Pensions & Savings

So after yesterday's positive news stories, I think its time to delve back in and throw some gasoline on the fire.  Pensions, pensions, pensions.  For a lot of Americans these days, pensions are non-existent.  They have either been eliminated by their employers or they do not have access to them.  Yet regardless of whether you have a pension or not, you inevitably pay for someone's pension.  The pensions that everyone are paying for are those that provide retirement money for people with public sector jobs, especially the unionized ones.  So lets break it down a little bit.  If you are self-employed or you have a retirement plan that you pay into with a corporation, you still pay for pensions that have no effect on you.  While it is great in theory for a state government to provide retirement money to its workers, it is unsustainable, even before the economy went into a recession.  There are a couple of factors which play into this.  The first is that the life expectancy of individuals has been risen, prolonging the time that they will receive pension money.  This means that there are more and more retired individuals collecting money from their pensions.  In order for this to be sustainable, the taxpayer base (general work force) necessary to sustain the payout of pensions must increase at a similar rate.  Yet even before the recession, this was not happening.  Just because more people were retiring didn't mean that more people were having children, and even if they were having more children, they wouldn't be entering the work force until their late mid to late teens, if not later.  So the fundamental problems began years ago and just recently took a turn for the worse as the work force was drastically cut down, reducing the amount of money states received in taxes.  With a lower work force, there is less tax revenue, and thus less money to meet financial obligations.  The effect is compounded by the fact that states still need to fund necessary government agencies in addition to paying for pentions.  Even before the recession, states were borrowing from the pension funds figuring that things would keep on getting better.  Now its just another issue that they have to deal with.   Guaranteed pensions are an excuse for people not to save money on their own.  There is a fundamental lack of education when it comes to fiscal responsibility in this country.   If people had been saving more money before the recession hit, there would be less bankruptcy and less drain on welfare programs.  People should be responsible for their own money and retirement.  Just because people fail to save money and spend responsibly does not mean that all taxpayers must pay for them.  During the Great Depression, my grandparents realized the necessity of watching your money and saving wherever you could.  Today, they live in an assisted living facility and pay for it out of their savings because they looked to the future and made sure that they could sustain themselves.  Part of the whole reason we went into a recession is because people lived beyond their means.  They took on mortgages and credit card debt that they could barely pay for.  Unfortunately we are now in a difficult situation because people were promised these pensions from state governments, didn't save their own money, and now rely on them to live.  There is not much we can do about former obligations, but we can change how we proceed.  There needs more effort placed on education in fiscal responsibilty than continuing to support people through pensions.  Lets all take a look at our finances and see if we our preparing properly for retirement or if we will become another drain on our already overburdened system.  Lets keep our heads up, pinch our pennies, and we will all make it through this together.