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Report: 82% Chance California Pensions Are Going Under and You’ll Be Next

• Poor Richard**Q**s Blog
by Mac Slavo  via

“Socialism works only until you run out of other people’s money.”
-Margaret Thatcher
According to a recent study there’s an 82% chance that California pensions will run out of money.
Who didn’t see this one coming?
Well, my fellow Californians, looks like we’re all pretty much screwed.
The evidence: a new study by theStanford Institute for Economic Policy Research finds that California’s struggles with giant pension obligations for state workers is getting worse. Much worse. The report finds that unless reforms are taken, pension obligations are almost certainly going to crowd out non-mandated spending for things like education and social services.
The study, conducted by Stanford Professor Joe Nation along with California Common Sense, covered all three of the state’s largest pension systems.
Source: Forbes

California’s pension system is living in a fantasy world where investment returns average 12.5% annually and there’s enough money for everyone.
The largest union, CalPERS, has a 82% chance of a budget shortfall in the next 16 years.
Source: Business Insider
We’ve discussed the destruction of pension funds before, and soon it will become reality. It’s obvious that local, state and federal governments have no intention of cutting spending, regardless of whether that spending is for essential services or discretionary. This means that in order for California (as well as other pension funds nationwide) to keep their funds solvent they need to earn some serious return on their investments. In the case of California that’s 12.5% a year. You’d be hard pressed to find a mainstream financial adviser anywhere in the world that could deliver these kinds of gains (unless, of course, they’re advising you to buy collapse-proof assets like gold and silver).

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