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Pension risk?
Old 03-07-2009, 10:53 AM   #1
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Pension risk?

I've been reading the pension risk/bailout thread in the FIRE and Money forum. Most seem to think that some sort of changes will be necessary so the system doesn't collapse.

I invest pretty aggressivly, considering my pension to be the equivilent of "bonds." So, most of my 401K is in stock index funds.

I am wondering if anyone else has a similar strategy, and if you are considering altering that to reflect the belief that pensions will be reduced or modified in some way.

I have roughly 18 years until I collect my military reserve component pension ($600-$700 per month at age 60) and anywhere from 14-18 years until I can retire under the gov't FERS system.

A lot of things can change in 18 years. Has anyone come up with a way to weigh "pension risk."

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Old 03-07-2009, 11:13 AM   #2
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First of all, the "pension crisis" we're hearing about is mostly at the state and local levels, not with the federal pensions. I wouldn't worry much about a federal pension plan defaulting. Yes, they could change the rules a bit, but my guess is that it would only apply to new hires who were processed in after the rules were changed. That's a fairly common "grandfather clause" especially with public employee pensions. And the federal reforms made with FERS seem like a much more reasonable and sustainable plan than either CSRS was or many state/local plans are.

The $64,000 question is how to handle the huge shortfalls in some badly hurting state and local public pension funds, as we've kicked around in that other thread.

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 03-08-2009, 05:46 PM   #3
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I'm not so sure. I do think there will be changes. Didn't they change SS? Sure, some were grandfathered in, but I don't think I was.
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Old 03-08-2009, 07:38 PM   #4
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The last thing I would be worried about in a retirement plan is a federal pension.

Smaller group, state local okay something could possibly go wrong, but if the feds can't pay up no other plan would have worked. Canned goods and ammo.
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