Washington Post: "Government pension funds underestimating shortfall by $1.5 trillion or more"

Today's Washington Post:

'The pension funds for state and local workers in the United States are understating the amount they will owe workers by $1.5 trillion or more, according to some economists who have studied the issue, meaning that the benefits are much costlier than many governments and taxpayers previously believed.

Doubts about government pension accounting have been voiced by analysts for years, but with shortfalls in state and local pension plans exacerbated by the recession, the push to refigure pension fund shortfalls has gained political momentum.

The trillion-dollar gap arises from the government method of accounting, which several experts say significantly underestimates the cost of future pension payments.

"It's been a perfect storm," said Alicia Munnell, director of the Center for Retirement Research at Boston College. When the pension liabilities are correctly tallied, "you get a very, very large number."'

Wow.  This has been written about for years - Forbes, Fortune, Wall Street Journal - and yet it seems like new information.  Here is more:

"Even under current accounting methods, state and local governments are facing massive pension shortfalls - at least $344 billion, according to calculations by the Center for Retirement Research and other groups.

But when the accounting is revised to value future payments more accurately, in the critics' view, the amount that pensions are underfunded grows to more than $1.9 trillion, according to Munnell's calculations for 126 large plans, which in part have been published in a working paper for the National Bureau of Economic Research. "

Those are COSTS.  If you invest, you have big costs, too.

Figure out your costs in actual dollar amounts.  From now on, every time you review your investment accounts, review your costs first.  Get the numbers in actual dollars amounts.  That should wake you up.

We teach a better way to invest that allows you to keep most of your costs.  It is simple to understand and easy to implement. 

Contact us: BroderickETF at gmail dot com

http://www.washingtonpost.com/wp-dyn/content/article/2011/03/03/AR2011030302918.html