This is a YouTube video titled "Pension Risks You Need to Know" containing a detailed monologue or presentation from May 29, 2019, discussing the financial risks and realities associated with pensions, including assumptions about interest rates, life expectancy, and the Pension Benefit Guarantee Corporation's role. The speaker explains the challenges retirees face when pension promises may not be fulfilled due to economic factors and demographic changes.
If you have a pension that you are eligible for, there's some realities that come into play with pensions. Because Social Security, when they do their projections, they look at a 75 year period, okay? Pensions only look at a 10 year period. So when they calculate benefits, they're using assumptions like they're assuming they're going to make 4.5%, right? They're assuming a life expectancy is 20 years. Why is this a problem? It's a problem because one, where do you get 4.5% guaranteed year after year? We're in a very low interest rate environment. Are people living longer than 20 years? Yes, they are. PBGC, this is called the Pension Benefit Guarantee corporation. It's like FDIC. Okay. So what they've analyzed, and this is from heritage.org if you know, if you ever heard of Heritage foundation, they're very reputable foundation. They did this study and what they were saying is that for somebody that is promised $24,000 in a pension, if for some reason that pension doesn't meet its obligations, the insurance will cover it up to 12.12,800. And what it's saying here is that if PBGC goes insolvent, that $24,000 promise goes to 1,500. I've only had it happen once, thank goodness. But I had one client come in and they handed me a letter that they got from their pension department that said that their pension was going to discontinue at a certain date in the future. It was like 24 months. Well, when you retire and you're kind of counting on that as part of your income and then you get this letter, I mean, what do you do? It's out of your control, you see. So we have to make sure we're moving things into our control. This shows back in 2008, the projected deficit for pensions was 5 million. In 2014 it was 42 billion. That's a big jump, isn't it? From 2008 to 2014, it went from 500 million in deficit projection to 42 billion. This is real and it's because of the interest rate environment and people living longer. So when I say to you that there's 10,000 people retiring every day and we're in a low interest rate environment, the things I'm going through is why it's important for you to understand SA.
