Do you have $26,000 to spare?
If you’re a Millennial living in New Jersey, you should probably start saving up. After all, every resident is on the hook for at least $26,000 to pay for the state’s massively mismanaged public pension funds.
New Jersey owes $285 billion in scheduled pension payments, but the fund is missing $235 billion. That’s four out of every five dollars. And if you’re a New Jerseyan, sooner or later you’re going to have to pay for it.
For years, the state has been underfunding the pensions by the millions and basing its estimates on overly rosy investment predictions that weren’t even remotely realistic. The state made promises to public employees, but didn’t take steps to make good on that promise. Instead of planning responsibly, New Jersey chose wasteful spending and irresponsible budgeting.
The future looks bleak for New Jersey residents. The pension funds are already sucking dollars away from roads, schools, and police departments, and the problem is only going to get worse.
One of the pension funds is expected to be insolvent in just four years. Unless the state takes steps to start fixing the problem, New Jerseyans are going to be hit with tax increase after tax increase.
Families and businesses are already fleeing New Jersey in droves, headed for states with better tax climates and economies. This reduces opportunity for young people and leaves an even bigger burden to shoulder for future generations and those who remain.
The state’s pension system isn’t good for public employees either. The outdated, one-size-fits-all approach doesn’t let employees start earning benefits towards retirement for a decade. Leave before you hit the ten-year mark and you walk away with no retirement savings.
A system like that was more understandable when people stayed at the same company for their entire career. But in today’s world, people are much more likely to change jobs. A rigid pension system puts young employees at a huge disadvantage, especially when compared to a defined contributions plan like a 401(k) that puts you in control of your own retirement.
New Jersey is one of the worst examples of a looming nationwide pension crisis that’s threatening our future. It’s time for New Jersey take its pension crisis seriously. To learn more about New Jersey’s pension problem and how the state can begin fixing the problem, check out SafeguardNJFuture.com.