near the top 10. Even a garbage collector is three times more likely to die on the job than a police officer. https://qz.com/410585/garbage-collectors-are-more-likely-to-die-on-the-job-than-police-patrol-officers/ https://qz.com/410585/garbage-collectors-are-more-likely-to-...
        throwawaymath 7y ago
        18 is quite close to 10, in an absolute sense. The context of that citation is a claim that it's statistically inaccurate to say police officers risk their lives. That claim is demonstrably not borne out by statistics. Out of the universe of available professional work, being a police officer is #18 in risk. It's a rather small consolation that they're not eight jobs higher up the chain in terms of risk, considering there is essentially no chance of e.g. my monitor killing me as I sit at my desk. A valid takeaway from the cited list is that being a police officer isn't literally the most dangerous thing you can do for work. An invalid takeaway is that being a police officer isn't dangerous.
- prepend 7y ago
  I don’t think the fix is removing pensions from old people, but rather drastically reforming pensions for future retirees entering the workforce now. Cutting pensions now would be like cutting someone’s salary and would likely lead to skilled people quitting.
  - RhodesianHunter 7y ago
    So cut compensation for current already underpaid employees to shore up retirement for the people who voted for the politicians who caused this? That doesn't taste right to me.
    - patrick5415 7y ago
      The aarp is a powerful propaganda machine.
    - prepend 7y ago
      I don’t think reducing compensation for future employees through reduced pensions shores up retirement for current employees or pensioners. For that you have to raise taxes a lot, I think. My suggestion was to prevent even worse problems in the future. I think the current folks are hosed because raising taxes on the middle and working class along with rich people is unpopular so I don’t think elected officials will want to do that. So they will probably chug along and then go bankrupt, hosing pensioners.
  - wbl 7y ago
    What about unvested obligations for current workers like 3٪ of highest pay going to 2٪ for all pay after now?
  - jonathankoren 7y ago
    You can’t cut the pension for the retired, or the soon to be retired. Instead you try buy outs and phase them out. New workers get 401ks. Old workers get pensions. Middle aged workers get a choice. 30 years later, the pension holders are dead, or your company is. Either way, it’s no longer a problem.
- dev_dull 7y ago
  They were promised something by the city that couldn’t be delivered to them. There’s no other way out. Is there a difference in Silicon Valley workers being promised future stock if they just forgo their paycheck for a little while longer? The Difference of courses that taxpayers don’t foot the difference.
  - moorhosj 7y ago
    Silicon Valley workers also don’t work for the taxpayers, so that would be another difference. Who would pay public employees if not taxpayers?
  - rocqua 7y ago
    Differences between silicon valley stock and city pensions are 1) stock options are a known volatile thing rather than a government backed guarantee. 2) Missed Stock options are much easier to compensate for financially than a pension. If you miss stock options, you are still part of the wage pool. If you miss a pension that is much harder. After all, the point of a pension is to take care of people who are 'worn out'. Hence, there is much less of a fall-back system for missed pensions.
- JumpCrisscross 7y ago
  > Pulling or cutting the pensions of retired public service workers (many of whom who risked their lives to protect the public) would, beyond the ethical questions, eliminate the credibility of the city's promises Well, yes. It would be a default. But more money has been spent than is there and there are only three pools to draw from: taxpayers, services and creditors. (Creditors include both pensioners and bond holders.) At this point, multiple pools have to be hosed. It’s just a matter of when and to what degree, with the hosing being less extreme the earlier it’s dealt with. In all likelihood, the city will go bankrupt and have creditors cut services in federal bankruptcy proceedings, thereby imperilling the city’s long-term tax base. State, being unable to go bankrupt, will probably hose creditors more.
rrrrreeeee 7y ago
Do the employees and employers not pay into a separate fund that cannot be touched? I fail to see how it's the fault of the pensioners. It's absolutely archaic if the future taxpayers have to pay for a retirees pension. In Canada we have pension funds that are separately funded entities that are payed into over an employee's career.
- lotsofpulp 7y ago
  How do you ensure the funds are invested properly, and not in a nephew's real estate development project? How do you ensure the correct assumptions are used in calculating how much to contribute into the fund in the first place? You can adjust mortality tables and investment return assumptions to make the benefits seem cheaper than they are. The government can even choose to forego making their understated contribution if they vote themselves to forego it! (which many governments frequently have) People's eyes glaze over when talking about their own 401k, what chance is there for voters to get into the nitty gritty about multiple government agencies' pension liabilities and investments at the city/county/state/federal level?
  - rrrrreeeee 7y ago
    The employer isn't liable for the pension at all. Neither is the employee. All they do is pay into the fund. Instead, there is an entirely separate legal entity (the pension fund) that controls and distributes the assets. The fund releases reports regularly on the health of the fund. The contribution calculations are usually included in those reports. The investments by pension funds are usually in long term infrastructure assets like highway 407 in Ontario, or various property management companies such as Cadillac-Fairview. https://en.m.wikipedia.org/wiki/Ontario_Teachers%27_Pension_Plan https://en.m.wikipedia.org/wiki/Ontario_Teachers%27_Pension_... the Ontario Teachers Pension Plan is probably one of the best examples of a well run pension fund. All public employees in Ontario, as well as federal employees are all part of a union, whether it be OMERS, PSAC, CUPE, caisse or otherwise. These unions protect the employees from the 4 year swings of governments and instead look after the long term health of employees. I suggest you research the laws surrounding pensions in Canada. Answering the questions properly here is too lengthy, but they could probably be answered by 30 minutes of research. Pensions are incredibly powerful for looking after retirees. In fact, Canada has a federal pension plan called CPP which pays out to all Canadians based upon their contributions over their lifetime. Pensions are not the enemy my friend, it's elected representatives who look out for their short term interests instead of the health of their electorate.
echelon 7y ago
Could they raise more money by locally legalizing more "sins" and heavily taxing them? Something of a cross between Las Vegas and Colorado could pull in a lot of revenue.
- czbond 7y ago
  I suspect they will. As a resident of Colorado, once the politicians realize they can MAKE money off it, rather than spending considerably more money ON it (eg: jails, etc)... the transition suddenly "makes sense".
  - thelasthuman 7y ago
    It's so sad that undoing horrible laws and ineffective prohibitions must come down to dollars and cents, rather than the innate freedom we all should have. Land of the fee, home of the slave.
- lotsofpulp 7y ago
  They already do, via video game gambling in bars: https://www.bnd.com/news/local/article230192814.html https://www.bnd.com/news/local/article230192814.html
closeparen 7y ago
$75k income, increasing at 1% a year, saving 15% each year, investing at 7% average returns over a 40 year career would give you $101k in retirement. That doesn’t seem unreasonable.
- phonon 7y ago
  Err, who earns $75k a year for 40 years? 40 years ago that person probably started off below $15k/year. (In 1979 average household income was $19,553) https://www.multpl.com/us-average-income/table/by-year https://www.multpl.com/us-average-income/table/by-year
  - closeparen 7y ago
    The calculation includes inflation. $20k in 1979 is $70k today. It’s also the classic tradeoff of government work: lower salary than you could get in the private market, but retirement equivalent to a higher salary than you could get. Compelling only if you are sufficiently long term oriented.
    - phonon 7y ago
      I ran a few scenarios--your numbers are not correct. Start at age 20, making $15,000/y, increasing 5% per year. (Salary at retirement over $100k/y) Assume annual savings rate of 15% 8% return Retire at 60. I get around a million dollars saved at age 60 (i.e. today). Not enough to buy an annuity that pays out over $100,000/y. Off by a factor of 2 or so, I think. And starting salary 40 years ago was probably under 15k, 8% consistent compounded returns are really good, the other retirement benefits besides the pension etc.
- sseagull 7y ago
  Your calculations are a bit off, since even $75k * 0.15 * 40 = $450k (ie, not taking into account salary increases or returns). Also, $75k is a lot more that most people make. From what I can find, that would be ~85th percentile of personal income, or around the 60th percentile of household income. Edit: Some representative (although a bit outdated) sources: https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_... https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
anbop 7y ago
Hopefully the Fed can inflate away >50% of real pension liabilities.
intended 7y ago
How can you be in debt for pensions of all things. Get employee. Put money in pension fund. Let fund grow. Wait 20 years earn interest and pay employee. end. What you are describing is gross mismanagement of funds, and blaming the rightful recipients of funds for the existing.
- rhinoceraptor 7y ago
  > Wait 20 years That's the problem, politicians don't care about 20 years from now. They care about their next election.
- conanbatt 7y ago
  Because pensions are guaranteed benefits. So if you put it on a bond, and the bond goes down, you need to draw more taxes to make the difference. Pensions are partially the outcome of wishful result-oriented thinking ("workers should have pensions they can depend on, so make the promise first and then the solution will happen").
  - intended 7y ago
    What? How the heck is that a pension ?? That’s a bond. Why does that have anything to do with a pension ? And who in his right mind plants a bond and links it to a pension ? How does that even work? A bond is a loan. That means the firm or institution is taking a loan. A pension is the opposite of that - it’s money taken from employee payments and added to a conservative fund with a time horizon of 20-30 years. This allows them to make long term plans which avoid the risks of high beta and risk stocks or deals. So as your economy goes up, your fund goes up and you pay people off with the interest. Something changed/went wrong, long before you got to the bond.
    - anthuman 7y ago
      What do you think "conservative fund" is? It is a fund of bonds. What do you think pensions are? There is nothing more "conservative" in investing than bonds ( particularly treasury bonds ). Nobody "plants" a bond and links it to a pension. A pension buys bonds, stocks, etfs, etc which hopefully grows in value or pays healthy interest. The problem is if the pension doesn't do as well as expected or the ratio of workers to retirees gets too skewed and they can't meet their defined payouts.
jacquesm 7y ago
> So expect more digital taxes in your future. This is not a problem that will be solved with taxes, it will be solved with a global reset, and those are usually accompanied by major wars. This is not a Chicago problem, an Illinois problem or even an American problem.
alpineidyll3 7y ago
God I need to sell our apt. in Chicago...
420codebro 7y ago
Lol Chicago and Illinois in general are a fuckin shithole. I welcome their downfall.

gfodor 7y ago

Pulling or cutting the pensions of retired public service workers (many of whom who risked their lives to protect the public) would, beyond the ethical questions, eliminate the credibility of the city's promises to those who sign up for such jobs and hence would likely greatly reduce the quantity and quality of recruits.

SOLAR_FIELDS 7y ago
The current proposed solution is just to cut back benefits on new job offers - though obviously if they cut back too much no one decent will want to work there.
- Phlarp 7y ago
  Because there is some glut of smart qualified people gunning for those public sector jobs?
  - vkou 7y ago
    I've met plenty of idiots who worked in well-paid private sector jobs, and plenty of smart people who worked in government jobs.
- czbond 7y ago
  Not true - if it were, every minimum wage, overworked job would go unfilled.
  - closeparen 7y ago
    Minimum wage overworked jobs have a hard time attracting people with alternatives.
outside1234 7y ago
Just pay them market rate and give them 401ks like everyone else - what am I missing? Why do we keep doing this to ourselves with government jobs?
- hn_throwaway_99 7y ago
  > Why do we keep doing this to ourselves with government jobs? Because the politician who agrees to the largess will be long gone before the bill comes due. Not sure how to fix this, but generally I think some sort of additional checks and balances should be required whenever government takes on huge future liabilities.
  - lotsofpulp 7y ago
    Easy to fix, ban long term compensation agreements. If a union wants an annuity, they can go buy it from an insurance company. No need to negotiate anything other than cash salaries. Unfortunately, not enough taxpayers vote to offset the government workers voting themselves benefits as a bloc.
    - malandrew 7y ago
      And sadly every time we grow the size of government by assigning more responsibilities to government, the larger that voting bloc grows. In states favoring big government, this can only end badly. Although they can always raise taxes to address shortfalls, this has limits as it eventually drives those paying the most taxes to low-tax states.
- deleted 7y ago
  [deleted]
- chrisco255 7y ago
  A lot of states do this. Florida Retirement System for public employees is mostly paid for through managed assets.
- lostphilosopher 7y ago
lotsofpulp 7y ago
I would think quality recruits are already avoiding Illinois in general due to the future share of tax revenues that will need to be diverted to pay for prior years' labor, meaning less resources for today and the future's quality of life.
- moorhosj 7y ago
  On the flip side, Chicago pays their teachers, police and fire fighters pretty good annual salaries. I imagine that outweighs their analysis of future benefits as a share of tax revenue.
scarface74 7y ago
The whole idea of policemen “risking their lives” is not statistically accurate. Only 144 policemen died in the line of duty in the entire United States last year (https://www.npr.org/2018/12/27/680410169/more-police-officers-died-from-gunfire-than-traffic-incidents-in-2018-report-say https://www.npr.org/2018/12/27/680410169/more-police-officer...) The Chicago police department isn’t exactly what most people would call “quality”.
- aswanson 7y ago
  It's not even in the top 10 most dangerous occupations: https://www.ajc.com/news/world/these-are-the-deadliest-jobs-america-study-says/pKusOItm8JG6m0P4SCrXuN/ https://www.ajc.com/news/world/these-are-the-deadliest-jobs-...
  - throwawaymath 7y ago
    It strikes me as a bit disingenuous to say it's not even in the top 10 when it's number 18, according to that list. At that point we're talking about a difference of degree, not category. If anything your citation supports the idea that police officers endanger their lives.
    - scarface74 7y ago
      It would be disingenuous if he said “it wasn’t in the top 10” when it was #11. #18 is nowhere near the top 10. Even a garbage collector is three times more likely to die on the job than a police officer. https://qz.com/410585/garbage-collectors-are-more-likely-to-die-on-the-job-than-police-patrol-officers/ https://qz.com/410585/garbage-collectors-are-more-likely-to-...
      - throwawaymath 7y ago
        18 is quite close to 10, in an absolute sense. The context of that citation is a claim that it's statistically inaccurate to say police officers risk their lives. That claim is demonstrably not borne out by statistics. Out of the universe of available professional work, being a police officer is #18 in risk. It's a rather small consolation that they're not eight jobs higher up the chain in terms of risk, considering there is essentially no chance of e.g. my monitor killing me as I sit at my desk. A valid takeaway from the cited list is that being a police officer isn't literally the most dangerous thing you can do for work. An invalid takeaway is that being a police officer isn't dangerous.
prepend 7y ago
I don’t think the fix is removing pensions from old people, but rather drastically reforming pensions for future retirees entering the workforce now. Cutting pensions now would be like cutting someone’s salary and would likely lead to skilled people quitting.
- RhodesianHunter 7y ago
  So cut compensation for current already underpaid employees to shore up retirement for the people who voted for the politicians who caused this? That doesn't taste right to me.
  - patrick5415 7y ago
    The aarp is a powerful propaganda machine.
  - prepend 7y ago
    I don’t think reducing compensation for future employees through reduced pensions shores up retirement for current employees or pensioners. For that you have to raise taxes a lot, I think. My suggestion was to prevent even worse problems in the future. I think the current folks are hosed because raising taxes on the middle and working class along with rich people is unpopular so I don’t think elected officials will want to do that. So they will probably chug along and then go bankrupt, hosing pensioners.
- wbl 7y ago
  What about unvested obligations for current workers like 3٪ of highest pay going to 2٪ for all pay after now?
- jonathankoren 7y ago
  You can’t cut the pension for the retired, or the soon to be retired. Instead you try buy outs and phase them out. New workers get 401ks. Old workers get pensions. Middle aged workers get a choice. 30 years later, the pension holders are dead, or your company is. Either way, it’s no longer a problem.
dev_dull 7y ago
They were promised something by the city that couldn’t be delivered to them. There’s no other way out. Is there a difference in Silicon Valley workers being promised future stock if they just forgo their paycheck for a little while longer? The Difference of courses that taxpayers don’t foot the difference.
- moorhosj 7y ago
  Silicon Valley workers also don’t work for the taxpayers, so that would be another difference. Who would pay public employees if not taxpayers?
- rocqua 7y ago
  Differences between silicon valley stock and city pensions are 1) stock options are a known volatile thing rather than a government backed guarantee. 2) Missed Stock options are much easier to compensate for financially than a pension. If you miss stock options, you are still part of the wage pool. If you miss a pension that is much harder. After all, the point of a pension is to take care of people who are 'worn out'. Hence, there is much less of a fall-back system for missed pensions.
JumpCrisscross 7y ago
> Pulling or cutting the pensions of retired public service workers (many of whom who risked their lives to protect the public) would, beyond the ethical questions, eliminate the credibility of the city's promises Well, yes. It would be a default. But more money has been spent than is there and there are only three pools to draw from: taxpayers, services and creditors. (Creditors include both pensioners and bond holders.) At this point, multiple pools have to be hosed. It’s just a matter of when and to what degree, with the hosing being less extreme the earlier it’s dealt with. In all likelihood, the city will go bankrupt and have creditors cut services in federal bankruptcy proceedings, thereby imperilling the city’s long-term tax base. State, being unable to go bankrupt, will probably hose creditors more.

rrrrreeeee 7y ago

Do the employees and employers not pay into a separate fund that cannot be touched? I fail to see how it's the fault of the pensioners. It's absolutely archaic if the future taxpayers have to pay for a retirees pension. In Canada we have pension funds that are separately funded entities that are payed into over an employee's career.

lotsofpulp 7y ago
How do you ensure the funds are invested properly, and not in a nephew's real estate development project? How do you ensure the correct assumptions are used in calculating how much to contribute into the fund in the first place? You can adjust mortality tables and investment return assumptions to make the benefits seem cheaper than they are. The government can even choose to forego making their understated contribution if they vote themselves to forego it! (which many governments frequently have) People's eyes glaze over when talking about their own 401k, what chance is there for voters to get into the nitty gritty about multiple government agencies' pension liabilities and investments at the city/county/state/federal level?
- rrrrreeeee 7y ago
  The employer isn't liable for the pension at all. Neither is the employee. All they do is pay into the fund. Instead, there is an entirely separate legal entity (the pension fund) that controls and distributes the assets. The fund releases reports regularly on the health of the fund. The contribution calculations are usually included in those reports. The investments by pension funds are usually in long term infrastructure assets like highway 407 in Ontario, or various property management companies such as Cadillac-Fairview. https://en.m.wikipedia.org/wiki/Ontario_Teachers%27_Pension_Plan https://en.m.wikipedia.org/wiki/Ontario_Teachers%27_Pension_... the Ontario Teachers Pension Plan is probably one of the best examples of a well run pension fund. All public employees in Ontario, as well as federal employees are all part of a union, whether it be OMERS, PSAC, CUPE, caisse or otherwise. These unions protect the employees from the 4 year swings of governments and instead look after the long term health of employees. I suggest you research the laws surrounding pensions in Canada. Answering the questions properly here is too lengthy, but they could probably be answered by 30 minutes of research. Pensions are incredibly powerful for looking after retirees. In fact, Canada has a federal pension plan called CPP which pays out to all Canadians based upon their contributions over their lifetime. Pensions are not the enemy my friend, it's elected representatives who look out for their short term interests instead of the health of their electorate.

echelon 7y ago

Could they raise more money by locally legalizing more "sins" and heavily taxing them? Something of a cross between Las Vegas and Colorado could pull in a lot of revenue.

czbond 7y ago
I suspect they will. As a resident of Colorado, once the politicians realize they can MAKE money off it, rather than spending considerably more money ON it (eg: jails, etc)... the transition suddenly "makes sense".
- thelasthuman 7y ago
  It's so sad that undoing horrible laws and ineffective prohibitions must come down to dollars and cents, rather than the innate freedom we all should have. Land of the fee, home of the slave.
lotsofpulp 7y ago
They already do, via video game gambling in bars: https://www.bnd.com/news/local/article230192814.html https://www.bnd.com/news/local/article230192814.html

closeparen 7y ago

$75k income, increasing at 1% a year, saving 15% each year, investing at 7% average returns over a 40 year career would give you $101k in retirement. That doesn’t seem unreasonable.

phonon 7y ago
Err, who earns $75k a year for 40 years? 40 years ago that person probably started off below $15k/year. (In 1979 average household income was $19,553) https://www.multpl.com/us-average-income/table/by-year https://www.multpl.com/us-average-income/table/by-year
- closeparen 7y ago
  The calculation includes inflation. $20k in 1979 is $70k today. It’s also the classic tradeoff of government work: lower salary than you could get in the private market, but retirement equivalent to a higher salary than you could get. Compelling only if you are sufficiently long term oriented.
  - phonon 7y ago
    I ran a few scenarios--your numbers are not correct. Start at age 20, making $15,000/y, increasing 5% per year. (Salary at retirement over $100k/y) Assume annual savings rate of 15% 8% return Retire at 60. I get around a million dollars saved at age 60 (i.e. today). Not enough to buy an annuity that pays out over $100,000/y. Off by a factor of 2 or so, I think. And starting salary 40 years ago was probably under 15k, 8% consistent compounded returns are really good, the other retirement benefits besides the pension etc.
sseagull 7y ago
Your calculations are a bit off, since even $75k * 0.15 * 40 = $450k (ie, not taking into account salary increases or returns). Also, $75k is a lot more that most people make. From what I can find, that would be ~85th percentile of personal income, or around the 60th percentile of household income. Edit: Some representative (although a bit outdated) sources: https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_... https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...

anbop 7y ago

Hopefully the Fed can inflate away >50% of real pension liabilities.

intended 7y ago

How can you be in debt for pensions of all things. Get employee. Put money in pension fund. Let fund grow. Wait 20 years earn interest and pay employee. end. What you are describing is gross mismanagement of funds, and blaming the rightful recipients of funds for the existing.

rhinoceraptor 7y ago
> Wait 20 years That's the problem, politicians don't care about 20 years from now. They care about their next election.
conanbatt 7y ago
Because pensions are guaranteed benefits. So if you put it on a bond, and the bond goes down, you need to draw more taxes to make the difference. Pensions are partially the outcome of wishful result-oriented thinking ("workers should have pensions they can depend on, so make the promise first and then the solution will happen").
- intended 7y ago
  What? How the heck is that a pension ?? That’s a bond. Why does that have anything to do with a pension ? And who in his right mind plants a bond and links it to a pension ? How does that even work? A bond is a loan. That means the firm or institution is taking a loan. A pension is the opposite of that - it’s money taken from employee payments and added to a conservative fund with a time horizon of 20-30 years. This allows them to make long term plans which avoid the risks of high beta and risk stocks or deals. So as your economy goes up, your fund goes up and you pay people off with the interest. Something changed/went wrong, long before you got to the bond.
  - anthuman 7y ago
    What do you think "conservative fund" is? It is a fund of bonds. What do you think pensions are? There is nothing more "conservative" in investing than bonds ( particularly treasury bonds ). Nobody "plants" a bond and links it to a pension. A pension buys bonds, stocks, etfs, etc which hopefully grows in value or pays healthy interest. The problem is if the pension doesn't do as well as expected or the ratio of workers to retirees gets too skewed and they can't meet their defined payouts.

jacquesm 7y ago

> So expect more digital taxes in your future. This is not a problem that will be solved with taxes, it will be solved with a global reset, and those are usually accompanied by major wars. This is not a Chicago problem, an Illinois problem or even an American problem.

alpineidyll3 7y ago

God I need to sell our apt. in Chicago...

420codebro 7y ago

Lol Chicago and Illinois in general are a fuckin shithole. I welcome their downfall.