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The Only State Where Retirees Have Enough Income

A new study has analyzed Census Bureau data to determine in which states the typical retiree is living a “healthy” retirement – that is, a retirement where one earns at least 70 percent of their pre-retirement income.

The study found there was only one state where the median retiree had enough retirement income: Nevada.

From Time.com:

Financial advisers generally agree you need at least 70% of pre-retirement income to maintain your lifestyle after calling it quits. Many say 80% to 85% is a more appropriate target.

But even using the lower bar, Nevada is the only state where the typical retiree has sufficient income to live comfortably in retirement, according to a study from Interest.com, a division of Bankrate, a financial information provider. The District of Columbia also makes the cut. But every other jurisdiction in the nation falls short, underscoring the scope of the retirement income crisis in America.

Nationally, the median income for those who are 65 and older equals just 60% of the median income for those aged 45 to 64, the study found. In Nevada, median income for those past 65 is 71%. In Washington D.C., the figure is 74%. States that get close to the minimum retirement income level are Hawaii (69%), Arizona (68%) and Mississippi (68%). At the bottom are Massachusetts (49%) and North Dakota (49%).

The national rate represents a jump of 10 percentage points over the past decade. But that is not as encouraging as it may appear, reflecting trends where older Americans stay on the job longer and young workers fail to see significant wage gains. The share of Americans working past 65 has been increasing for 20 years and reached 18.9% this May, one of the highest levels in the last half century.

Just below Nevada were Mississippi and Arizona, state where retirees benefit low costs of living, as well as Hawaii, a state that carries a “strong pension culture”.

Near the bottom of the list was Massachusetts.

Fact-Checking Pension Claims in Rhode Island’s Race For Governor

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Amidst all of the pension sparring going on in the Rhode Island governor race, one question recently came to the forefront: Which candidate more effectively managed their respective pension system?

In a recent debate (the video of which can be seen above), Raimondo made the claim that Taveras did very little to improve the health of Providence’s pension system since he’s been in office.

“The pension fund in the city of Providence is only 30-percent funded, about the same level as when he [Taveras] took office,” she said at the debate. “[I] fixed a system for the long term. He made small changes and the pension system in Providence is still in crisis.”

But is that claim true? PolitiFact checked the facts.

We asked the Raimondo campaign for its evidence.

Spokesman Eric Hyers sent us links to two documents. The first was a Jan. 19, 2012 report from Providence’s pension adviser, Buck Consultants, which tracks funding going back to 1994, when the city had 57.4 percent of the pension money it needed.

Since then, the overall trend has been down. The funded ratio had plummeted to 39.3 percent by the last full fiscal year Vincent A. “Buddy” Cianci Jr. was in office. It had dropped to 34.1 percent by June 30, 2010, when David Cicilline, now a U.S. representative, was in his last year.

A year later, when Taveras had been in office for six months, the funded ratio had dropped to 31.94 percent.

The second document was the Jan. 31, 2014 valuation report by the city’s new pension adviser, Segal Consulting.

It reports that as of June 30, 2013, with Taveras in office two and a half years, the funded ratio was virtually the same — 31.39 percent. And this was after Taveras won union concessions to reduce pension costs.

But PolitiFact also contacted the Taveras campaign to hear their side of the story.

Michael D’Amico, Taveras’ former director of administration who is now a budget consultant for the city, said it was “a complete oversimplification” to imply that the changes were small because the funded ratio didn’t change significantly.

The actual cost of the pension system was reduced substantially by negotiating changes such as a 10-year suspension of cost-of-living raises and the elimination of 5- and 6-percent compounded cost of living adjustments, D’Amico said.

“We got just about as much as we possibly could have without cutting pensions,” said Taveras spokesman David Ortiz. “In a sense, the administration faced a choice: do we push Providence into bankruptcy to give a receiver the ability to cut pensions?

“The mayor believed the cost and collateral damage of pushing Rhode Island’s capital city into bankruptcy was not worth extra pension savings we would have been able to pursue,” Ortiz said.

Said D’Amico: “If we hadn’t done anything, the funded ratio would have been much lower.”

PolitiFact’s final verdict: Raimondo’s claim regarding Providence’s pension fund is “mostly true.” From PoltiFact:

When Raimondo said, “The pension fund in the city of Providence is only 30 percent funded, about the same level as when he [Taveras] took office,” she was only off by one percentage point, according to the most recent audit of the fund. That funded ratio has not increased since Taveras was sworn in on Jan. 3, 2011.

But that percentage was on a downward spiral at the time, so having it stabilize at 31 percent doesn’t necessarily reflect “small changes,” as Raimondo claimed in the debate. And the changes negotiated between Taveras and the city’s unions are intended to gradually increase the funding ratio.

Because the statement is accurate but needs clarification or additional information, we rate it Mostly True.

Retirees Blast Mass. City Retirement Board For “Criminal” Cutbacks

Retirees, labor group leaders and even a city councilman are upset at the Leominster, Massachusetts Retirement Board after the Board voted to eliminate a cost-of-living increase in pension payments for the fifth straight year. Reported by the Sentinel and Enterprise:

“We think it’s unconscionable that our local retirees haven’t received a (cost-of-living increase) which they need,” Shawn Duhamel, the legislative liaison for the Retired State, County and Municipal Employees Association of Massachusetts, said Wednesday. “They are largely reliant on their pension as their sole income, so not having a cost-of-living increase for five years really hurts retirees, and we think it’s unnecessary.”

Out of 105 retirement systems in the state, Leominster is the only community to deny a cost of living increase in recent years, according to the association’s monthly newsletter. Somerville is the only other community to miss a cost of living increase dating to 1998.

Mayor Dean Mazzarella defended the retirement board’s decision not to increase benefits while it works to reinvest and fully fund its post employment financial requirements.

Critics have lashed out, in part, because the COLA denial comes in the wake of the Board’s above-average investment returns and the recent decision to lower its assumed rate of return.

The Board’s investments returned 21 percent in 2013, and the assumed rate of return was lowered from 6.5 percent to 5.5 percent. From the Sentinel and Enterprise:

If the retirement board maintained projects of 6.5 percent rate of return based on 2013 earnings the city’s post employment benefits obligation would be fully funded, Duhamel said.

Leominster should be proud of its long success, which is outperforming almost all others in the state, but instead of sharing the wealth with retirees is taking a different approach, Duhamel said.

The retirement board’s projection of lower returns puts a bigger burden on taxpayers to fund the program, Duhamel said.

The board’s rate of return on investments should justify a cost-of-living increase, said at-large City Councilor Bob Salvatelli.

“With that kind of impressive return we’re making off this thing, and not giving retirees a 3 percent raise, is criminal,” Salvatelli said. “It’s not even funny; it’s criminal.”

According to city estimates, giving retirees a 3 percent cost-of-living increase would cost the city $145,000 up front and would cost $900,000 over the life of the retirees who received it.