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CalPERS Falling Short

August 2nd, 2019

  It isn’t news that pensions haven’t been doing as well as they used to. They are no longer the powerhouse that fueled the American retirement. In fact, many of the countries largest pension plans are starting to falter on a significant scale. Teamsters for example. The wave of struggling pension plans has affected state pensions as well, and that doesn’t exclude California. CalPERS, the largest public pension fund in the country, just missed its target rate of return on the year. This is the kind of news that can make you break a sweat.

The annual goal for the massive public pension fund was not met this last year. Wes Venteicher, of the Sacramento Bee, reported that the massive $370 billion fund came short of their annual goal of 7 percent with a 6.7 percent return on the year. Which doesn’t seem like much at first, but that is actually just over $1 billion. Christopher J. Ailman, California State Teachers Retirement System’s Chief Investment Officer, stated “It was a roller coaster year and a very challenging environment in which to generate returns…Thanks to the in-house expertise of our investment team, we were able to come very close to our assumed rate of return despite the instability of the market.” This is very true, the market this year has been a wild ride. The trade war with China, tariffs across the globe, and just this week the announcement of a rate cut by the Federal Reserve has definitely had its impact on the ability to make solid gains. This doesn’t mean that CalPERS is going under, but that also doesn’t mean that you shouldn’t be concerned. If the largest pension in the country is starting to backslide, then you can bet that the others are not far behind.

It is for this reason exactly that you have to have more than one stream of income. Depending only on a pension, 401(k), or Social Security is simply not enough in today’s age. We have to be prepared for the market to not go our way. If the largest public pension fund in the country is seeing trouble, it’s probably not too wrong to believe that your funds might see the same thing. Diversification, tactical investing, and staying informed can mean the greatest difference when it comes to preserving your nest egg. Don’t depend on the state to carry you down the road to retirement, depend on yourself, and the support of those around you. After all, you’ve made it this far, haven’t you?