Public retirees twice as rich?
October 17, 2011
Retirement benefits for state and local public workers are significantly higher than the package awaiting those in the private sector, a study tracing a 20-year trend suggests.
In an article for CalWatchdog, an independent investigative reporting group, Chriss Street said that for many retirees, “working as public servants literally turned into a gold mine.” Street is the former treasurer of Orange County.
The former official cited a study by the Center for Retirement Research at Boston College, “Comparing Wealth in Retirement: State-Local Versus Private Sector Workers.” The study demonstrates that spending more than half of one’s career as a state or local public employee translates into at least 18 percent more wealth at age 65.
That’s a bare minimum advantage, Street wrote: “Public-sector employees, since the peak of the stock markets in 2000, enjoyed the equivalent positive 10 percent yearly compounded investment return from defined benefit pensions — a total of a 235.8 percent increase.”
One of the biggest factors in that long-term growth was the predominance of the annual cost-of-living adjustment enjoyed by virtually all public sector employees. The study concluded that public employees can expect at age 65 to be 77 to 86 percent richer than comparable private-sector workers — nearly twice as rich.
The report tracked more than 12,650 people in 7,600 households since 1992.