Let’s think about these two words for a moment…”covet” (to yearn to possess or have something) vs. “begrudge” (to envy or resent the good fortune of someone, to be unhappy or upset because someone has something you think they do not deserve).
Most of us growing up and going to church probably believe to covet something is bad (it is a commandment after all). Is it possible though that a little coveting is a good thing? If I want something bad enough, perhaps I’ll work harder to make sure I get it. And this doesn’t just apply to material things—it could be getting in better physical shape, finishing a college degree, etc. But what does that have to do with pensions?
Are you thinking about claiming your Social Security benefits soon? Before you decide to start taking your benefits, it’s important to determine if you’ve reached your full retirement age. If you haven’t, claiming Social Security now instead of waiting could result in much lower benefits.
Social Security benefits are calculated based on a formula that factors in your highest 35 years of earnings, adjusted for wage growth. The formula determines what your standard benefit amount is, which is the benefit you receive if you retire at the age the Social Security Administration designated as your full retirement age (FRA).
Welcome to the latest edition of This Week in Pensions! As we do most weeks, we have gathered the best stories about pensions and retirement security from the previous week. This is the news you need to know in the fight for a secure retirement.
Here are this week’s top stories:
Below you’ll find resources that dig deep into the numbers to determine how, when and why certain strategies for generating retirement income work, and how effective they are when compared to other strategies.
This collection of retirement income research takes investment portfolios and annuity products, looks at them inside and out, upside and down, and spits out a generous supply of charts, graphs, and tables which tell you exactly how each strategy measures up to the task of generating a life-long inflation adjusted retirement income.
By: Jim McNamee, President IPPFA
IPPFA supports legislation aimed at expanding investment authority of local Police and Fire Pension Boards. The current investment rules, just as the market changes, need to be updated. HB 5571 is a bill that was drafted with input from our investment managers and DOI. This bill clarifies language on investment authority. Police and Fire Pension Fund Trustees have proven, when given the tools, they meet or exceed their investment benchmarks. The Anderson Economic study reflects Article 3 and 4 Funds’ exemplary investment performance. Other proposals from the Illinois Municipal League (“IML”), like consolidation, will increase unfunded liabilities due to transition costs and disruption of our retirement systems. The COGFA study shows consolidation is nothing more than a “pie in the sky” claim. The IML’s flimsy plan is not supported by any credible experts and fails under even the most superficial of challenges. Taxpayers will pay more under the IML plan. “Consolidation” is about who controls Police Officers’ and Firefighters’ retirement money. It is not about solid fiscal policy, ethical reform, or even doing the right thing – it is about power. Police Officers and Firefighters have always been good stewards of their retirement systems. We should trust them to continue their excellent and scandal free track record.
You know the name: John Arnold. The former Enron energy trader and Wall Street hedge fund manager funds most of the attacks on public pensions nationwide. How, exactly, does he orchestrate these attacks on the retirement security of working families? He pays other people to do his dirty work for him.
Social Security’s Trust Fund is projected to run out in 2034. As policymakers consider restoring financial balance to the program, one topic that may be discussed is how to structure any tax increases. Understanding why Social Security requires a higher payroll tax than a funded retirement program for a given level of benefits is a crucial first step in informing this discussion. The current “pay-as-you-go” approach is the result of the policy decision made decades ago to pay benefits far in excess of contributions for early cohorts of workers. By paying benefits in excess of contributions to early cohorts, the nation essentially gave away the Trust Fund that would have accumulated and, importantly, gave away the interest on those contributions. Thus, the payroll tax must cover not only the required contribution but also the missing interest. This paper addresses alternative ways to pay for this Missing Trust Fund, including a comparison of the size of the required changes and their distributional implications.
The brief’s key findings are: