I Like Guarantees – Part II

I can not watch scary movies.  They just haunt me for days after, so I am done watching them.  There is a scary real life movie unfolding today, but we can’t turn the channel on this one.  The title – “Pension Armageddon.” At least once a month I read an article on the state of today’s pension funds.  The level of unfunded obligations is horrifying.  For example, the state of Illinois is short $137 billion on their pension promises.  If you have a pension I recommend that you look at the current funding levels.  If it is less than 60% you need to begin watching it closely.  The issue is not that they will never pay you, the issue is, could there be a pay cut in your future.  Your retirement plan needs to consider how to add income from other sources if your pension does have an issue in the future.  Pensions are a source of guaranteed lifetime income.  They are an important part of a retirement plan.  I will write on pension choices for payouts and what to consider if you have a spouse in future post.