Retired New Jersey Teachers are going to lose their pension

[tmoneyearlyretiree]

I've done a ton of research on the state of NJ's finances over the past several weeks, focusing on the NJ Teachers' Pension Fund. Here's what i've found:

-The Teachers' Pension Fund is only about 33% funded, if you use the optimistic return assumptions from the state.

-By my own calculations, the fund should reach $0 by mid 2025.

-When the fund runs out, benefits will have to be cut by at least 50% and taxes in NJ will need to be raised at least 30%.

-The stock market drop over the past 3 mos has virtually guaranteed the Teachers' Pension fund will go to $0.

Hopefully there are some retired or current NJ teachers that are also mustachians. I was wondering what you think about this possibility? Have you planned for it? Or do you feel like the state will sort everything out before they run out of cash?

I'll post the detailed calculations I made here that proves the State is going bankrupt, and the Teachers' pension fund along with it. Would appreciate any and all thoughts. This is one of the biggest issues thatpeople arent talking about.
http://millennialmoola.com/2016/01/18/the-new-jersey-teachers-pension-fund-will-be-gone-in-less-than-10-years/

[Steve Rogers]

Thank you for this. I live in NJ and have a bunch of teacher friends. So i will definitely be reading this.

[Cassie]

That's terrible. I hope they start taking action now to prevent this.

[Gin1984]

I assume the pension is insured by the federal government and therefore the pensions will be about 30% of the current vested amount.

[Cassie]

I just saw on another thread about this that the NJ supreme court is siding with the teachers so they would probably get their full amount -just no COLA'S.

[beltim]

I assume the pension is insured by the federal government and therefore the pensions will be about 30% of the current vested amount.

Huh?

1) Only private pensions are insured by the federal government.

2) Where did you get 30% from?

[ncornilsen]

Hence why I would never want a pension to be my primary retirement fund. I'd rather be cashed out and have control over my money.

[Ebrat]

Hence why I would never want a pension to be my primary retirement fund. I'd rather be cashed out and have control over my money.

Same.  Unfortunately, I don't think that's an option in my state (luckily, my state's pension system is pretty well-funded).

[Cassie]

In some states if they do let you cash it in they only give you your own contributions back and not the states. That ends up being a pittance and you leave much $ on the table.

[JLee]

It's amazing how NJ can be out of money...the taxes here are absolutely absurd.

[tooqk4u22]

It is amazing how a state with the following characteristics has such financial problems:

- most densley populated state
- highest property taxes in country
- 5th highest corporate taxes
- 6th highest income tax rates
- 3rd highest household income
-  ......The list goes on and on.....

How is it possible that NJ has the densest populations with one of the highest incomes paying taxes at one of the highest rates and paying the highest property taxes and it is financially F*#d Up.  This should be a formula for financial nirvana, not chaos.

Because the politicians are corrupt, the liberals spend the shit out of it to get votes from the teachers and public workers, the conservatives loaded up the state with a shit ton of debt to make it look like they were better (they weren't), the liberals made more changes and promises to get the teacher and public sector vote, economy collapsed allowing conservative to become governor (Christie) who slowed the spending but didn't really change anything so as to get reelected and state is still in disaray, property taxes continue to rise, housing values stagnate, NJ economy putters along, people and companies with money leave the state.

For anyone that says that NJ should raise taxes.....go F yourself......spending IS the problem in NJ.

Awesome

[yuka]

That's terrible. I hope they start taking action now to prevent this.

Here's a financial solvency report on the States:  http://mercatus.org/statefiscalrankings

I think you're more likely to find that no one will take much action, because after a while the problem gets big enough that everyone wants to just kick it down the road and hope it blows up somewhere past themselves.. I assume that's just because everyone wants the other people to cut their thing.

[tooqk4u22]

That's terrible. I hope they start taking action now to prevent this.

Here's a financial solvency report on the States:  http://mercatus.org/statefiscalrankings

I think you're more likely to find that no one will take much action, because after a while the problem gets big enough that everyone wants to just kick it down the road and hope it blows up somewhere past themselves.. I assume that's just because everyone wants the other people to cut their thing.

Tying to the Liberal or Conservative thread.....if you overlay the table at the bottom of the link (states by fiscal solvency) with red vs. blue states the worst ones are liberal states that already have high taxes.

[Jack]

http://www.rollingstone.com/politics/news/looting-the-pension-funds-20130926

[bacchi]

That's terrible. I hope they start taking action now to prevent this.

Here's a financial solvency report on the States:  http://mercatus.org/statefiscalrankings

I think you're more likely to find that no one will take much action, because after a while the problem gets big enough that everyone wants to just kick it down the road and hope it blows up somewhere past themselves.. I assume that's just because everyone wants the other people to cut their thing.

Tying to the Liberal or Conservative thread.....if you overlay the table at the bottom of the link (states by fiscal solvency) with red vs. blue states the worst ones are liberal states that already have high taxes.

It also interestingly lines up with the least and most dependent states. The red states are predominately moochers and the blue states are predominately givers.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/#red-vs-blue

NJ is least dependent (#4 on worst Return on Federal Taxes). If NJ received more of their money back from, say, North Dakota (#49 on worst Return on Federal Taxes), they'd be in better shape. North Dakota is also overly dependent on federal jobs, as is Alaska and South Dakota.

[astvilla]

Property taxes I believe are independent of state government funding.  While the state government is doing poorly, I think someone else here talked how municipal government pensions are pretty solid and doing well. 

Not to mention the schools in many places are pretty good.  Although having seen it all first-hand, it's the Asian kids and parents that make the schools great, not the teachers or facilities.  That and the industry here is more tech, science, higher education.

It's also pretty safe in many areas (except Newark, Camden, Jersey City is improving, Somerville got WAY better, overall getting better, SNJ is meh good and bad).  Gun control actually works, no mass shootings.  In my town, there hasn't been a single murder I think in over 27 years.  The only gun violence was recalled by someone else, some hostage situation but no one got hurt. 

The Asian drivers can be dangerous though. Indian women these days.  Well there's more of them now but people these days don't signal when turning anymore. 

It's not a bad place to live.  It's hard to be Mustachian though. COL is high, and real estate rental is a poorer investment than most other states.

[JLee]

Property taxes I believe are independent of state government funding.  While the state government is doing poorly, I think someone else here talked how municipal government pensions are pretty solid and doing well. 

Not to mention the schools in many places are pretty good.  Although having seen it all first-hand, it's the Asian kids and parents that make the schools great, not the teachers or facilities.  That and the industry here is more tech, science, higher education.

It's also pretty safe in many areas (except Newark, Camden, Jersey City is improving, Somerville got WAY better, overall getting better, SNJ is meh good and bad).  Gun control actually works, no mass shootings.  In my town, there hasn't been a single murder I think in over 27 years.  The only gun violence was recalled by someone else, some hostage situation but no one got hurt. 

The Asian drivers can be dangerous though. Indian women these days.  Well there's more of them now but people these days don't signal when turning anymore. 

It's not a bad place to live.  It's hard to be Mustachian though. COL is high, and real estate rental is a poorer investment than most other states.

Gun control is largely irrelevant in this context, unless you mean restricting access to guns helps temper the constant anger and impatience that seems to be within nearly everybody on the road in NJ. NH and Vermont have the smallest number of gun deaths per 100k people and have some of the most lenient firearms laws in the country (I was in law enforcement in NH for ~5 years; now I am in NJ working in IT).

Towns in NJ are funny. I could say "my town has/hasn't had X in Y years"..but my town is barely over one square mile, which is a laughably small footprint. :)

[tooqk4u22]

It also interestingly lines up with the least and most dependent states. The red states are predominately moochers and the blue states are predominately givers.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/#red-vs-blue

NJ is least dependent (#4 on worst Return on Federal Taxes). If NJ received more of their money back from, say, North Dakota (#49 on worst Return on Federal Taxes), they'd be in better shape. North Dakota is also overly dependent on federal jobs, as is Alaska and South Dakota.

Only one of the four categories is relevant, which is the first one "Return on Investment"  The others really aren't relevant and possibly skew the outcomes...such as fed funding as a % of state budget....if one state has a $40billion budget and gets $10Billion and another state has a $4B but gets $1Billion both are 25% of budget and then ranked equally....that doesn't make sense....this would tend to favor high tax states.  Also the number of fed employees in any state doesn't matter.

It is interesting data and the represented conclusion may still be correct but the way it is sorted lends itself very much to bias, as do most reports or articles that are politically motivated on either side.

[tooqk4u22]

Property taxes I believe are independent of state government funding.  While the state government is doing poorly, I think someone else here talked how municipal government pensions are pretty solid and doing well. 

Not to mention the schools in many places are pretty good.  Although having seen it all first-hand, it's the Asian kids and parents that make the schools great, not the teachers or facilities.  That and the industry here is more tech, science, higher education.

It's also pretty safe in many areas (except Newark, Camden, Jersey City is improving, Somerville got WAY better, overall getting better, SNJ is meh good and bad).  Gun control actually works, no mass shootings.  In my town, there hasn't been a single murder I think in over 27 years.  The only gun violence was recalled by someone else, some hostage situation but no one got hurt. 

The Asian drivers can be dangerous though. Indian women these days.  Well there's more of them now but people these days don't signal when turning anymore. 

It's not a bad place to live.  It's hard to be Mustachian though. COL is high, and real estate rental is a poorer investment than most other states.

Not sure your ethnicity comments are contributing anything to this discussion.

[astvilla]

Property taxes I believe are independent of state government funding.  While the state government is doing poorly, I think someone else here talked how municipal government pensions are pretty solid and doing well. 

Not to mention the schools in many places are pretty good.  Although having seen it all first-hand, it's the Asian kids and parents that make the schools great, not the teachers or facilities.  That and the industry here is more tech, science, higher education.

It's also pretty safe in many areas (except Newark, Camden, Jersey City is improving, Somerville got WAY better, overall getting better, SNJ is meh good and bad).  Gun control actually works, no mass shootings.  In my town, there hasn't been a single murder I think in over 27 years.  The only gun violence was recalled by someone else, some hostage situation but no one got hurt. 

The Asian drivers can be dangerous though. Indian women these days.  Well there's more of them now but people these days don't signal when turning anymore. 

It's not a bad place to live.  It's hard to be Mustachian though. COL is high, and real estate rental is a poorer investment than most other states.

Not sure your ethnicity comments are contributing anything to this discussion.

I'm Asian.  Then to be PC for you...newly arrived immigrants that tend to come from the Asian continent these days (in the form of H1B visas displacing jobs and abused by companies) that never grew up in a car culture or taught safety (especially in winter, no snow in most of India to my knowledge and have different ideas of the road).

I've seen my share of bad white drivers.  More aggressive, speeding through traffic, changing lanes.  And demographic is currently changing.  More Asians, "poorer" driving? Like no signaling. Not even slowing down for stop signs, and more density, traffic. It's definitely changed since I started. Could be coincidence, could be cultural.

Thread derailed off about life in NJ sounding bad, I'm just saying it ain't that bad.  Every state has challenges.  Pension funds are just one part.

My town is one of the biggest actually.  More to do with people and median income though, not just gun laws, but I'd say a combo is better than one alone.  Asians don't get gun culture as much as other groups.  They usually get guns cause they see different skin colors or foreigners like Asians.  A lot of towns in NJ are pretty safe though.

We're taxed high but COL is high too, and salaries are higher overall.  We also have NY and Philly.  I asked a similar question before...so I'm not too worried about NJ.  NJ has a lot of potential, it's just squandered away by corruption (law enforcement, politics, etc).

Corruption and poor governing. The people are kinda meek though so they're responsible for not being louder. Started way back, Whitman was horrible, but I think Kean started it.  McGreevey didn't do much.  Only Corzine did anything to help the pension.  Christie just inherited the hot potato and it landed on him and once he wanted and made mashed potatoes, so now it's a mess. This pension debacle has been going on for decades.  NJ just wanted more $$ for some mysterious reason (probably K-12, NOT college definitely) so they drew from the pensions.