The Pension Crisis Gets A Catchy Name: “Silver Tsunami”
The comments below are an edited and abridged synopsis of an article by DollarCollapse.com
Pensions really are in crisis, but the story is so full of large numbers, obscure projections, and dry terms like “unfunded liabilities” that not many people are paying attention.
The same is true for a lot of other big trends out there, which is why those sounding the alarm eventually settle on pithy/scary terms to get people’s attention. Global warming, for instance, or nuclear winter.
However, the pension crisis may have found its hook, as per the San Francisco Chronicle: “Silver Tsunami hits as pension costs devour California school budgets.” The silver tsunami in question is the tens of billions of dollars in pension and other post-retirement benefits guaranteed to retirees.
“… California has more than $92 billion in unfunded health care liabilities. By 2030, Los Angeles Unified School District, serving more than a half-million students, is projected to spend half its budget on retiree pension and health care costs. Hundreds of other districts could make dramatic budget cuts or even go bankrupt.”
“District and charter leaders are beginning to talk about the impact of these rising costs. Unfortunately, everyone else is making things worse. Unions, foundations, and non-profits still live in a world where an improving state economy was a reason to advocate for salary increases or fund the latest program.”
With 10,000 or so baby boomers turning 65 daily, pension imbalances will explode in the coming decade, so life gets harder for everyone who drives, needs police protection or has kids in school.
At the same time, the weakest pension plans and their cities will be forced into bankruptcy, leading to panic among the not yet bankrupt and the owners/buyers of the bonds cities and states issue to keep afloat. When the muni market dies, so does much of the US financial system.