COST OF LIVING PLANNING IS NOW UP TO YOU!

It used to be that cost of living adjustments were granted to retirees of PSERS every four to five years by the Pennsylvania state legislature. Well, you can kiss those days goodbye. It would probably be political suicide if a bill was introduced today to increase the pensions of thousands of retired teachers and administrators due to the impending pension crisis in Pennsylvania and the financial pressure that will undoubtedly squeeze the taxpayer –  taxpayers who feel that public school employee’s have a pretty sweet deal as it is without enhancing pensions. And, to make the odds even worse for a COLA, don’t forget that the multiplier was changed from 2.0% to 2.5% through political maneuvering which took a 35 year service pension from 70% of their final average salary to 87.5% – a 17.5% increase at the time!

You are now officially on your own to protect your life style, like it or not. At a nominal inflation rate of 4%, you will need 25% more income in nine years to provide the equivalent of what you will receive in your pension in year one of retirement.   In addition,  if inflation soars like many economists predict it might, you are going to need even more! So, if you like putting your money under the mattress, you might find yourself in a bind at a point in your life when you no longer have time to do anything about it!