That Was Then; This Is Now

We had a fantastic success in Minnesota teachers’ defined-benefit pension plan last spring. Here’s what shaped that public employee pension adjustment bill:

What were the factors making it necessary to pass a pension bill?

Mortality Experience: An experience study in 2015 evaluated all actuarial assumptions (economic and demographic) and recommended an adjustment to the mortality tables — TRA members and retirees are living longer — on average an extra two years, adding significant cost to the fund.

Who has the longest average life expectancies in the USA?
…….people born in Hawaii, age 81.3
…….people born in Minnesota, age 81.1
…….people born in Connecticut, age 80.8
…….people with higher education
And which of these are Minnesota teachers?

Investment Return Expectations: A “mini-experience study” in 2017 of the economic assumptions recommended a lower investment return assumption, from 8.5% to 7.5%. This adds significant liability to the fund.

However, It isn’t over yet. Future legislatures and administrations could undo all of that, and there will certainly be a big push from Arnold Foundation millions to bring us all into their high fee brokerage firms with a defined-contribution plan. While we fight back at the polls, Minnesota TRA is heading toward stabilizing and advancing those hard won pension system benefits.

TRA logoTRA Strategic Planning – Four Goals

Engagement and education
TRA will provide information to empower members, employers, legislators and taxpayers to be informed and engaged about TRA’s governance structure as well as the value of a defined-benefit plan. Member educational materials should be clear, accurate, accessible and presented in innovative ways for all life stages.

Fund integrity balanced with equity in plan provisions
TRA will abide by its fiduciary duty to ensure the financial stability of the plan while working toward fairness in benefit structure and contribution rates. TRA will continually monitor the plan’s financial health. When needed, TRA will recommend adjustments to stabilize the fund while upholding the board’s guiding principles of shared commitment, intergenerational equity, long-term financial sustainability and maintaining the recruitment/ retention value of a TRA pension

Engaged, empowered, high-performing workforce
TRA will demonstrate dedication, stability and inclusivity. Leadership and staff will respect all perspectives and experiences. Succession planning and operational workforce planning will support the transfer of knowledge from outgoing employees and the recruitment and retention of new and existing employees.

Risk-intelligent organization
TRA will be a risk-intelligent organization with a robust, proactive and comprehensive risk-management program. TRA will continue to monitor and respond to known and emerging risks.

TRA’s Mission:

Retirement security for Minnesota teachers

Support state’s education system by attracting and retraining teachers


Retire early? You need ‘at least $5 million,’ according to Suze Orman

This lifestyle leaves you exposed if disaster strikes

Suze Orman just threw cold water all over the FIRE movement that’s been spreading across the internet.
FIRE is short for “financial independence, retire early.” Work hard, make money, SAVE!!!, and, then, stop slaving away for “the man.”
Envision your dream of a flexible future and do what it takes to make it happen. Sacrifice now, enjoy later. That’s the gist.
On Reddit, there are more than 433,000 subscribers gathering to discuss their FIRE tips and experiences daily. “At its core, FI/RE is about maximizing your savings rate (through less spending and/or higher income) to achieve FI and have the freedom to RE as fast as possible,” the group’s description reads.
For many a work-worn millennial, it’s the Holy Grail. For one of the biggest names in personal finance, however, the approach has disaster written all over it.
“I hate it. I hate it. I hate it. I hate it.”
Tell us how you really feel Suze.
“Listen everybody. I know you want to retire at 25. At 30. At 35,” Orman told the “Afford Anything” podcast ( “But… as you get older, things happen.”
What things, Suze? That’s when the interview turned dark:
“You get hit by a car. You fall down on the ice, You get sick. You get cancer,” she said. “If a catastrophe happens, if something goes wrong, what are you going to do? You are going to burn alive.”
Then, Orman, with a net worth estimated to be in the neighborhood of $30 million, dropped a reality bomb of self awareness.
“Listen, if you have 20, 30, 50 or 100 million dollars, be like me, OK?” she said. “If you have that kind of money and you want to retire, fine.”
If not, and that’s most of us, better build that cushion, because, she says, if you stop stashing money, you’re losing the compounding years of your life.
“When you are younger, the money that you invest makes money and that money makes money and that money makes money,” Orman explained. “You cannot make up for that with sums of money later on in life.”
When Paula Pant, the host, asked what level of wealth would be necessary to comfortably reach FIRE, Orman threw out some big numbers.
“You need at least $5 million, or $6 million… Really, you might need $10 million,” she said — short of that, it’s just not going to be enough for most people.
“You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime,” she said. “I think it’s just ridiculous. You will get burned if you play with FIRE.”
Listen to the full podcast for more:
There was a range of responses. Some FIRE devotees, like Thomas Insall, appreciated hearing the other side of the argument
“Hearing such a strong, contrarian view from someone who’s spent their life hitting the ground hard and made so much for themselves is great!” he writes in the comments section. “If anything at all, Suze challenges us to revisit, reassess, potentially implement a warier eye and more conservative safeguards over ourselves for if/when we FI/RE.”
Reddit’s FIRE board, however, was much less supportive, in general. Here are just some of the criticisms lobbed her way:
“Suze doesn’t want you listening to anyone but Suze. She only promotes advice that supports something she previously said, and FIRE is way outside of her wheelhouse.”
“This is a situation where the old saying ‘Consider the source’ applies.”
“She had made millions on being the expert to tell you how to manage your money. If you can learn how to meet your goals just by reading the FAQ on a subreddit, her business model is f**ked.”
“Suze Orman is right: private planes and private islands are not cheap.”
What’s your take on FIRE and Orman’s distaste for it?
For more on this topic, check these out:
Here’s why you shouldn’t retire super early even if you can (
Why early retirement IS all it’s cracked up to be
People may be missing the point on retiring early (
The bad things about early retirement nobody talks about (
-Shawn Langlois; 415-439-6400;

October 03, 2018 17:39 ET (21:39 GMT)
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