They keep using the full cost of all liabilities in determining the percentage of funding. If the state promises 75% of my salary 30 years from now, they're not going to take 75% of my current salary and put it in a bank account. They take 11.5% of my salary from me and match it to put 23% of my salary in investments. Assuming a 7% rate of return on that money for the next 30 years, one year's worth of contributions will be equal to 1.5x the total salary or 2 years worth of benefits. Adding in compounding returns over 30 years and continued contributions at the same rate will yield 31 years worth of payments at 75% of my salary after retirement.
How is that not solvent again?
Big Dawg #1408, TT #1408
Moto Club #1408, GSSF Member, NRA RSO
NRA Benefactor Member
Last edited by jpa; 10-03-2012 at 22:43..