I’m Here to Collect $93k

While not tops on the list (that honor goes to Alaska), California has the second highest public pension unfunded liabilities totals, estimated at $1T (yes you read that correctly it is one trillion dollars with a T). Which, as it turns out, is approximately $93k per each CA household. Oh, and by the way, this is up $15k since 2014 alone. Bad investment returns apparently are to blame. 

I’ll pause here and let that sink in. Every household will be responsible for contributing $93k to meet these commitments!

The bottom line is that either the pension payouts will need to be lowered or taxes will need to be raised to meet the obligations (or some combination thereof). Which do you think it will be? Do you have your checkbook handy, just in case? And no, there is zero chance we will be able to “grow our way out of the problem” so don’t go there. And unlike Social Security, California will not be able to print money and bail out the system like the Government can and will likely be forced to do with Social Security.

Much of the blame for this mess rests squarely on the “experts” who, when establishing the annual funding levels, used an investment rate of return that was unrealistically high which helped keep contributions to a minimum throughout the years. Their model may have been reasonable some 40-50 years ago when the pension systems were established but not in a dynamic, changing world. The most frustrating thing about this mess is that it is not a new revelation as it has been known about it for years (and decades).  But rather than address the issue, those same experts and politicians just kicked the can down the road. So if you ever wonder why, under most circumstances I recommend tapping into your pension as soon as you have access because it is my belief most pensions will fall short of being able to meet their full obligations for the reasons above. As such I am a full believer you should take what you can while you can. As Stevie Guitar Miller sang, “Take the Money and Run”

To read more on this future crisis go to