Some
U.S. states face so much pressure to fund pensions for public
employees that it could hurt their credit ratings, Moody's Investors
Service said on Thursday.
As concerns grow over the
financial health of many states after the 2007-2009 recession and how
they will cut spending to cope, the ratings agency combined pension and
debt data to rank the liabilities of each state.
In
the past, Moody's evaluated credit risks from pensions and debt levels
separately. Lower credit ratings could raise the costs to states of
borrowing money.
Connecticut, Hawaii, Illinois, Kentucky,
Massachusetts, Mississippi, New Jersey and Rhode Island, along with
Puerto Rico, have the largest debt-and-pension loads, Moody's found.
Nebraska and South Dakota have the lowest.
"Large
and growing debt and pension burdens have been, and will continue to
be, contributing factors in rating changes," Moody's said.
Problems
with pensions -- which states have underfunded by at least $700
billion -- include weak returns on investments, not enough money set
aside, impending retirements of "Baby Boomers" born in the late 1940s
through mid-1960s, and Americans living longer, Moody's said.
New
York, Delaware and California are often cited for large debt burdens
but do not have the highest combined long-term liabilities, Moody's
analyst Ted Hampton said in a statement.
"In general, states'
rankings for debt and pension combined parallel their rankings for debt
alone," Hampton said but he added: "not all states with large debt
burdens also suffer from weak pension funding."
IN THE TRILLIONS?
The
$700 billion underfunded figure is a conservative estimate for how
much money states will need to cover the pension promises they have
made to their employees.
But $3 trillion could be nearer the
mark, one study warned last year. States expect too generous a return
on investments made by their pension funds, said the study by Joshua
Rauh of the Kellogg School of Management at Northwestern University.
Regardless of the exact amount, states have to find a way to adequately fund pensions.
"More
and more, it's going to take up a larger share of their ... budgets,"
said Kil Huh, director of research at Pew Center on the States, which
has been closely following the pension issue.
Money
flows from three major sources into pension funds: employee
contributions, the employing governments and investment returns.
"Employee
contributions have gone down and, at the same time, employer
contributions because of the fiscal crisis haven't been there," Huh
said.
Moody's, too, says the problem is getting bigger.
"Unfunded
pension liabilities have grown more rapidly in recent years because of
weaker-than-expected investment results, previous benefit enhancements
and, in some states, failure to pay the full annual required
contribution," the report said.
"Moreover, pension liabilities may be understated because of current governmental accounting standards," it added.
The
Moody's report "will shed more light upon the states which have
eliminated or underfunded their yearly contributions for pension
liabilities simply as a way to manage their finances," said Thomson
Reuters Senior Market Strategist Daniel Berger.
One
dramatic solution to the pension problem would be allowing states to
declare bankruptcy, which some congressional Republicans want. Then,
they could renege on pension promises made to employees.
After
being criticized for missing risks in the housing boom, Moody's is
showing with this report it's "not asleep at the wheel" on the pension
threat, said Richard Larkin, senior vice president and director of
credit analysis at Herbert J Sims & Co. in New York.
But, the
report also showed the liabilities are manageable, he added. For
example, Moody's found Hawaii's pension-and-debt load is equal to 16.2
percent of its gross domestic product, the biggest proportion of all the
states.
Even though the liabilities are in the billions of dollars, "when you compare them to GDP it's still low numbers," Larkin said.
"And
it's still relatively much lower than these problem countries people
keep comparing them to," he said, referring to recent fears that
California or Illinois will soon be plunged into troubles similar to
those Greece or Ireland are facing.
In a separate article, Simone Baribeau of Bloomberg reports, Moody's Says Massachussetts Among States With Highest Debt, Pension Burden:
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Some
U.S. states face so much pressure to fund pensions for public
employees that it could hurt their credit ratings, Moody's Investors
Service said on Thursday.
As concerns grow over the
financial health of many states after the 2007-2009 recession and how
they will cut spending to cope, the ratings agency combined pension and
debt data to rank the liabilities of each state.
In
the past, Moody's evaluated credit risks from pensions and debt levels
separately. Lower credit ratings could raise the costs to states of
borrowing money.
Connecticut, Hawaii, Illinois, Kentucky,
Massachusetts, Mississippi, New Jersey and Rhode Island, along with
Puerto Rico, have the largest debt-and-pension loads, Moody's found.
Nebraska and South Dakota have the lowest.
"Large
and growing debt and pension burdens have been, and will continue to
be, contributing factors in rating changes," Moody's said.
Problems
with pensions -- which states have underfunded by at least $700
billion -- include weak returns on investments, not enough money set
aside, impending retirements of "Baby Boomers" born in the late 1940s
through mid-1960s, and Americans living longer, Moody's said.
New
York, Delaware and California are often cited for large debt burdens
but do not have the highest combined long-term liabilities, Moody's
analyst Ted Hampton said in a statement.
"In general, states'
rankings for debt and pension combined parallel their rankings for debt
alone," Hampton said but he added: "not all states with large debt
burdens also suffer from weak pension funding."
IN THE TRILLIONS?
The
$700 billion underfunded figure is a conservative estimate for how
much money states will need to cover the pension promises they have
made to their employees.
But $3 trillion could be nearer the
mark, one study warned last year. States expect too generous a return
on investments made by their pension funds, said the study by Joshua
Rauh of the Kellogg School of Management at Northwestern University.
Regardless of the exact amount, states have to find a way to adequately fund pensions.
"More
and more, it's going to take up a larger share of their ... budgets,"
said Kil Huh, director of research at Pew Center on the States, which
has been closely following the pension issue.
Money
flows from three major sources into pension funds: employee
contributions, the employing governments and investment returns.
"Employee
contributions have gone down and, at the same time, employer
contributions because of the fiscal crisis haven't been there," Huh
said.
Moody's, too, says the problem is getting bigger.
"Unfunded
pension liabilities have grown more rapidly in recent years because of
weaker-than-expected investment results, previous benefit enhancements
and, in some states, failure to pay the full annual required
contribution," the report said.
"Moreover, pension liabilities may be understated because of current governmental accounting standards," it added.
The
Moody's report "will shed more light upon the states which have
eliminated or underfunded their yearly contributions for pension
liabilities simply as a way to manage their finances," said Thomson
Reuters Senior Market Strategist Daniel Berger.
One
dramatic solution to the pension problem would be allowing states to
declare bankruptcy, which some congressional Republicans want. Then,
they could renege on pension promises made to employees.
After
being criticized for missing risks in the housing boom, Moody's is
showing with this report it's "not asleep at the wheel" on the pension
threat, said Richard Larkin, senior vice president and director of
credit analysis at Herbert J Sims & Co. in New York.
But, the
report also showed the liabilities are manageable, he added. For
example, Moody's found Hawaii's pension-and-debt load is equal to 16.2
percent of its gross domestic product, the biggest proportion of all the
states.
Even though the liabilities are in the billions of dollars, "when you compare them to GDP it's still low numbers," Larkin said.
"And
it's still relatively much lower than these problem countries people
keep comparing them to," he said, referring to recent fears that
California or Illinois will soon be plunged into troubles similar to
those Greece or Ireland are facing.
In a separate article, Simone Baribeau of Bloomberg reports, Moody's Says Massachussetts Among States With Highest Debt, Pension Burden:
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
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Some
U.S. states face so much pressure to fund pensions for public
employees that it could hurt their credit ratings, Moody's Investors
Service said on Thursday.
As concerns grow over the
financial health of many states after the 2007-2009 recession and how
they will cut spending to cope, the ratings agency combined pension and
debt data to rank the liabilities of each state.
In
the past, Moody's evaluated credit risks from pensions and debt levels
separately. Lower credit ratings could raise the costs to states of
borrowing money.
Connecticut, Hawaii, Illinois, Kentucky,
Massachusetts, Mississippi, New Jersey and Rhode Island, along with
Puerto Rico, have the largest debt-and-pension loads, Moody's found.
Nebraska and South Dakota have the lowest.
"Large
and growing debt and pension burdens have been, and will continue to
be, contributing factors in rating changes," Moody's said.
Problems
with pensions -- which states have underfunded by at least $700
billion -- include weak returns on investments, not enough money set
aside, impending retirements of "Baby Boomers" born in the late 1940s
through mid-1960s, and Americans living longer, Moody's said.
New
York, Delaware and California are often cited for large debt burdens
but do not have the highest combined long-term liabilities, Moody's
analyst Ted Hampton said in a statement.
"In general, states'
rankings for debt and pension combined parallel their rankings for debt
alone," Hampton said but he added: "not all states with large debt
burdens also suffer from weak pension funding."
IN THE TRILLIONS?
The
$700 billion underfunded figure is a conservative estimate for how
much money states will need to cover the pension promises they have
made to their employees.
But $3 trillion could be nearer the
mark, one study warned last year. States expect too generous a return
on investments made by their pension funds, said the study by Joshua
Rauh of the Kellogg School of Management at Northwestern University.
Regardless of the exact amount, states have to find a way to adequately fund pensions.
"More
and more, it's going to take up a larger share of their ... budgets,"
said Kil Huh, director of research at Pew Center on the States, which
has been closely following the pension issue.
Money
flows from three major sources into pension funds: employee
contributions, the employing governments and investment returns.
"Employee
contributions have gone down and, at the same time, employer
contributions because of the fiscal crisis haven't been there," Huh
said.
Moody's, too, says the problem is getting bigger.
"Unfunded
pension liabilities have grown more rapidly in recent years because of
weaker-than-expected investment results, previous benefit enhancements
and, in some states, failure to pay the full annual required
contribution," the report said.
"Moreover, pension liabilities may be understated because of current governmental accounting standards," it added.
The
Moody's report "will shed more light upon the states which have
eliminated or underfunded their yearly contributions for pension
liabilities simply as a way to manage their finances," said Thomson
Reuters Senior Market Strategist Daniel Berger.
One
dramatic solution to the pension problem would be allowing states to
declare bankruptcy, which some congressional Republicans want. Then,
they could renege on pension promises made to employees.
After
being criticized for missing risks in the housing boom, Moody's is
showing with this report it's "not asleep at the wheel" on the pension
threat, said Richard Larkin, senior vice president and director of
credit analysis at Herbert J Sims & Co. in New York.
But, the
report also showed the liabilities are manageable, he added. For
example, Moody's found Hawaii's pension-and-debt load is equal to 16.2
percent of its gross domestic product, the biggest proportion of all the
states.
Even though the liabilities are in the billions of dollars, "when you compare them to GDP it's still low numbers," Larkin said.
"And
it's still relatively much lower than these problem countries people
keep comparing them to," he said, referring to recent fears that
California or Illinois will soon be plunged into troubles similar to
those Greece or Ireland are facing.
In a separate article, Simone Baribeau of Bloomberg reports, Moody's Says Massachussetts Among States With Highest Debt, Pension Burden:
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The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
Do you like reading movie news and movie reviews? All of us without exception love the movies. They allow us to escape into a fantasy world and get away from our everyday realities if only for a while. Sitting in front of the screen at ...
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
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The San Jose Mercury News reports that fish and birds are responding well to restoration of former salt ponds on the edges of San Francisco Bay to more natural tidal marsh. Continued operation of the salt ponds by Cargill Salt, ...
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There are many great reasons to hire an accountant to help you manage your finances. Yes, you can do your taxes by yourself. But you might not be aware of all of the different "perks" that are available to you as a taxpayer. Here's a list of ways a personal accountant can help you out, not just with your tax return but year-round as well. This is one of the best ways to master that sticky issue of personal finance.
Accountants are not cheap. In the San Francisco area, for example, a good one will charge approximately $250 to calculate an individual tax return. But having a tax expert look at your financial situation will more than pay for itself in the long run, and it may be the best $250 you've ever spent. Look for a certified public accountant (CPA), and even better, a CPA who is also a tax attorney. A tax attorney is certified to appear before the Internal Revenue Service (IRS) on your behalf, and can advise you if you're being audited or if you have a lien on your paycheck. It never hurts to have some decent firepower in your corner when you're facing the IRS. In fact, if you owe back taxes to the IRS or to the state, you should call one right now.
10. The tax laws change frequently, and it's too much to keep up with on your own, even if your background is in finance. Accountants keep up with them and are aware of all of the new tax benefits available to taxpayers.
9. An accountant can give you an overview of your financial situation. If you're living paycheck to paycheck and have a lot of debt, your accountant will sound a warning bell and present you with an array of options on how to reduce your debt.
8. An accountant can teach you how to improve your credit rating. Accountants know all kinds of slick ways to do this. It's not as obvious as you may think. And credit ratings are routinely pulled by human resources departments, lending institutions and landlords, so it's something you want to keep an eye on.
7. An accountant can perform an analysis of your investment portfolio. If you're thinking of purchasing property, an accountant can advise you on what you can comfortably afford to spend, and the most suitable type of mortgage for your real estate investment. Accountants are not typically financial planners, but they will sound an alarm when you're about to do something that might come back to haunt you later.
6. If you're facing a potential change in tax status (i.e., before you get married, divorced, widowed, have kids, or retire), you are in for a big change. Your accountant can give you a reliable prediction on how much more (or less) you will be paying in taxes before your tax status actually changes.
5. If you decide to venture outside the world of cubicle employment, either to work as an independent contractor or start your own business, your accountant can make the transition easier for you by advising how to stay within the limits of what the IRS will allow.
4. If you change jobs, your new job(s) may not be withholding the right amount from your paycheck. In this case, your accountant would ask you to forward the pay stub from your first paycheck to make sure your boss is withholding the right amount. If you don't do this, you could be on the hook for thousands in back taxes to the IRS. It's definitely worth keeping an eye on. Don't expect your place of employment to do this for you - that's too much to ask, and you'll make enemies in the Payroll Department.
3. An accountant can help you save money. Look at it this way - your accountant probably knows more about you than even your mother at this point! He or she can help you devise strategies to hide money from yourself, such as automatic payroll deductions into a brokerage or savings account, or over-withholding on your pay. An accountant can also help you to become wealthy. One of the reasons rich people have so much money is because they know the "ins and outs" of the tax system and have skilled professionals to help them make educated decisions. You should, too.
2. An accountant is the one person who will not lie to you about your finances. If you complain to your best friend or your sibling about having $5,000 in credit card debt, they will probably say, "so? I owe $15,000 on my cards. $5,000 isn't that much. Stop complaining." An accountant will say, "get rid of the plastic and pay off that debt - now." They are obligated by law to act with integrity and professionalism, and you can count on them to do so.
1. An accountant can educate you on general concepts pertaining to personal finance.
The best way to hire a personal accountant is to ask around. You might not find one you like right away. You should hire one who can explain complicated concepts to you in language you can understand. One thing you should not do is have one of those monolithic tax preparation companies prepare your returns for you. Many of them are not skilled at handling complicated tax issues and they might really mess you up. And please don't hire anyone who advertises on TV. Make sure you're working with a credentialed, experienced professional, and then you'll have solid advice on which to rely.
Sources:
Personal experience
http://www.mrtaxspecialist.com/
http://www.thinkglink.com/blog/2007/12/19/debating-whether-to-have-an-accountant-do-your-taxes
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