My mother, who recently passed away, spent the last seven years of her life in assisted living facilities. Such care is quite expensive, but fortunately she had a generous Maryland state pension from her many years as a teacher and guidance counselor. Although current teachers and other government employees in many states have been promised similarly generous pension benefits, many of them won't be so lucky.
The cold, hard accounting tells us that some will face financial hardship when their government employers are unable to pay what's been promised. The sooner states act on pension reform, the fewer promises will be broken.
Most state pension plans, including Maryland's, have large unfunded liabilities. State governments have not been contributing enough each year to cover the cost of benefits owed to workers later on in retirement (given reasonable expectations of what the money invested by their pension funds will earn between now and then). In 2015, total unfunded liabilities of state pension plans were approximately $5.3 trillion, equal to about 35 percent of Americans' collective annual personal income.
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