A practitioner of Cowboy Safety is skeptical of the future of social security, 401Ks, 403Bs, and any other pension plan. Long term odds for any of them are not good. For years the equities markets have been bid up, not just by inflation, increased earnings, and increased cash flow but by pension money. Pension money coming into the market has forced the sale and resale of existing stock shares at ever increasing ratios to earnings. I can remember when the average stock sold at 5 times earnings and high flyers at 20 times. Amazon is now at 115 even with the possibility that it has peaked and is burning through cash reserves. For the next 17 years or so 10,000 baby boomers a day will be retiring. Instead of paying into taxes and capital the boomers will begin taking out government benefits and capital. The hypothetical retirement plan is to have enough of a capital fund to withdraw 4% a year and still have capital growth with investment earnings. For most baby boomers, 4% will not go far. Neither will 25%. Problems are on the horizon as there are only so many jobs bagging groceries and only so many Wal-Mart greeters.
According to an article today in the Moneyland section of Time.com, last year 1,425 fully funded pension plans were terminated. AMR Corp, the parent company of American Airlines, said this week it will shut down its underfunded pension plan.
The Federal government backup, Pension Benefit Guaranty Corp (PBGC), last year took over 134 underfunded plans covering 57,000 workers. PBGC has liabilities of $107 billion and assets of $81 billion. PBGC can cover the short run yet is as underfunded as the plans it has taken over.
Municipalities such as Prichard Alabama and Central Falls Rhode Island simply quit paying pensions.
The School Board in Baltimore found out suddenly last year that pensions are now current budget as all of the reserves are gone. The question becomes do they pay current teachers or retired teachers?
Within the idea of Cowboy Safety there are retirement solutions with new viewpoints, using old and proven practices. There are ways to have sustainable businesses. There are ways to make secure pension plans inside those businesses using some completely legal tax and other loopholes. There are ways to create deferred income by creation of new forms of money. While it is good to plan in advance the problem is the uncertainty of what can happen to money over time. A Cowboy Safety pension plan can start at age 65 after someone finds that the pension they expected will be zero or will be reduced by PBGC rules. Ideally future workers, with new understanding, will not put anything into a plan they cannot control.
David Sneed
According to an article today in the Moneyland section of Time.com, last year 1,425 fully funded pension plans were terminated. AMR Corp, the parent company of American Airlines, said this week it will shut down its underfunded pension plan.
The Federal government backup, Pension Benefit Guaranty Corp (PBGC), last year took over 134 underfunded plans covering 57,000 workers. PBGC has liabilities of $107 billion and assets of $81 billion. PBGC can cover the short run yet is as underfunded as the plans it has taken over.
Municipalities such as Prichard Alabama and Central Falls Rhode Island simply quit paying pensions.
The School Board in Baltimore found out suddenly last year that pensions are now current budget as all of the reserves are gone. The question becomes do they pay current teachers or retired teachers?
Within the idea of Cowboy Safety there are retirement solutions with new viewpoints, using old and proven practices. There are ways to have sustainable businesses. There are ways to make secure pension plans inside those businesses using some completely legal tax and other loopholes. There are ways to create deferred income by creation of new forms of money. While it is good to plan in advance the problem is the uncertainty of what can happen to money over time. A Cowboy Safety pension plan can start at age 65 after someone finds that the pension they expected will be zero or will be reduced by PBGC rules. Ideally future workers, with new understanding, will not put anything into a plan they cannot control.
David Sneed
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