ZIRP & NIRP: Killing Retirement As We
By John Mauldin
Pension funds are going to wake up in 10 or 15 years, find they are massively underfunded, and look to taxpayers and businesses to re-fund them. Your corporate pension plan that is guaranteed by the Pension Benefit Guarantee Corporation is not as guaranteed as you might think. If the PBGC has to take over your fund, you may be lucky to get 50% of the promised benefits. Before you get too fat and happy, I would read the fine print on that guarantee. Then I would ask the pension plan management exactly what expected return they are planning to get; and when you hear the typical “7½% for the long run (blah blah blah),” start trying to figure out how to work well past your expected retirement age so that you can supplement your pension when it fails. Then again, maybe your corporation will be there in 20 years when you need it. No need to worry – just assume it wil l all work out. Everybody else plans that way, and they all tell you everything’s going to be fine – just ask your brother-in-law.