Retirement: 78 is the new 65

Bill Regardie Founder, Regardie's Magazine
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As Americans live longer, state governments are increasingly faced with looming pension obligations that threaten to break their bank accounts.

Uncle Sam is wrestling with increasing the federal retirement age by two years, California bumped up its retirement age by five years for new hires of six public-employee unions, and starting January l, new teachers in Illinois have to work 10 years more — to 67 — to get their pension. It’s like this all over the country.

To learn how they deal with this on the firing lines, I called an old pal who is now in his second and final term as governor of one of the less progressive Southern states.

“Governor Bob,” I asked, “how bad is the pension situation down there?”

“Let me put it this way: If we hadn’t got $28 million from BP last month, we would have had about 10,000 wheelchairs rolling to the Capitol. I was ready to call the Budweiser distributor and tell him to cut his order from the brewery by half.

“Regardie, the only good thing about this crappy situation is that me and about a third of the legislators are lame ducks due to term limits. Now we’ve got two choices: raise taxes or slash state spending.”

“I thought you guys were in decent shape?” I said.

“We were until the economy went to hell. Then BP destroyed tourism and fishing.

“On top of that, our pensioners are living too damn long. Used to be they’d start dropping like flies in their 60s. Now, they’re making it to their 70’s.  Even 80’s.

“Also, we had Lehman Brothers set up our retirement system. I think that one’s my fault.”

“So lifestyle changes reached all the way down there?”

“Damn straight. Those TV stop smoking ads worked. Fried foods sales are dropping faster than Obama’s ratings. Free exercise classes are opening in church basements all across the state. Most of the rednecks stopped thinking drinking and driving is a Constitutional right.”

“What are you going to do about it?

“Next week I’m gonna ram through legislation to reform state government from top to bottom. The voters will love it ’cause it will save ’em a fortune; no tax increases for them. I call it the five-finger plan:

“First, we’re immediately raising the retirement age for all current state employees to 78, thus no additional pension expenses.

“Second, we’re doubling their mandatory contribution to the state’s retirement account from 2% to 4%.

“Third, every state employee except police, teachers and medical will work for free one day a week, which will cut personnel costs by about 75% immediately.

“Fourth, all state employees will have 5% of their gross pay deducted and invested in state bonds.

Fifth, we’ll cut state employment by 20% over the next two years: first, by attrition and second by terminating the 10% lowest performing personnel in every — and I mean every — state agency or department.

“If that department head doesn’t deliver, he’s got what we down here like to call freedom of choice: jump or be pushed.

“In one year, we’ll go from a massive deficit to a significant surplus.”

“Wow, Governor Bob, with a plan like that, you could run for president.”

“Regardie, are you insane? Do you know what the spotlight’s like post-Blagojevich? Running for any other office is the last thing on my mind.”

Bill Regardie was the founder and publisher of Regardie’s Magazine.