No. of Recommendations: 3
Steve: "While the pension funds supporting defined benefit plans are invested in the stock market, the retiree's pension income is not directly connected to the action in the market. A 30% rise in the market does not mean a 30% rise in his pension benefits."

True, but as you probably know, state pensions do make actuarial assumptions that can impact the ability of the fund to remain fully funded in the long term. For example, jgcspouse's pension is with the Commonwealth of Virginia. Although considered to be in the top half of state pensions in terms of funding, as of last year they were still optimistically estimating 7% returns and 2.5% inflation:

I suppose that could happen, but jgcspouse is close to retirement and over the next ten years, some pretty smart people are offering more muted predictions:

My concern is that we are repeating the mistakes that we made under Reagan, Bush 1 and Bush 2. Deficit spending our way to wealth which is great until we realize that we are increasing the deficits again and have to raise taxes and cut spending to keep from going broke over the long run. I could borrow enough to build a mansion right now and brag about how rich I am, but eventually I would have to pay for it.
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