Let’s face it: For many people, saving for retirement isn’t easy, and it’s getting harder. If you think you’re safe because you have a pension, think again. A huge shortfall globally means millions of pensions aren’t safe. The United States is more than $6 trillion short of where it needs to be right now and is tracking to be $137 trillion short by 2050. Every state has pension shortfalls, but some are worse than others. These are the 15 states making America’s pension crisis worse.
Research from the American Legislative Exchange Council shows just how bad the situation is for public pension plans around the country. Looking at the investment return assumptions used by states, ALEC calculates how much the promised pension amounts exceed current assets to arrive at the shortfall. States with larger populations have more public employees and more pensions to fund, but we’ll visit a small state with a big problem (page 4) and two medium-sized states with more than $350 billion in shortfalls (pages 12 and 13).
Pension shortfall: $118.3 billion
There are fewer than 500,000 people taking pensions in Colorado, but the state has one of the biggest shortfalls in the United States. The state is more than $118 billion in the hole in total, thanks in part to paying out twice as much from the pension fund as it takes in
Next: A state that’s virtually a replay of Colorado.
Pension shortfall: $118.7 billion
Minnesota is basically a carbon copy of Colorado, the state we just visited. The populations and pension shortfalls are about the same in each state. Minnesota is a little better off with its $118 billion shortfall paired with close to 600,000 public pensions, but it’s still one of the states making America’s pension crisis worse.
Next: Local pension plans outnumber state plans five to one.
Pension shortfall: $120.5 billion
Washington runs 10 state-level pension plans, and there are another 50 plans at the local level. When you put it all together, the state would come up $120.5 billion short if it had to pay out all of its 429,599 public pensions.
Next: A small state with a huge problem.
Pension shortfall: $127.7 billion
Spoiler alert: Connecticut is the smallest state we’ll visit, but it has one of the biggest pension problems. The state has 176,674 current and former employees taking pensions (also the smallest number on our list) as of 2016, yet with 212 total plans and more than $127 billion in shortfalls, this small New England state is one of the states making America’s pension crisis worse.
Next: It’s not a long trip to reach our next state in trouble.
Pension shortfall: $134.9 billion
Connecticut’s northern neighbor faces a similar pension crisis. Massachusetts has close to 400,000 people taking pensions, and it’s nearly $135 billion short of what it needs to fund those pensions into the future.
Next: When $93.5 billion isn’t enough.
Pension shortfall: $143 billion
According to Ballotpedia, Georgia has roughly $93.5 billion in cash and assets behind its public pension plans. It seems like a significant amount until you consider the state is billions short of what it needs to pay for the pensions. It paid $7.1 billion to pensions in 2016, but only $3.8 billion went into the coffers.
Next: Problems galore in our next state.
Pension shortfall: $168.1 billion
Michigan is one of the states people don’t want to live in anymore, and there are lots of reasons. The Flint water crisis, vanishing manufacturing jobs, a serial killer at large, and a massive pension shortfall are just a few of the many problems in Michigan.
Next: You need a calculator to keep track of the many pension plans in this state.
Pension shortfall: $223.1 billion
Pennsylvania has 2,261 total pension plans, but just three at the state level. It has 677,508 pensioners within its borders, which works out to one pension plan for every 300 employees. No matter how you look at it, the Keystone State is one of the states making America’s pension crisis worse thanks to more than $223 billion in shortfalls.
Next: Pension problems are another reason to hate this state.
Pension shortfall: $226.5 billion
The wealth gap and ravenous mosquitoes are two reasons Florida is the most-hated state in America. For the 737,000 people on public pensions, the $226.5 billion funding shortfall is another reason to hate the Sunshine State. The state paid $11.8 billion to active pensions in 2016, but just $5.2 billion went in, which shows how Florida is one of the states making America’s pension crisis worse.
Next: Public employees don’t have it nearly as good as people in the private sector.
6. New Jersey
Pension shortfall: $248.7 billion
Merck and Johnson & Johnson, two New Jersey-based corporations, are two of the few companies that still give out pensions, and employees love them for it. Public employees in New Jersey aren’t as lucky. The state pension fund paid out twice the amount it received in 2016, and all told the Garden State is nearly $250 billion short of where it needs to be to keep pension payments going.
Next: Where pension payments are 61% higher than the money put in.
5. New York
Pension shortfall: $345.2 billion
According to Ballotpedia, New York paid nearly $32 billion to pensioners in 2016. However, the state had just $19.7 billion in contributions. When you do the math, payments are roughly 61% more than contributions, and unsustainable number making New York one of the states facing pension problems.
Next: A ton of taxes can’t keep this state from showing up on our list.
Pension shortfall: $354.6 billion
As of 2016, Ohio had $175.2 billion in cash and investments behind its pension plans. It sounds like a lot until you consider its liabilities are more than twice that amount. Even having a huge tax burden can’t prevent Ohio from being one the states making America’s pension crisis worse.
Next: Another Midwest state with a huge problem.
Pension shortfall: $388.3 billion
Illinois’ financial problems are so bad that no amount of estate taxes or potential legal marijuana revenue will fix them. It’s one of the states making America’s pension crisis worse thanks to a more than $388 billion shortfall. It’s almost as much as our next state, but with less than half the number of pensions.
Next: One year shows why this state is in trouble.
Pension shortfall: $397.3 billion
The Lone Star state has seven public pension plans covering firefighters, teachers, judges, and the other 1.9 million people on pensions in the state. How did things get so bad? Just take a look at 2016, when Texas paid $17.2 billion for pensions but collected just $11.3 billion.
Next: No. 1 among states making America’s pension crisis worse, and it’s not even close.
Pension shortfall: $987.7 billion
You shouldn’t be surprised seeing California take the top spot on our list, Like we said back on page 1, bigger states have more public employees and more pensions to fund. With 2.5 million pensions as of 2016 and 1.8 million working employees in plans, California is nearly $1 trillion behind when it comes to funding its pensions.
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