Thursday, April 27, 2017

New COLA Tree from Bob Buerkle

From Bob Buerkle, April 27, 2017
Here's what your new COLA Tree looks like
With the STRS Board vote on 04/20/2017 to completely eliminate our COLA they have set a future legacy that will leave our Retirees Impoverished.
In The Past - Consider a retiree with a 1979 retirement date and a $$20,000 beginning pension, enough to buy a new Cadillac. On their anniversary month beginning in 1980, STRS provided a 3% simple COLA and continued to do so each year until 2013. Over that 33 year period their pension rose to $40,000, nearly enough to buy a new Cadillac. Even so they had lost 5.1% in purchasing power. Still, at least they saw a doubling of their original pension over that period thanks to a well-managed pension system. Over 33 years your payments would total $1,003,200 under the old STRS COLA Plan.
Today - Now consider a 2014 retiree who will likely never receive a COLA. Their pension may start off at $40,000 but it will probably never increase. Even so, that's a pension about the same amount that the 1979 retiree now receives and nearly enough to buy a new Cadillac when they retire. However, with average inflation rates and no COLAs for the next 33 years, it is unlikely that your $40,000 pension could buy any model new car in 2047. Under the new STRS "No-COLA" plan your pension payments would total $1,320,000, not the $2,006,400 it should be. You'll lose $686,400 in missing COLA payments, stolen by current "Management of the STRS Retirement System".
A recent fidelity article said that a 3% compounded annual inflation rate will cut the value of a fixed benefit in half in 24 years. The last 100 years of U.S. inflation was 3.19% so you are sure to lose 50% of the purchasing power you retired with.
        Contact your legislators immediately
Larry KehresMount Union Collge
Division III
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