We need some arithmetic here.
If you contribute $50,000 to your retirement plan, and draw $500,000 of benefits after you retire, who pays the difference?
Nobody pays in $50,000 to social security and draws out $500,000 unless it's through disability or retiring early and then living past age 100. The only people I know with that kind of retirement plan are ex-CEOs like G.W. Bush's Secretary of the Treasury John Snow, whose retirment plan from CSX is paying him a benefit based on far more years of service than he actually worked there.
I know I've contributed far more than I'll ever see in benefits, and I'm not nearly done paying yet.
The Social Security system was orginally set up to provide a safety net for people, without regard for how much they paid in. It was never a Ponzi scheme and only recently have the current contributions been used to pay current benefits. Ideally contributions will be invested and pay for the benefits of those who contributed in the future. But the intent was never to guarantee such an outcome. Once it got started, however, politicians just couldn't keep from screwing around with it and thus we end up where we are today. The real questions should be do we support the idea of a minimum safety net for people, and if so, what level do we set it at? There are always going to be hills and valleys in the population and the economy. The policy has to take the long view and make decisions that can ride out those hills and valleys without causing unwarranted problems.
However, in the case of Minneapolis's retirement liabilities, it appears that a number of mistakes have been made, continue to be made and/or have not been rectified. For example, the police and fire pension funds were historically mismanaged by people with conflicts of interest outside of the purview of the city (aka the taxpayer) which was nonetheless on the hook for paying them regardless of how those funds were managed. One fund (I don't recall which from memory) was so bad the state of Minnesota had to step in to try to clean it up. If memory serves, the city is still under some sort of state direction to fix those pension funds. The articles in the Southwest Journal should be a required primer on the subject. (http://makeashorterlink.com/?C6F023416)
The city screwed up, 20, 30, 50 years ago by not managing those funds directly and pinching every penny. Instead, union members over-paid themselves at retirement, guaranteeing that the funds would go bankrupt some day.
Incidentally, this same principle applies to the idea of building oneself out of a problem through continued growth. Every last rube who advocates that a city or county needs endless growth to survive needs to read the book "Limits to Growth" or at least learn some basic laws of physics and economics.
This appears to be true of most politicians, far and near. Given the power to vote themselves pay raises, comfortable retirements and first class healthcare at taxpayer expense, they rarely hesitate. We could solve a lot problems simply by requiring politicians to live by the same rules and limitations that the rest of us do. And they wonder why the electorate is digusted and angry.Minneapolis specific: How much is a former City Council person expecting to receive? At what age? I remember reading that he or she can expect a monthly income equal to 75% of his or her highest salary. Who knows what they include as "salary" for the calculation, but let's assume $60,000 per year.
If these numbers are correct, a former Council Member would receive $45,000 per year, plus first class healthcare for 10, 20, 30 years. That kind of annuity is worth a lot -- in the millions. How much did he or she pay for the annuity? Not much.
Chris Johnson Fulton
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