Saturday, August 25, 2018

Finances and Pensions.

Tom's Journal.

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Hello  Friends:
    When I want to get an accurate estimate on any set subject matter I delve into many sources and read a multitude of books and articles, and not just take ONE person's viewpoint on it.    I want to get many different opinions before I make a decision and also the history of that subject.   Although I have heard there is much to be said about,  "Common Sense," and the KJV Bible has much sound information about that subject, too.  Just read Psalms and Proverbs.   The evil spirits try to push us into wasting our precious time with goofy TV, too much entertainment, non-stop music, games, FaceBook, and cell phone games, etc.   If we are honest with ourselves, try to calculate how many HOURS per day do we spend on the cell phone and TV.   

Unfortunately,  I am physically disabled and find it hard to walk any serious distance now day,   so I am relegated to sitting in a chair too much every day.   My new Diet is just starting to work,  but I lack patience.
     I am thinking about building an old-fashioned wooden toolbox for my many carpentry tools.    I had too much pain just getting into my Dodge Ram pick-up truck this morning to shop for a few items.   I am eating a lot more tuna these days, and my dear, talented wife,  Lori, makes it so good, along with Rye bread.   
It is not my intention to cause more worry and anxiety,  but the subject of today Blog post has to do with our pensions and retirement savings.    As we were all working hard to invest in a good retirement,  we should have not trusted our Government closer, to notice that they RAIDED our SS ---Social Security.
    And when I started working part-time for PFS Investments, etc.,  I was taught NEVER to trust the Gov't, also SS, and Banks and most kinds of "Life Insurance" companies love to rip us off--- especially with any kind of Whole Life or anything with the term/ word, "Life" in it.  Instead,  buy "Term Life insurance," and "invest the rest."  Never, but never 'bundle' your Life Insurance and Investments, together!!   Please!   And when investing,  so a ton of close, study and searching for Info, before investing.   Personally,  I believe in investing in "Metals" and strongly urge my personal friends to invest in      --- Look it up on your computer and do your own research, as I have done.   Even some investments are better than no investments.   

Well,  my Left lower molar tooth is getting more loose, more sore, and swollen so I might be planning to take a pure, washed, plyers/ tool to the local VAMC,   Oscar G. Johnson, in Iron Mountain, MI., after notifying the local News Paper, and extract my own tooth.  The 'so-called' Dental Clinic there is just so slow even when the Veterans' have an emergency!   

Still Hanging in There,
Tom Schuckman

Sat, Aug 25, 2018 6:04 pm
Patriot Finances ( Details

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The US pension system has gotten so bad, Congress is actually planning for its failure.
As the government was working on the recent, new budget deal and subsequent boost in government spending, Congress quietly snuck in a provision forming a committee which would use federal funds to bail out as many as 200 “multiemployer” pension plans – where employers and labor unions jointly provide retirement benefits to employees.
As is often the case, this rescue “plan” is too little too late. The US pension system is beyond repair. And if you’re depending on pension income to carry you through retirement, it’s time to consider a Plan B.
Before explaining how dire the situation actually is, let’s take a step back…
Pensions are simply giant pools of capital used to pay out retirement benefits to workers.
Typically, employers and employees contribute a percentage of the employees’ salary to a pension throughout his or her career. Then, upon retirement, the pension is supposed to pay a fixed, monthly amount to the retiree.
There are both government and corporate pension plans.
Boston College estimates the nation’s 1,400 multiemployer plans (corporate) are facing a $553 billion shortfall. And around one-quarter of those are in the “red zone,” meaning they’ll likely go broke in the next decade or so.
But Congress’ committee, assuming it works, wouldn’t even rescue the red zone plans, much less the remaining 1,200.
And it doesn’t even begin to address the real problem – the $7 trillion funding gap faced by the government’s own pensions.
Congress is stepping in because the Pension Benefit Guaranty Corporation (PBGC) – the pension equivalent to the Federal Deposit Insurance Corporation (FDIC) – is completely insolvent.
Like the FDIC, the PBGC is an insurance program funded by premiums paid by its participating members (pensions). Its entire income is made up of premiums collected and the investment income it earns on those premiums.
So, as the markets crash, not only will the PBGC’s portfolio get slaughtered… so will those of the pensions it guarantees (which will then require more funds). And as these pensions fail, the PBGC will collect less in premiums. It’s a vicious circle.
But things are plenty bad already.
The PBGC, which only covers corporate pensions, had a $76 billion deficit in 2017. It has total assets of $108 billion on its books compared to potential loss exposure of more than $250 billion.
By its own estimation, its fund to cover multiemployer pensions (which makes up $65 billion of the deficit) will be insolvent by 2025.
Pensions are in such bad shape today for the simple reason investment returns are too low. And pensions can’t cover their future obligations.
Pension fund managers invest in assets like stocks, bonds and real estate in hopes of generating a safe return.
Most funds require a 7%-8% return in order to meet their future liabilities.
But with interest rates near record lows, these funds are having to take on more risk in order to meet their minimum return requirements. They’ve reduced their bond allocations and started buying more stocks, private equity and other riskier assets.Some funds, like Hawaii’s pension fund, went even further and dabbled in the incredibly risky strategy of selling put options. By selling a put, you collect a small premium if markets stay calm or rise. But you’re exposed to unlimited losses if markets crash – like they did when the Dow fell 2,400 points in a week last month.
At the end of last year, equities made up nearly 54% of public pension fund portfolios. The $209 billion New York State Common Retirement Fund has over 58% of its assets in stocks. Kentucky’s $20 billion pension for teachers is 62% in stocks.
These giant funds, which are supposed to pay for public and private employees in retirement, are piling into stocks at record high valuations. And when the volatility hits, it will be devastating.
Consider America’s largest pension fund, The California Public Employees’ Retirement System (CalPERS), lost 5% of its assets ($18.5 billion) in just 10 trading days leading up to February 9.
Pension funds should never experience this kind of volatility. But the current macro environment is forcing them to make dumb decisions in hopes of generating a minimum return.
You’ve got to make long-term plans for retirement. The pension system is broken. So the time to take action is now.

To your success,
Patriot Finances
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