So I read in another thread that the Wisconsin Public Employee retirees are being

[WCGreen]

asked to take an about 2% cut in their retirement checks. This is due, so the story says, to the funds which make up the retirement program have lost a good chunk of money in the stock market.

This could be just a one time event, an anomaly, if you will, and the Fund will be completely whole once the market recovers. But what if more state funded retirement plans start to have problems with even matching COLA (Cost of Living Adjustment). What effect could the decrease in buying power of these retirees have on the recovery? If they are spending less, and I would assume that most of the money coming out of retirement plans are more than likely to be spent, what will that do to the over all heft of the prayed for recovery?

What if these plans drop so that four or five percent of the projected benefits will be gone? What then? Does that mean state employees, teachers included, will be forced to work longer than they expected? Will that cause unemployment to increase just because the pool of people will be growing while the number of jobs available remain virtually frozen?

I know this is a bit gloomy, but this is part of the long term adjustments I think our people will have to look at in order to establish a strong recover.

Are we indeed entering a long period where we will all have to, as Jon Lovitz always said in that hoary old SNL skit, lower our expectations?

[CaliforniaPeggy]

1. Anytime you mess with people's buying power,

You are messing with long-term consequences for the economy.

It looks like a cascade of the worse sort.

I'm hoping that the job market will be expanding again, though I don't expect that to happen any time soon.

Good questions, all...

K&R

[marketcrazy1]

2. this is not an anomaly

MANY pension funds are in deep do do!, total losses are astronomical!. you will see more of this......................

[SharonAnn]

3. Our retirement pay has no COLA. The amount is the same, forever.

And it's from a lifetime professional career at a Fortune 100 company.

So far, it seems the COLA is found in Social Security, public employee retirement, and union contracts.

Outside of those, it seems that the "defined benefit" plans in the private sector define the benefit only once. No redefinition occurs after that.