The PEW Center on the States has an important study that shows many states’ pension liabilities as underfunded according to the data available. The study shows that many of these states were fully funded as recently as the year 2000. The current levels have created a $1 trillion gap between what has been promised and what is currently set aside. Click here to see the full study.
Everyone will be affected by these underfunded pensions as states will likely either have to create new taxes or raise current taxes to help pay these pensions. The problem may get worse as some of these states are assuming they can earn an 8.5% rate of return, which will be very difficult in the coming years.
So, what can you do about it? Have you or your advisor done something to prepare for this? The solution is found in where your money is positioned and how it is invested. The solutions we provide have helped our clients reduce current taxes and some of our strategies even eliminate future taxes.
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