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Contributors
Jon Coupal- Columnist
Jon Coupal
is an attorney and president of the Howard Jarvis Taxpayers
Association -- California's largest taxpayer organization with
offices in Los Angeles and Sacramento. [go to website] [go
to Coupal index]
 Public
Employee Millionaires
Taxpayers are very generous...
[Jon Coupal] 8/20/04
We've all
been exposed to get rich quick schemes. The huckster says if
you send him
money, he'll show you how to buy real estate
with no money, which is probably how much you will have after
you send him yours. Then there are the offers to sell you a stock
that "guarantees" a 5000% return, or an opportunity
to corner the market in pigmy llamas by raising them in your
spare time.
One has to ask, if these opportunities are so good, why anyone
would want to share their secret with others. Well, as the adage
says, if it sounds too good to be true, it probably is.
However, when Ken
Mandler tells you that he can help you become an instant millionaire,
he is neither a con-man nor a prankster.
A column by Mandler titled "Land a State Job and Become
an Instant Millionaire" recently appeared in a neighborhood
paper in the Sacramento area.
The column's author
teaches a monthly workshop on landing a state job. What makes
these job holders "millionaires" according
to Mandler is that the California state government provides a "defined
benefit" pension plan to each of its employees. The plan
is more generous than any 401K or defined pension plan available
from any other employer in the state. "In fact," says
Mandler, "the plan is so generous that it makes the average
state employee a millionaire after only 22 years of work!"
To prove this, Mandler
shows how a typical state employee, making $55,625 per year
and working for only 22 years, is eligible for
a life pension of $37,546. He goes on to demonstrate that for
the average worker to be able to provide themselves with this
retirement income, assuming a 3% return on investment, they would
have to save $1,251,562. This would require putting $56,889 in
a 401K/IRA or other retirement account for each of those 22 years. "When
you work for the state, the state does this for you," stresses
Mandler.
Mandler tells prospective state employees not to worry about
future reforms to the state pension plan, because once hired,
the pension benefits available at that time are locked in. However,
he warns, landing a state job is not an easy process, because
everyone wants to be a millionaire!
The reaction by taxpayers to Mandler's column may be to first
laugh in disbelief, then to cry after recognizing that the high
taxes Californians pay to enable state workers to have these
generous pensions makes it more difficult for those in the private
sector to save for retirement.
Of course the situation is actually much worse for taxpayers
than Mandler implies. As an example, a recent survey of Los Angeles
County records by the Daily News reveals that nearly 1,200 county
retirees are drawing pensions of over $100,000 annually and at
least one is drawing $316,047. Using Mandler's calculations,
this retied employee would have had to save $10,534,900 over
22 years to provide this level of retirement income. Perhaps
this former employee worked longer -- one can only hope -- to
earn this pension, but it is still a slap in the face to those
millions of California taxpayers whose only pension will be Social
Security.CRO
copyright
2004 Howard Jarvis Taxpayers association
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