The state of Illinois is broke. That is according to economist, James Dale Davidson, who just spoke yesterday on what is happening to employees that have worked for the state, stating that their retirement paychecks will not be sent out next month. What’s the problem in Illinois that could be a factor in other states as well in the future?
Consider these facts:
- The number of Illinois state university employees, teachers and administrators actively working is 80,845. The retired employees are over 50,000. The average pension paid annually is $37,261. The unfunded liabilities exceed $20 billion.
- The retired teachers in Illinois exceed 10,000, with an average annual pension of $50,494. The unfunded liabilities for teachers exceeds $57 billion.
- The number of retired state employees is 53,478 who are receiving an average of $33,115 annually. The unfunded liabilities for retirees with pensions is $24 billion.
How would you like it if you had worked your entire life and had been receiving a monthly income for the last five years, only to find out that all of it will end in just 30 days? What would you do? What will Illinois state retirees do? And what will those currently working for Illinois do today, knowing they may not receive anything at retirement?
What about California’s retirees, and any other of the 50 states? If you are a government worker who is expecting a pension, it might be wise to begin asking for accountability from your employer. With trouble brewing in places like Illinois, it is only a matter of time before more audits begin to be conducted in other states and the media jumps on top of this story about how bad things are becoming in Illinois and many other bankrupt cities, counties, state and federal agencies.
Working for the government has always been considered a “safe” place as it doesn’t terminate very many employees and the benefits are great, when compared to private employment. But as soon as Illinois stops paying their retirees, this will all change.
We can learn from this, I am sure. While it may be too late for some, each of us needs to re-examine what we are doing for retirement and make hard choices. Learning the Money Mastery Principles will be the key to making the right ones. As the Money Mastery program teaches:
- Know the rules (Principle 5)
- The rules are always changing (Principle 6)
- Always look at the big picture (Principle 7)
While planning your own retirement, you can save a lot of heartache by not assuming others should know the rules for you or that things will never change. Be prepared by looking at the overall big picture so you can anticipate problems before they arise.