Friday Top Five November 29 2013

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Happy Thanksgiving Everyone!

The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the New York Times: Expanding Social Security (Paul Krugman)

Krugman takes on "two bad arguments for cutting Social Security that you still hear a lot," and says that as a result of the failure of the shift to 401(k)s, "we’re looking at a looming retirement crisis, with tens of millions of Americans facing a sharp decline in living standards at the end of their working lives. For many, the only thing protecting them from abject penury will be Social Security."

From the Washington Post: Elizabeth Warren Wants to Spend More on Social Security. But She’s Not Thinking Big Enough!

From the post: "On the Senate floor on Monday (November 18), Elizabeth Warren delivered a speech arguing that Social Security should be expanded — not cut. In this, she joins a growing movement of Senate Democrats, including Tom Harkin, Mark Begich and Bernie Sanders. 'Social Security is incredibly effective, it is incredibly popular, and the calls for strengthening it are growing louder every day,' Warren said."

Says the author: "Social Security has been wildly successful at raising living standards for the elderly, even as other forms of retirement savings have grown shakier. We've gotten so used to thinking of our entitlement programs as problems to be solved, we're missing all the problems they can solve."

From USA Today's Editorial Board: Rein in Reckless Public Pensions: Our View

From the editorial: "A good bit of [NJ Governor Chris] Christie's appeal stems from a pension overhaul he engineered that pushes back retirement ages and requires workers to contribute more. Similarly, in Wisconsin, Republican Gov. Scott Walker faced down public-sector unions and survived a recall election. "Wisconsin's pension system is the only one in the country that is fully funded," Walker writes in his book Unintimidated, which [came out November 18].

And be sure to read the opposing view by David Sirota, Don't Demonize Public Pensions: Opposing View, in which he argues that "the budget problems of state and local governments have more to do with wasteful corporate subsidies than pensions. While states face an annual $25 billion pension shortfall over 30 years, they give away $120 billion a year in unjustifiable handouts. That includes the $80 billion that The New York Times reports that are given away in direct subsidies, and an additional $40 billion in corporate tax loopholes."

From the New York Times: The Payoff in Waiting to Collect Social Security

From the article: "If you delay collecting your benefits, which can be claimed anywhere from age 62 to 70, the money you leave on the table each year is basically a payment for a much higher stream of lifetime income. And that money will buy significantly more income, perhaps 50 percent more for a couple, than buying an annuity through a commercial insurer."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Does a Person Lose Money by Waiting to Retire?

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Does a person lose money by waiting until Jan. 1 to retire? Have heard that this happened to someone else at MSSU so they backed up their retirement to November in order not to lose any money. Please clarify. Thank you.
The BackDROP lump sum payment is equal to 90% of the retirement benefits earned by working beyond normal eligibility. Several factors go into calculating the distribution amount, including COLAs, service credit, salary, and the temporary benefit under the MSEP2000.

Generally, the longer you work, the higher your benefit and BackDROP. However, there are cases where working longer could decrease your BackDROP lump sum. The reason for the decrease could be due to a number of factors, among them, a lower COLA rate the year you retire as opposed to the previous year, or less or no temporary benefit calculated into the distribution if you are over 62 and electing the MSEP2000.

You can calculate estimates on our website using the "estimate my retirement" feature from our secure site, or contact a benefit counselor for a more detailed explanation.

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Friday Top Five November 22 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From Pension Dialog: The Us vs. Them of Pensions

Our friends at PD offer two take-aways from recent "Us vs. Them" stories about pensions.

  1. "The first is that the current messages—whatever those messages are—are not getting traction..."

  2. "We should be doing much more to shift the retirement plan discussion from what everyone else is doing (i.e., cookie-cutter solutions crafted by non-practitioners) to what constitutes good retirement plan design based on field-tested experience."

From CNBC: How to Rescue Your Retirement at 55

What surprised the reporter, Elizabeth MacBride, the most was "the extent to which experts are really nervous about the state of Americans' retirement."

From Kiplinger: Fill the Gaps in Your Retirement Income

Alicia Munnell, director of the Center for Retirement Research at Boston College, answers questions from Kiplinger personal finance reporter Jane Bennett Clark.

From Senators Propose to End Defined Benefit Pensions for New Federal Employees

From the article: "Senators Richard Burr (R-NC), Tom Coburn (R-OK), and Saxby Chambliss (R-GA) have reintroduced legislation that would end the defined benefit pension portion of the Federal Employee Retirement System (FERS) for new federal government hires starting six months after enactment. Current federal government employees and retirees would not be impacted by the changes."

From the Congressional Budget Office (CBO): Options for Reducing the Deficit: 2014 to 2023

In an email of 11/19/13, The National Association of Retirement Administrators  (NASRA) explained it this way:

Several options would directly impact retirement, and include (but are not limited to) the following:

  • Expand Social Security Coverage to Newly Hired State and Local Government Employees

  • Further Limit Annual Contributions to DC Retirement Plans

  • Include Investment Income From Life Insurance and Annuities in Taxable Income

  • Tax Social Security Benefits in the Same Way That Distributions From Defined Benefit Pensions Are Taxed

  • Impose a Tax on Financial Transactions

  • Increase Federal Insurance Premiums for Private Pension Plans

  • Reduce the Amounts of Federal Pensions

  • Increase Federal Civilian Employees' Contributions to Their Pensions

  • Link Initial Social Security Benefits to Average Prices Instead of Average Earnings

  • Raise the Full Retirement Age for Social Security

  • Lengthen by Three Years the Computation Period for Social Security Benefits

  • Reduce Social Security Benefits for New Beneficiaries by 15 Percent

  • Use an Alternative Measure of Inflation to Index Social Security

  • Increase the Maximum Taxable Earnings for the Social Security Payroll Tax

  • Reduce Tax Preferences for Employment-Based Health Insurance

Other options of major concern to government plan sponsors include:

  • Eliminate the Deduction for State and Local Taxes

  • Eliminate the Tax Exemption for New Qualified Private Activity Bonds

  • Eliminate or Reduce Funding for Certain Grants to State and Local Governments

CBO notes that the options are "intended to reflect a range of possibilities, not a ranking of priorities or an exhaustive list."  Furthermore, the inclusion or exclusion of any particular option "does not imply endorsement or disapproval by CBO," and the report makes no recommendations.  Finally, the costs of any unfunded mandates that might be imposed on State and/or local governments by any of these options are unaddressed."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five November 15 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From The Squared Away Blog: Will Millennials Be Ready to Retire?

From the post: "Although it can be difficult to focus on a retirement that is still 40 years away, many young adults...try very hard to save.  But are they doing enough?  A lot of evidence suggests they’re not, either because they can’t afford to, refuse to, or don’t know what to do."

From PBS News Hour: Justin Fox on 'why retirement risks are best shared'

From the intro: "Justin Fox, the executive editor of the Harvard Business Review Group and author of "The Myth of the Rational Market" has studied the Dutch pension system extensively. He discusses what aspects of the system -- mandatory savings, annuitized payments, national pools -- might work in the United States." [video]

From ABC17 News (Mid-Missouri): SPECIAL REPORT: Public pensions are going through changes

You may have seen this report from ABC17 News in Columbia. Meredith Hoenes reports on the pension systems of the cities of Columbia and Jefferson City, as well as the Public School Retirement System of Missouri (PSRS).

No one from MOSERS was contacted for the story. The state of Missouri has never not fully funded the actuarial required contribution (ARC) to the fund. According to the actuary the reporter in the story talked to, Traci Christian of McCloud & Associates, the most important factor is "are they making the actuarially required contributions every year. That, in my opinion, has more to say about the long-term viability and solvency of the pension plan than the funded status." The answer, as far as MOSERS is concerned, is yes. You can read about the key facts regarding MOSERS funding here: MOSERS_Key_Facts_1013

From The WSJ's MarketWatch: You can still get a job with a pension

From the article: "To most new hires, the idea of being eligible for a pension probably seems as far-fetched as being asked to write memos on an IBM Selectric typewriter. But a new study shows that a fair number of companies still offer the traditional retirement plans — and aren’t planning to get rid of them any time soon."

From The Guardian: Detroit's decision to fend off bankruptcy: pay pensions or banks?

From the article, a quote from 68-year-old retiree Donald Smith: "All those years they were taking money out of my wages. I was never rich but I never thought it would come to this," he says. "There are times when I have to decide whether I am going to eat or get my medicine. This was supposed to be the American dream? It's a nightmare. I love America but we are being persecuted by our own elected officials."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five November 8 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the Center for Retirement Research at Boston College: Gauging the Burden of Public Pensions on Cities

The brief’s key findings are:

  • Media stories suggest – especially since the bankruptcy of Detroit – that pensions are the major expense of American cities and could lead to widespread collapse.

  • A comprehensive measure of the cost burden considers how much city taxpayers pay for the pensions of city and county general government workers and teachers.

  • For a sample of 173 cities, these overall pension costs equal 7.9 percent of the total revenue base.

  • The cost burden ranges from 12.3 percent for the highest cost quintile to 2.7 percent for the lowest cost quintile.

From Deadline Detroit: Orr Revisits 'Sacrosanct' Pensions Pledge At Bankruptcy Trial

From the article: "Detroit's emergency manager says he "wasn't attempting to mislead anyone" earlier by saying vested public pensions are “sacrosanct” and "can't be touched" in this state, even though he proposed cutting retirees' checks just four days later."

From AARP: Life Reimagined

From the website: "Change is a part of life. Life Reimagined has been created to help you navigate change no matter what situation you find yourself in. We'll help you take the mystery out of change and discover your path to new possibilities."

From the WSJ's MarketWatch: 4 Big Predictions That Retirees Get Wrong

  • "R" Day

  • Free Time

  • Expensive expenses

  • Medicare

From Bloomberg: At 77 He Prepares Burgers Earning in Week His Former Hourly Wage

An amazing article highlighting the importance of saving for retirement: "It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe. Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs: one as a $10-an-hour food demonstrator at Sam’s Club, the other flipping burgers and serving drinks at a golf club grill for slightly more than minimum wage."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Pew/Arnold Trust Lobbying in Missouri

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PSRS and MRTA are warning their members about the lobbing of the Pew/Arnold Trust to change the Missouri defined benefit retirement programs. What is MOSERS doing/recommending?
We are aware of the Pew/Arnold effort, and are working with the Public School Retirement System of Missouri (PSRS) and the other public employee retirement systems on a detailed communication plan, and to ensure that MOSERS members, Missouri legislators, the media have accurate information about the defined benefit retirement plans in Missouri. 

Rest assured that your promised benefits are secure. MOSERS has the basic elements necessary to provide a sound income replacement to retirees and to help stimulate Missouri’s economy. Through a history of reasonable benefit levels, mandatory participation, consistent employer contributions, and professionally managed investments, MOSERS continues to be very viable in all respects.

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Travel Assistance and "Domestic Partnership"

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I received the following email:
FROM: Karen Meyer, Human Resource Director
SUBJECT: Travel Assistance Included As Part of Your MOSERS Basic Life Insurance
"A new Travel Assistance program is now available to active and retired members who have basic life insurance through MOSERS. You do not have to enroll in the program and there is no additional cost. You, family members including your spouse or domestic partner, and children through age 25, regardless of student or marital status, are automatically covered in the program."

I would like to know what is meant by domestic partner since the State of Missouri only recognizes marriage between a man and a woman.
The travel assistance program is provided nationally to various employers that provide life insurance coverage to their employees through Standard Insurance Company. Eligibility for the travel assistance program is determined by the agreement between the program’s provider and Standard Insurance Company. That agreement provides that a person who qualifies as a “spouse” or a “domestic partner” under the laws of the state where the person resides is eligible for the travel assistance program. Currently, Missouri law recognizes marriage only between a man and a woman and does not recognize domestic partnerships.

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Friday Top Five November 1 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the National Institute on Retirement Security (NIRS): Defined Benefit Pensions: Still the Best Bang for the Buck

From the release: "Recently, the TIAA-CREF Institute released a paper written by Josh McGee of the Laura and John Arnold Foundation (Arnold) and Paul Yakoboski of the Institute. Entitled Equivalent Cost for Equivalent Benefits: Primary DC Plans in the Public Sector, the paper questions the model used in A Better Bang for the Buck. Unfortunately, the Institute/Arnold paper relies exclusively on a flawed critique of the assumptions of the NIRS model. Moreover, it fails to offer a concrete cost analysis that supports their assertion that DC plans provide benefits at a cost equivalent to that of DB plans."

From Retirement - Your Plan for the Future recently unveiled a new Retirement website with sections on Financial Planning, Lifestyle, Healthcare and Travel. Check it out!

From PlanSponsor: Best and Worst States for Retirement

From the article: " ranked each of the 50 U.S. states by examining a variety of retirement-related factors in each state, including:

  • Senior population;

  • Economic factors, including cost of living, taxes and unemployment;

  • Violent and property crime rates;

  • Climate; and

  • Life expectancies at age 65."

FWIW, Missouri didn't make the top, or bottom, ten.

From the Employee Benefit Research Institute (EBRI): Review Cause

An Excerpt: "Retirement planning typically focuses on looking to ensure that your post-retirement income sources are adequate to replicate some percentage of your preretirement income level. Underlying that approach is the assumption that individuals incur roughly the same kind of expenses in retirement, although the amount, and proportionate share, of those expenses can certainly shift, particularly in areas such as health care. Indeed, while EBRI’s Retirement Security Projection Model®  (RSPM) and Retirement Readiness Rating have long incorporated the uninsured costs of post-retirement health care and long-term care, a few other  retirement projection models only recently acknowledge post-retirement health care costs as a discrete retirement savings need."

From HuffPost Post50: 5 Things Retirees Miss About Work

From the post: "Not having to work anymore can be great, but you might be surprised by what you will miss about work:

  • Social Interaction

  • Structured Days

  • Goals

  • Healthcare Benefits

  • Outsourcing Household Chores"

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF