Topic: WSJ: US Faces $5 Trillion Pension Hole, Same Size as Japan's Economy (Read 321 times)

Does this really even matter? The Government will just print more USD to pay for what it wants. The entire system is based off debt, there are more debts in the world than money to pay them all back.  The only thing that keeps the USD a global currency is the military force backing it.

The pension crisis is pretty simple, there are not enough contributions to pay the pensions.
People live longer, contribute less and less and it's quite easy to see where this is going.
Bitcoin or some "ico" (really?) will not solve this, but an "ico" has the potential to destroy the entire system once for all.

What you need is one of those, a higher workers/retired ratio or higher contributions.
It's simple math, not magic.

Given past precedents, it's only a matter of time that the USD hegemony ends. I don't give it more than 20 years, unless the USD for some reason destroys any past precedents which I doubt.

What matters is what will fill the gap that the USD leaves: The CNY or Bitcoin?

It's debatable whether or not the pension system is a scam, but I completely agree with the fact that we should be doing the best we can to take care of ourselves instead of relying on external elements.

The older generation has a pretty decent pension budget they will be able to somewhat comfortably maintain themselves with, but that's completely different for the younger generation. We are literally on the wrong side.

If I don't do anything myself to build up enough capital to later on retire with, I'm in a very bad situation, that I know right now. Bitcoin is the only element that I have confidence in to help me achieve my goal.

There is nothing for me to lose in this case. Not doing anything will make me a loser.

Does this really even matter? The Government will just print more USD to pay for what it wants. The entire system is based off debt, there are more debts in the world than money to pay them all back.  The only thing that keeps the USD a global currency is the military force backing it.

Does this really even matter? The Government will just print more USD to pay for what it wants. The entire system is based off debt, there are more debts in the world than money to pay them all back.  The only thing that keeps the USD a global currency is the military force backing it.

The US pension funds will never buy bitcoin or any other crypto because:
1.They are restricted by the regulations.
2.They know that cryptocurrenices are too risky,the crypto markets are manipulated by the whales and 90% of all ICOs are scams.
The only way to solve this "pension hole" is the Federal Reserve to print 5 trillion USD.

Bolded: exactly. What would happen if a corporation in the private sector tried to run a retirement plan the way governments do I wonder? Would it be shut down? There could be a substantial difference between how states and corporations run retirement plans to consider.

I think there is potential for an ICO or a crypto currency offering a retirement plan based on the concept of compounding interest and a viable long term growth plan. There is a real need for it. Crypto could be better suited for that purpose than fiat. Especially crypto with a limited supply which would be guaranteed to not be overprinted or devalued.

The US pension funds will never buy bitcoin or any other crypto because:
1.They are restricted by the regulations.
2.They know that cryptocurrenices are too risky,the crypto markets are manipulated by the whales and 90% of all ICOs are scams.
The only way to solve this "pension hole" is the Federal Reserve to print 5 trillion USD.

my father always thought the pensions system was a scam and if you want to retire you need to make a plan by yourself and holding some bitcoin is not a bad idea.

Bolded: exactly. What would happen if a corporation in the private sector tried to run a retirement plan the way governments do I wonder? Would it be shut down? There could be a substantial difference between how states and corporations run retirement plans to consider.

I think there is potential for an ICO or a crypto currency offering a retirement plan based on the concept of compounding interest and a viable long term growth plan. There is a real need for it. Crypto could be better suited for that purpose than fiat. Especially crypto with a limited supply which would be guaranteed to not be overprinted or devalued.

The pension crisis is pretty simple, there are not enough contributions to pay the pensions.
People live longer, contribute less and less and it's quite easy to see where this is going.
Bitcoin or some "ico" (really?) will not solve this, but an "ico" has the potential to destroy the entire system once for all.

What you need is one of those, a higher workers/retired ratio or higher contributions.
It's simple math, not magic.

Here we see a market with future potential for ICO tokens and crypto currencies.

Crypto currencies like bitcoin, which are deflationary in nature, and built around producing long term value, could represent an ideal vehicle for retirement or pension funds as they are designed to appreciate in value over time.

Definitely a critical issue in the years to come.

Here we see a market with future potential for ICO tokens and crypto currencies.

Crypto currencies like bitcoin, which are deflationary in nature, and built around producing long term value, could represent an ideal vehicle for retirement or pension funds as they are designed to appreciate in value over time. This inflation in value could help a pension fund to stave off additional liability costs in terms of people living longer lifespans or being in better overall health.

"Be greedy when others are fearful," is one investment quotation people love to quote. There is a lot of fear in pension plans and retirement funds which could mean its a good area to be greedy in atm.

Practically everything said about why pensions and retirement plans are failing is false. There are valid and easy to explain reasons for why these things fail and the real reasons are never mentioned.

Financially strapped cities and states can’t afford the retirement payouts they made to public workers years ago and The Wall Street Journal reports that by one estimate they are short $5 trillion, an amount that is roughly equal to the output of Japan, the world’s third-largest economy.

Many retirement funds could face insolvency unless governments increase taxes, divert funds or persuade workers to relinquish money they are owed, the Journal warned.

“Uncertainty over public pensions is one reason some Americans are reaching retirement age on shaky financial ground. For this group, median incomes, including Social Security and retirement fund receipts, haven’t risen in years. They have high average debt, and are often using savings for their children’s educations and to care for their elderly parents,” WSJ.com explained.

“A technology-led stock market boom in the late 1990s produced a brief period of surpluses in pensions, according to figures from Pew, before deficits began to creep higher in the mid 2000s. Deficits accelerated following the 2008 financial crisis, which caused steep losses for many funds just as large numbers of baby boomers began to retire,” the Journal explained.

“State and local pensions lost roughly $35 billion in assets between 2008 and 2009, according to Pew. Liabilities, meanwhile, ballooned by more than $100 billion a year, widening the difference between the amount owed to retirees and assets on hand. Not even a nine-year bull market in stocks could close that gap.”

Meanwhile, Maine has adopted a risk-sharing plan for municipal employees that participate in the system starting the fiscal year than began July 1. Under the plan, the risks of investment gains and losses aren’t just assumed by taxpayers, but shared between local governments, their employees and retirees.

Most U.S. public pensions were fully funded as recently as 2000, but the collapse of the internet bubble and the Great Recession caused by the financial crisis of 2008 -- combined in some cases with years of contribution shortfalls and unfunded benefit increases -- resulted in pension debt exceeding $1 trillion, Bloomberg reported

Between 2003 and 2013 the cost of making required pension payments almost doubled, according to a 2017 report from the Pew Charitable Trusts.

In response, some pensions have adopted formal cost-sharing mechanisms, adjusting contributions or benefits, instead of making unplanned benefit cuts or contribution increases. Almost 30 defined benefit pension plans in 17 states use cost-sharing mechanisms to manage risk, according to the Pew report.

Some states, such as Illinois and New York, have constitutional or statutory prohibitions on changing retiree benefits.

Maine capped contribution rates by municipalities at 12.5 percent and 9 percent for employees, giving both parties certainty about how high costs would go to make up for investment losses. If pension losses exceed the capped contribution rates, retiree cost of living adjustments are reduced. Maine’s local governments and employees share in investment gains and losses at a 55 percent to 45 percent split.

Had Maine’s plan been in effect after the financial crisis, contribution rates would have increased to 12.5 percent and 9 percent and held there for five years. Retirees would have had a 30 percent annual reduction in cost of living adjustment for seven years, according to Gene Kalwarski, chief executive officer at Cheiron, a McLean, Virginia-based actuarial and financial consultancy.

“Under a traditional plan, you have one lever that deals with something like a recession, that’s the employer contribution," Kalwarski said. “Here we’ve got the COLAs as well as the member contributions that reduce what otherwise would have been an employer contribution spike."

When the markets rebound and investment gains exceed the assumed investment return, the COLA would increase until reaching a cap of 2.5 percent. Further gains would allow employers and employees to reduce contributions for services performed by current members when the plan is fully-funded, to a minimum of about 14 percent, 7.7 percent for employers and 6.2 percent for employees.

https://www.newsmax.com/finance/personal-finance/wsj-pension-japan-economy/2018/07/31/id/874780/