Pension Despair
Unions Declare War on Arithmetic in Illinois
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  • Anthony

    What we are witnessing in Illinois is not blue model governance but history of self serving governance at all municipal levels statewide (and locally generally). In Illinois policy/politics reeks with what Fukuyama calls ritualized reciprocity (complete with inadequate public policy sensibility) – alas, rank and file Illinoisans continue to elect these up from the soil representatives.

  • Corlyss

    “On the evidence of Illinois, they will let you plan for retirement and pay into the system for decades before letting you know that the money’s gone and your plans need to change.”

    That’s the essence of Social Security and Medicare. We don’t need to go as far as Illinois.

  • free_agent

    You write, “Thirty years of work in exchange for twenty-five years of paid retirement is simply a chimera.”

    I think this needs to be fleshed out before it becomes true. As far as I can see, it can’t be done in the mode that Illinois workers have been promised, but it would help to know exactly where the problems lie.

    As I calculate it, if you contribute $0.13 per year for 30 years and can get 6.8% returns (which is the long-term total return for the US stock market), then you can take out $1 per year for 25 years. If you assume a more conservative 5% return, you have to contribute $0.22 per year. It’s possible that the tradeoff is made worse by the fact that while some retirees die faster, some will live longer. And there’s going to be the complication that people expect their pension to be based on their final pay while contributions ought to be considered relative to their current pay, which might be considerably less in early years.

    But the current conservative recommendations are that one should save something like 25% of one’s income, and that seems to be enough to finance an arrangement something like this.

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