Lobbying for a Pension

New Jersey state house TrentonRecently I read a rather surprising Associated Press story. Did you know that some states award public pensions to private lobbyists?


According to the article (http://bigstory.ap.org/article/private-lobbyists-get-public-pensions-20-states) at least 20 states — including New York and New Jersey — give full state pensions to private organizations who don’t work for the state (and in fact may lobby against state interests at times).


The rationale behind this largess is that the lobbyists represent associations of counties, cities and school boards. This perk was granted decades ago based “on the premise that they serve governments and the public.” In many cases the lobbyists also receive health care benefits.


Does this seem extravagant? Most states in our area are struggling to fund their pension obligations. Democrats and Republicans have acknowledged that more legislation designed to raise revenue is almost certain. In other words, higher taxes.


There are ironies galore in this story. One is that the very people who are advancing the idea of benefit cuts for other government workers are themselves enjoying a cushy pension. Another is that their salary increases are without state oversight. As their salary increases so too do their pension benefits.


How many people do you know today who have lifetime pensions? If you look at the statistics, it’s less than one out of 10 workers. Is there anyone lobbying for you to get lifetime retirement income?


Fortunately, there are ways to get a pension that pays you as long as you live, even if you’re not a lobbyist. If you don’t currently have a guaranteed income stream to supplement your retirement, you might want to consider looking into a “personal pension plan.”


Some people think that once they pass a certain age, it’s too late to get started on creating a pension. Here’s an example of a client who’s over 60, who wanted to supplement his retirement. He put $200,000 into a personal pension plan at age 61. He plans on starting his pension at age 75. At that time he will receive $32,598 every year for the rest of his life. Given his family history, he expects to live past 90. If he’s correct, sixteen years at $32,598/year would equal $521,568. If he lives longer, he continues to collect. If he dies sooner, his beneficiaries get what’s left. The pension payments are guaranteed by an insurance company.


There are pros and cons to every financial strategy, so contact us for more details and information.