Everything is collapsing.
This isn't just bleak conjecture. You can read about the pension and health care catastrophe facing New York City retirees here, on the front page of the NY Times:
http://www.nytimes.com/...
I'm going to tell you what such news might mean for you and me and our friends and neighbors.
A gym acquaintance, Larry who usually occupies the elliptical next to me, is a semi-retired NYC school guidance counselor. He's youngish--probably mid 50s.
A couple of weeks ago, he was telling me about his blessed life. He was most proud of his decision to buy an inexpensive apartment in Manhattan when one could do so on a teacher's salary. The dramatic appreciation in the value of his apartment has become central to securing his future. He explained that thanks to the real estate bubble, he was a wealthy man. He was amazed, how a civil servant could become rich on a simple real estate acquisition.
I listened.
Then he told me about his great retirement benefits. He also said his future health care needs were all taken care of courtesy of the time he spent in the New York City school system.
I continued listening and started to feel real pangs of envy.
I cautioned him not to count on the continued appreciation of his apartment. I also suggested he think of selling it, if he no longer needed to live in Manhattan. No, he told me, he doesn't have that much equity any longer since he took out a home equity loan to buy another little retirement place in upstate New York.
I was starting to feel melancholy for Larry.
But he maintained that since the apartment would continue to appreciate and since his retirement was secure, what with the guaranteed pension and health care benefits, he felt secure about his future.
I laughed and said, "Larry, I hope you're right but the way I see things, nothing is sacred any longer, what makes you think they're not cooking the books, this is Bushworld?"
"They can't do that, it's guaranteed." He looked at me like I had taken leave of my senses.
If you don't want to go to the link, here are a couple of key paragraphs from the Times:
"But the cost of pensions may look paltry next to that of another benefit soon to hit New York and most other states and cities: the health care promised to retired teachers, judges, firefighters, bus drivers and other former employees, which must be figured under a new accounting formula.
The city currently provides free health insurance to its retirees, their spouses and dependent children. The state is almost as generous, promising to pay, depending on the date of hire, 90 to 100 percent of the cost for individual retirees, and 82 to 86 percent for retiree families.
Those bills - $911 million this year for city retirees and $859 million for state retirees out of a total city and state budget of $156.6 billion - may seem affordable now. But the New York governments, like most other public agencies across the country, have been calculating the costs in a way that sharply understates their price tag over time.
Although governments will not have to come up with the cash immediately, failure to find a way to finance the yearly total will eventually hurt their ability to borrow money affordably.
When the numbers are added up under new accounting rules scheduled to go into effect at the end of 2006, New York City's annual expense for retiree health care is expected to at least quintuple, experts say, approaching and maybe surpassing $5 billion, for exactly the same benefits the retirees get today. The number will grow because the city must start including the value of all the benefits earned in a given year, even those that will not be paid until future years."
So the question remains, what will happen to Larry and perhaps millions of others like him across America? Was I correct--is anything sacred any longer? States and municipalities may not be totally cooking the books, perhaps such accounting sleigh-of-hand, is still considered permissible. The bottom line is: there is no money for millions of Larry's across America.
What an unbelievable mess. I was thinking of calling this diary: You better stay healthy and die quick.