By Jon Coupal
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.
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.