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Wednesday, October 26, 2005

Retirement Issues

By Lyle Hillyard
Senate Chair of Executive Appropriations

I recently turned 65. My birthday stirred memories of the day my father turned 65. He was forced to quit his long time job as a field man for Del Monte here in Cache Valley. He and mother then enjoyed 11 years of moving to Mesa every winter and back here for the summer.

I can’t imagine leaving work because of my age. With the high cost of health insurance and inflating cost of everything else we buy, most of the retirement plans we accepted when we were in our 20s are grossly under funded for the lifestyle to which we are now accustomed.

One of the legislature’s significant responsibilities is to prepare and approve a state budget. Working on this process, I’ve been thinking about a recent talk I read by a demographer regarding the changing population in America and throughout the world. The average age is increasing because fewer children are being born and we are living longer now than ever before.

An aging population is causing serious problems with funding defined benefits programs. These programs are based on life span projections that have turned out to be too short. Therefore, the state or the employer has to make up the difference. I expect a sizeable need this next fiscal year to add more money to our defined benefits program just to keep it solvent. That will be a challenge because we need all the money we can get to meet increasing costs for current employees’ salaries and health insurance benefits.

We may need people to work longer before they retire and move toward using more defined contribution plans rather than defined benefits programs.

These are challenging issues, but I believe we will find solutions. As always, I would appreciate your thoughts.


Blogger Joel Wright said...

This is leadership. We need more elected officials like Senator Hillyard who are willing to tell the truth, and deal with the fact that people are living much, much longer than predicted.

Unless we start seriously considering some of the options Senator Hillyard proposes below, we will end up with a situation where we have a massive transfer of wealth from the young to the old that was not intended. In other words, our future harvests will be diminished because we are eating our seed corn today.

Does it really make sense for the government to spend more on the health care of a senior citizen in their last year of life than it spends on educating a child from Kindergarten through 12th grade? Of course it does not. But the senior citizen votes, while the child does not, so that is the system we currently have -- and things will not change unless we see more principled leadership like Senator Hillyard discusses above.

10/27/2005 9:50 AM  

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