Buying 2 years more pension or not?

[Greencheese]

First of all don't believe everything you read about public employees having gold plated pensions and living in Florida and being perpetually in shorts. The vast majority of public employees live on a modest pension and do not get social security. So this is their only lifeline for most. Also the unions did agree to a pension reform package and Madigan never called the bill to the floor. You say your retirement year is 2042. It seems to me you are a little GREEN to be making statements about something you may know little about.

Oh I know that not every pensioner is living it up with an incredible gold plated plan like the anti-pension people say. However I have several family members who are IL state retirees with benefits that are rather... generous. My favorite benefit was my grandmother's health insurance as a teacher, no deductible, co-pay, or premiums for the first 15 years she retired. Last year they began to make her pay something like... $15/month for premiums and she claimed she had to eat peanut butter and crackers to survive as a result. I know this isn't the case for every retiree but her mentality towards any benefit cuts are certainly not unique.

I'm not advocating that we just screw over retirees, but at some point reality has to take priority. The inability of the state to make changes for current employees going forward is what grinds my gears. Things such as reducing cola for benefits going forward has proven difficult as is increasing contribution limits or retirement age. Factor in that pension income is NOT taxed by Illinois and you can see where the anger comes from. You've got people who get "sweet deals" for retirement, this causes funding issues down the road because the funding math was never correct, and then when those individuals retire suddenly they pay nothing on the very taxes they suggest raising to save the pensions.


As for Chuckanut's comment, is picking the pockets of retirees ok? Absolutely not, but neither is picking the pockets of generations who never had a say in making those retiree promises or getting the state into the mess it is. The way I see it, IL is the same as a parent running up a credit card and then handing the card with the balance to their kid because the adult is now "too old to help" and then moves away to escape any responsibility (either through pension income or leaving the state). There's been a whole generation of people who have enjoyed a higher amount of services from the state than what they were willing to pay for and now they simply want to punt the bill to their children. Now that those children are growing up they refuse to be forced to pay twice what their parents did in taxes only to get half the benefits at best. The citizens of the state voted no to the tax increase, but some have already voted by simply leaving.

State and city populations aren't guaranteed to always go up, just look at Detroit. It doesn't matter how constitutionally protected your benefits are, if the taxpayers all leave and the money dries up, then it eventually comes down to simple math.

Do I want my grandmother living on the streets because the state just quit paying her pension? Of course not. But I'm not willing to let the promises made to her by an employer cause me to live a lower standard of living or hinder my own ability to retire. And that's what I think that's what most younger individuals feel is going on in this state right now.

 

[ripper1]

I think you may be right about the health insurance for Illinois state employees. But I think the health insurance only pays for them and not a spouse. In Chicago it is quite different. As a retiree myself and my wife I am currently paying 1375 a month. The city has agreed to let us stay in the plan until 2017 at which time we get dumped into obamacare.

 

[Teacher Terry]

WE each have a state retirement of $20,000 so not exactly lavish. The total is 40K & we pay 10K for our state's health insurance which is not very good. We also are taxed on our pensions. There are so many mis-perceptions about public employees. We will each get about $200 in SS. Yes we have Cola's.

 

[Running_Man]

for a 3% cola pension the benefit is better than anything that can be purchased. As most likely what Illinois would like to do is to either end the cola provision or cut back on pensions it is likely that a percentage of this would be reduced similar to a reduction in the remainder of your pension. Since this is getting you spousal equality on the payments and Cola and you will be taking now I would take it as the value is probably around $120,000 not counting the addition of your wife and you are paying 80K and getting immediate 5K per year benefit.

The only mitigating circumstance would be the percentage of your overall portfolio the 80 K is.

 

[Chuckanut]

No medical retirement benefit here. I pay 100% of the premium. I do get to buy into a group plan that is better than most offered under the state exchange. But, there is no subsidy for that even if I had zero income.