by Teresa Kuhn, JD, RFC, CSA
Authorized Bank on Yourself Advisor
Host, Living Wealthy Radio
In my BANK ON YOURSELF practice, I have the privilege of meeting many different kinds of individuals-
from business owners, to self-employed professionals, engineers, construction workers, and government employees, among others.
It's not surprising, then, that on occasion I will be confronted by someone who feels that he or she has such a good pension going that putting a Bank On Yourself plan in place is a waste of time.
These people are full of confidence in the system and feel they've got it covered.
They are convinced that the municipality or government agency for which they work can't possibly walk away from its' future obligations.
I hate to tell them this.. but they are dead wrong on that account.
Pensions, once considered more sacred than sacred are being actively scrutinized by dozens of cities and states across the nation, with some cities already having made substantial cuts.
Faced with rapidly ballooning deficits and property tax shortfalls, states and cities are desperate to do whatever it takes to pull themselves out of the red...including eliminating or curtailing public employee pensions.
A recent article on the Financial Collapse blog accurately summed up the situation of those counting only on their pensions for financial security:
"Many Americans that have been basing their financial futures on their pensions are waking up one day and finding that their pensions are either gone or have been cut back dramatically. According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 TRILLION dollars.
America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow. So where is that 4.4 trillion dollars going to come from? Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically. Either way, we are all going to feel the pain of these broken promises."
Already, It's Starting to Happen
In New York state for example, Governor Andrew Cuomo has been quoted as saying that the state faces certain bankruptcy without major public employee pension reform.
Central Falls, Rhode Island, the smallest city in the nation's smallest state recently went bankrupt.
CBS Evening news reported that:
"Central Falls, Rhode Island -- is bankrupt. The main reason is it can't afford the pensions for its retired city workers. How the city is digging out of its financial hole may have consequences for city pensions in other cash-strapped towns across the country.
For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy."
(read the rest of the story here:
http://www.cbsnews.com/8301-18563_162-57395072/as-cities-go-broke-pensions-are-slashed/)
Top financial analyst and frequent Bloomberg and CNBC contributor Meredith Whitney was pilloried in the financial press for predicting massive municipal bond defaults on an episode of 60 Minutes in 2010.
While, as of this posting, such defaults have largely failed to materialize, much to the glee of those who trade bonds, Whitney was correct in stating that the finances of America's cities, states, and towns are an absolute mess, and that increased taxes and cuts in social contracts (including pensions) are inevitable.
Stockton, California is another example of a city that is barely fending off bankruptcy, with mayor Ann Johnston declaring "We are hanging on by our fingertips." If current mediation fails, the city is set to file for bankruptcy on June 26th.
The point of all this, friends, is to let you know that in these unstable times, you really can't bank on anything but yourself.
You need to, RIGHT NOW, rethink your financial strategies and look into adding a Bank on Yourself policy. No matter what you already have in place, it makes perfect sense to add Bank on Yourself to the mix.
Educating yourself about how money really works is the first step... Get a free report by going to www.findoutmorenow.com. Enter in CODE TK93 and you'll get a report outlining why you should consider becoming your own source of financing.
Even if you are fortunate enough to have a great pension plan in place, don't take anything for granted. Start doing everything you can, today, to make your financial future as secure, risk-free, and enjoyable as possible.
Want to discuss YOUR personal situation with me? Call 800-382-0830 to set up your confidential one-on-one appointment.
You can also leave your comments or questions on my website at:
http://livingwealthyfinancialgroup.com/
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