Grand Rapids, MI -- (SBWIRE) --06/07/2011 -- Financial advisor Dennis Tubbergen spends a lot of time with his own clients, serving as a financial advisor to other financial advisors, and hosting his talk show The Everything Financial Radio Show. Having just finished writing his latest book, Tubbergen has been sharing excerpts from the book, Economic Consequences: Can You Survive, Even Prosper From 100 Years of Bad Money Decisions?

“This book talks about where we are economically and the possible courses of action folks should consider taking with their finances,” notes Tubbergen.

In a recent excerpt, Tubbergen told his readers that with federal stimulus money to the states drying up, it is time for us to face the music and either cut spending or raise taxes or both.

“In my view, one of the biggest financial time bombs waiting to explode is underfunded pensions at the state and municipal levels,” warns Tubbergen. “As big a problem as underfunding is in the Social Security program and the Medicare program at the federal level, there is a similar problem lurking at the state level.”

According to Tubbergen, an article in The Militant on January 16, 2011 estimates that pensions at the state and local levels are underfunded by at least $1 trillion and probably more (many estimates are closer to $3 trillion). In the last nine years, at least 39 states have raised retirement ages, cut pension benefits or increased pension deductions from worker’s paychecks in an effort to get pension plans for retirees back to solvency.

“In Prichard, Alabama retired city workers learned first-hand that pension law is just a piece of paper,” claims Tubbergen. “Citing that the pension fund had run dry, the City filed for bankruptcy and simply quit sending pension checks to 150 retired workers.”

Tubbergen goes on to say in New Jersey, Governor Chris Christie recently skipped a $3.1 billion pension payment to the state workers’ pension plan and proposed that workers triple their current contribution to the plan. Christie also proposed raising the retirement age to 65 and warned that an even more aggressive proposal was in the works.

“The financial crisis has been tough on pension plans themselves, too,” notes Tubbergen. “The New York State employee pension fund lost 26 percent of its value in 2008 and 2009. Yet, in spite of this large decline, the state deposited another $1 billion in hedge funds in 2009.”

Tubbergen claims one of the biggest causes of these underfunded pension plans is the accounting method used to determine the level of funding for these plans; plan actuaries have been “pretty optimistic” in their assumptions.

Tubbergen refers to an article published in Forbes magazine on February 14, 2011 that reported a typical actuarial assumption for a pension plan could look like the following: Stocks, 10.4% return annually; Long-Term Investment Grade Corporate Bonds, 5.9% return annually; Long-Term Government Bonds, 5.4% return annually; and 3-Month Government Treasury Bills, 3.7% return annually.

“Not only have stocks not returned 10.4 percent per year recently, the S&P 500, an index of stocks, has had a negative return over an 11-year timeframe ending on December 31, 2010,” concludes Tubbergen.

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at http://www.dennistubbergen.com. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at http://www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.