We have talked long and hard about the fact that the US government hasn’t got enough money to give to retirees. Moody which is a credit rating agency has said that the federal government and the local, state governments are approximately 7 trillion dollars short when it comes to funding regarding pension payments.
FEDERAL GOVERNMENT 7 TRILLION SHY:
A release from Moody this past week read, “The unfunded liabilities of the various federal employee pensions systems, covering civilian and military employee benefits, amount to about $3.5 trillion, or 20% of US GDP. Additionally, Moody’s estimates that unfunded state and local government pension plan liabilities are of the same magnitude, bringing the total shortfall to 40% of GDP.”
The report also expressed that this public pension problem is only one small piece of the puzzle and that the retirement problem is on a whole another level. They said that the biggest challenge is the inability of the government to fund the Medicare and Social Security programs. The funding gap in social security is estimated to be close to 13 trillion (which is 75 percent of the GDP) while the Medicare program’s deficit is around 3 trillion dollars.
This is definitely startling news and many critics including Tony James, who is the president of Blackstone has referred to this shortfall as the main reason behind the crisis that’s affecting America.
Will these factors lead to people not considering retirement at all? Will they fear not getting their hands on their pension and will that make them continue working? Only time will tell. We can’t deny how a big a problem this is for the federal government and it goes without saying that the sooner they get rid of it, the better it will be for them, the federal employees and the soon-to-be retirees.
