Retirement - How Much do we Owe Them?

(Article link no longer working - Sorry)

Reading about the greed of the retired government workers in Colorado almost made me vomit.  At what point did we as Americans forget the sacrifices our ancestors had to make to get us to this point?   They lost blood, sweat, and often their very lives to give us the freedoms we enjoy.  And now, during the first time that we face a real crisis in most of our lifetimes, folks are getting angry about foregoing 1.5% of a STANDARD ANNUAL 3.5% raise?

Ok, I need to breath for a moment to calm down before I spew my brains out in a slurry of swears.  Lets look at this rationally for a moment, shall we?

State governments across the country are going broke.   Cuts are being made to libraries, police forces, garbage collection, snow plowing, landscaping, fire departments, school districts, etc.  This shouldn't surprise the folks suing, because not long ago they had to work within the constraints of the already tight, pre-recession budgets OF THESE VERY ORGANIZATIONS. 

Now, what do normal businesses do when they go broke?  They balance the budgets by any means necessary, or declare bankruptcy.  Yes, I realize that these retired civil servants are saying that their contracts GUARANTEED them certain things, like set raises every year, health care, life insurance, etc.  But what happens when the money just isn't there to pay for it?  I know that retired teachers and fire fighters are not rich, but wouldn't these folks rather have something, rather than nothing?  When states really DO start going broke, the trillions of dollars in state pensions currently being paid out will evaporate along with everything else.  So these greedy retirees need to ask themselves, what is more important?  Having some sort of benefit package, that, though slightly deflated, is STILL way better than the no pension most of their coworkers in the private sector get.  Or to risk having nothing at all?

How can these folks honestly not see the sacrifices that many of their retired neighbors have already had to make in this epic battle with our faltering economy?  Yes, I realize folks that retire from the government sector are not eligible for Social Security.  But the average Social Security payment is only $1,000 per month, a far cry from the $2,883per month quoted in the article above.  (SS data based on http://www.ncpssm.org/news/archive/vp_cutting_ss_benefits)

Which leaves personal savings I know some recent retirees that lost almost half of their savings due to shady 401k planning by their employers choice of financial institution.  These are folks with NO pension, who were depending entirely on their own personal savings, and the minuscule Social Security payouts to live.  They have no union to sue for them, indeed no one to sue.

And what about the middle generations?  How can these ex-state workers not see the problems plaguing the 30-somethings? I can vouch for the plight of this group.  My husband and I are in our 30's.  He has not had a raise in 4 years, and has seen his commission plan slashed by nearly 30%.   His team of 15 in 2006 is now down to 8, and still his company is pinching every penny.  Our condo has lost $10k in value, so we have no equity, and have basically been paying rent to the bank for the past 5 years. Some financial forecasts say that this stagnation may take my generation 20 long years to recuperate our loses, putting our realistic retirement age around 85.   And we have NO pensions, a untrustworthy stock market, and a depleted social security fund to deal with.  Maybe 95 is more realistic...

Not to mention the youngest generation, just emerging from college or high school.  This group has been hit hard, especially in certain sectors such as teaching and law enforcement (what a surprise!).  

So I ask these Colorado retirees, and any other ex-state workers who may consider themselves so entitled as to sue over something as small as a percent decrease in their annual raises.  What is more important to you?  Having a couple extra hundred thousand dollars in your lifetime, (even though inflation is flat, and the cost of living is stagnant), or preserving the union that our forefathers sacrificed so much to create?  Because that is the point we are at right now.  Our financial solvency as a nation is in question, and it is imperative we all do what we can as Americans to make sure it stabilizes for generations to come.  We cannot let the greed of the unionized few jeopardize that.
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11/18
AP Exclusive:  Raising retirement age hurts poor  (by Stephen Ohlemacher, 11/18/2010)

With the nation's deficit at a record level, the first thing Congress is looking to modify is the nation's entitlement programs, including Social Security.  Current benefit levels are not sustainable.  If something does not change, the SS system will be broke by 2037.

"Nearly 54 million retirees, disabled workers, surviving spouses and children now get Social Security. Payments for retired workers average $1,020 a month; disability benefits average $929 a month. In 75 years, 122 million people, or one-fourth of the population, will be drawing benefits."

Which leads to the obvious question:  would raising the retirement age result in savings, or higher costs?  If older workers really are able to make it until 67 or 69 to retire, the savings would be exponential.  However, the older we get, the more likely we are to become sick, and therefore eligible for disability payments from SS.  "About one-fourth of workers age 60 and 61. . .reported a health condition that limited their ability to work."  Historically, disability payments have been about $100 more per month than retirement checks.

In addition, as David Center from AARP points out in the article, just because we tell older folks to work, doesn't mean that companies are willing to hire them. When I worked in HR years ago, I remember how older people would tell me they were on their 20th interview.  As I looked at their resumes, their lack of technical and computer skills screamed out to me why they were experiencing such a hard time finding new jobs.  Retraining older folks cannot possibly be more cost effective than just allowing them to retire, I would imagine. 

I believe everyone must be willing to lose a little to save the system as a whole, including disability beneficiaries.  If the biggest risk of raising the retirement age is more people collecting the historically higher disability benefits, then balancing the yearly increases so that this is no longer an issue seems like the proper course to me.  Perhaps a modification in the percentage paid out of former income for all disability payments going forward is also in order.  If older folks need to work longer, then I think sick folks, who also benefit from the system, should have to sacrifice something as well.