The other shoe is dropping

Geez, all sorts of bad things start happening when asset prices stop rising. Here in California, the Gubernator just declared some sort of "financial emergency" so that, after the first of the year, they can take back money that they've already promised to school districts and county agencies due to dwindling tax receipts .

Tax receipts are dwindling primarily because of dwindling property values as a result of the dwindling rate of homeownership here in the Golden State due, in part, to the soaring rate of foreclosures.

Along with some state tax receipts, some state pension funds aren't looking so rosy these days. In today's New York Times, a story about a new Pew Research report on state pension funds points to trouble ahead for some gubment workers.

Almost half of the states have been underfunding their retirement plans for public workers and may have to choose in the years ahead between their pension obligations and other public programs, according to a comprehensive study to be released to the public on Wednesday.

All together, the 50 states have promised to pay some $2.7 trillion in pension and retiree health benefits over the next 30 years, according to the Pew Center on the States, which spent more than a year studying the issue.
While some states are managing their costs reasonably well, the center found that others, like New Jersey and West Virginia, have made serious mistakes and are now cutting education and health programs as they struggle with costs incurred decades ago.

Surprise! New Jersey is at the bottom of the list. There will likely be even more unrest there as state retirees and their neighbors bicker over state taxes.

A while ago, when my wife and I first started thinking about quitting the rat race, we were envious of those who retired from public service jobs relatively early and then pulled down a very large percentage of their last year's salary as retirement income.

The more you think about it though, with cost of living adjustments based on the government's inflation statistics and other inevitable cost cutting measures that state governments are going to have to take, it might be better to have a lump sum when you quit your day job, with which you can purchase a big pile of dumb 'ol gold and silver coins, selling a few here or there, as needed, in retirement.