By DR. GLENN MOLLETTE

Guest Columnist

Stories of struggling government pension funding have abounded the last few months. Reports of changing the retirement scenario for state employees are dominating the conversation in states like New Jersey, Illinois, California and Kentucky.

Seventy-five year old retired Americans aren’t interested in going back to work. However, if state government pensions are cut some may feel like they have to.

Already, Wal-Mart, McDonalds, Target, Starbucks and scores of other retailers are filled with America’s seniors trying to at least make grocery money to survive during their senior years. The picture of an 80-year-old who has to work just to make payment on his government subsidized housing and to afford a few groceries is not a pretty picture of America.

Americans grew up in the ‘60s and ‘70s believing that someday most of us would be millionaires. During Jimmy Carter’s Presidency and runaway inflation era all the projections concerning 401k pensions were that they would yield at least a million dollars in savings. A friend of mine who recently retired and paid into a 401k annuity plan prescribed by his company for 35 years had approximately $350,000 saved to live on the rest of his life. That sounds like a nice chunk of money but it won’t go far.

Take for example a state government pensioner whose retirement is $4,000 a month. Some are a bit less and many are a lot more. However, this is $48,000 a year plus medical insurance benefits. A state government employee who retires at 52 and lives for 30 years will collect $1,440,000 plus occasional cost of living increases, plus health insurance.

It doesn’t take a genius to figure out that a defined benefit retirement will produce a lot more yield over a lifetime than a 401k pension. A 401k requires a very grueling disciplined lifestyle of saving lots of money and doing without today in hopes of having money for the golden years. Most of America’s current workers cannot fathom of trying to save $10,000 to $18,000 a year into a retirement plan because they need every penny today to live on. College loan debt, house payments and often one or two small children consume every penny. By the time people start seriously paying into a 401k pension the race is on. You can’t build much in 20 years unless you are paying $15,000 or more a year into a fund. Thus, most people need 30 to 35 years today to accumulate much money. A government pension that promises you $4,000 to $5,000 of money every month the rest of your life after working 28 years is a deal that is hard to beat.

Government retirements and other industries for years have afforded their retirees defined benefit retirements secured on the backs of what other people will pay into the fund. Social Security today is in trouble because the money people paid into it was not kept in reserve for the retirees. Instead we have spent it on Vietnam, Afghanistan and anything the government wanted to spend it on. Thus, we are already being warned that in 15 or so years there will not be enough people paying enough money into Social Security to fully pay America’s future retirees what was promised.

Saving American’s pensions will take an all-out effort. We can’t just kick the can down the road. Eventually there will be no more money to borrow because the ability to pay it back will be impossible which is where we are throughout our country.

I do believe Americans will do their part if government will do its part. Most pensioners would reluctantly take a painful 10 percent cut if it meant saving the system. Retirees would probably be willing to work to 59, but when you start at 25 that is still 34 years of work. A combination of state pension and Social Security would be a workable solution as well.

One major plus of a 401k pension fund is that at least it is your money. If you have saved $200,000 or $300,000 then you can count on it. You can spend it or leave it to your children. One thing about your government pension in this new modern era is – you probably can count on it – just probably not all of it.

Glenn Mollette is a syndicated columnist and author of 11 books. He is read in all 50 states. Visit www.glennmollette.com. The opinions expressed are those of the author and not necessarily those of this paper or its corporate ownership.