Is Your State Pension Really about to Explode?

Don’t look now, but many of the nation’s states are in deep financial trouble. Pensions around the country have been underfunded, and Ohio is one of the worst offenders. By 2037, there’s only a 25% chance Ohio’s fire fighters and police officers will have their pensions fulfilled by the current system. Economists Erick Elder and David Mitchell have detailed the poor condition of Ohio’s pension system in a detailed report. The Mercatus Center outlines their work, saying:

Ohio’s largest pension plans are at risk of falling significantly short on their obligations to hundreds of thousands of Ohioans. In fact, Ohio ranks ahead of only Mississippi in terms of the level of unfunded liabilities relative to the size of the state’s income.

Despite having assets of more than $150 billion, some estimates show that Ohio needs to increase pension funding by at least $275 billion to be fully funded—that’s almost $25,000 per Ohio citizen. If lawmakers fail to make the decision about how to close the gap now, future generations will bear the burden of higher taxes, reduced government services, or even reduced benefits.

Using Ohio government data, economists Erick M. Elder and David Mitchell ran 100,000 simulations of likely investment returns for each pension. They find that Ohio’s pensions have sufficient assets to pay promised benefits in the next five years, but the probability that assets will be sufficient declines very rapidly thereafter.

Is your state in a similar fix? Check out the map below, created by the Mercatus Center, to see if you live in a state with pension Armageddon on its way.

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Read Elder and Mitchell’s full report below.

[gview file=”https://www.richardcyoung.com/wp-content/uploads/2017/01/mercatus-elder-ohio-public-pension-v2.pdf” width=”100%”]

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.