Kiss Your Pension Goodbye!Dennis Miller Former US Comptroller General David Walker appeared on 60 Minutes back in July 2007. His message? Our country is suffering from a fiscal cancer far more dangerous than any external threat. The federal government is broke. It has promised entitlement benefitshealth care in particularthat it cannot afford. While few economists disagreed with Walkers projections, politicians were unwilling to actually address the problem. From their standpoint, its always better to push the problem off to a later date in the vain hope (or delusion) that it will simply disappear. Walker eventually gave up trying to educate politicians and took his message straight to the people. The Wall Street Journal referred to him as Chicken Little, and no one in Washington wanted to hear his doom-and-gloom message. After all, the economy was fine (remember, this was 2007). They either could not or would not see the problem. Walker was ignored. Since then, the fiscal cancer Walker warned of has continued to grow. In July 2007, our national debt was $8.9 trillion. Six years later, it has nearly doubled to $16.7 trillion. The cancer has metastasized. A Different Fiscal Cancer Hits Closer to Home While the fiscal cancer Walker warned of continues to grow, pensioners are about to battle another type of cancerone that is eating away at the money they thought would sustain them through retirement. Back up and consider why 97% of private-sector employees dont have a pension. Older private businesses realized that they could not meet their pension commitments and found various means to renege on their promises. I have several friends who retired from a large airline, each with a sizable pension. Of course, then the airline filed for bankruptcy, and the benefits of higher wage-earners were cut in half. Newer private companies never offered pensions in the first place. Sure, they administer 401(k)sand have various matching programs, but funding retirement in the private sector is now the job of employees, not employers. The demise of private pensions is foreshadowing that of government pensions; reality just caught up with the private sector faster, as it usually does. Motor City Blues Detroit is bankrupt and plans to cut its pensions. A recent New York Times article was full of sad stories about retired folks caring for invalid spouses who would have to return to work leaving their spouses without care if their pensions were cut. Policemen and firemen are saying they risked their lives, held up their end of the bargain, and now it is up to the government to keep its promises. These folks have legitimate gripes, but that wont keep their pension checks rolling in. Will the state of Michigan bail out Detroit? Upon reading the Michigan Public School Employees Retirement System fiscal-year 2012 annual report, the author of the Pension Facts blog reported that Michigan has unfunded pension liabilities of $48.3 billion. In short, the state government has its own problems. The scramble is on to grab the last few pennies left in Michigan. Bondholderswho have a higher ranking on the bankruptcy totem polewill have to battle public unions fighting to preserve their pensions. The press will label them rich and greedy despite the fact that many are also pensioners. As we saw with General Motors, the government will find a way to usurp the law. All sides will take a financial hit and scream about broken laws and broken promises. Were people lied to? Absolutely! Were promises broken? Absolutely! But it makes little difference now, as pensioners and creditors are left fighting over the scraps. So who is next? Bloomberg reports: Mounting pension liabilities have cost Chicago another cut in its credit standing. Moodys reduced the citys debt rating by three steps to A3. Why? Because of Chicagos $36 billion retirement-fund deficit and unrelenting public safety demands on the budget. Can the state of Illinois save Chicago? Nope. After the state legislature failed to address its $100 billion in unfunded liabilities in May, according to the article, Fitch dropped the state to A-, its fourth-lowest investment grade. Moodys cut it to A3, the equivalent rank. Standard Poors put the state at the same level. Moodys is also reviewing 15 other cities, including Cincinnati; Portland, Oregon; and Minneapolis. On a similar note, is any city in California on sound financial footing? Government employees who currently receive or expect to receive a pension will ultimately suffer greater losses than folks in the private sector. Most government workers have counted on their pension being there and have not built up their own nest eggs. They will get the short end of the stick as their pensions are drastically reduced. The stories of human agony will be tragic. Court of Broken Promises Most of us on the reunion committee were smokers at one time some, heavy smokers. Yet we all finally looked at the facts and weaned ourselves off our cancer-causing addiction. Unfortunately, politicians will never do the same with their spending addiction. Weve heard countless speeches about unsustainable spending, and yet no matter who is in office, these fiscal cancers continue to grow. Our governments are broke: cities, states, and the federal government. Detroits plight is just the first of many ugly endings. Government pensions are not safe, and no one relying on them will be immune to the fallout. At that point, complaining will be futile. When cupboards are bare and there is no money left, its too late to prepare for the problem. Just like the private sector, government pension promises will be broken. Sure, politicians might feel badly about their broken promises, but that wont keep former firemen, teachers, or other retired government workers with roofs over their heads and food in their bellies. Bankruptcy court is the court of broken promises. In theory, its an orderly way to fight over the scraps of a carcass. But at the end of the day, scraps are all thats left. Its sad to say, but many pensioners will find themselves in that fight, with few other resources to fall back on. How to Come Out Ahead While others fight over the scraps, pensionersactually, everyone approaching retirementcan take concrete steps to protect themselves. So where should we start? Fiscal cancer is not a communicable disease unless we allow it to be. While we may not be able to protect others from destruction, we can certainly protect ourselves. As Doug Casey has said many times, we are all going to get hurt; we just want to keep our share to a minimum. The total of the US governments unfunded liabilities currently stands at $86.8 trillion, or 550% of GDP. Will this be the death of retirement in America, and what can you do to escape poverty in your old age? Its time to take charge of your retirementwithout waiting for the Fed to do it for you. Learn to read between the lines of the constant speechifying coming from Bernanke and, soon, Janet Yellen. Or, you can let us show you how to take charge of your retirement.. My team and I make it our mission to share the best investing advice for retirees or soon-to-be-retirees, no matter what happens to pensions and Social Security in the future. Click here to read more about how to take charge today, and discover the best financial strategies and investments to get the retirement you deserve. RELATED: 