5% Chance of Success

When we do Sustainable Withdrawal Analysis (SWA) for clients we generally like to see 75% or better success rates based on reasonable assumptions. Just saw a report on state public employee pensions in the U.S. that are underfunded by an estimated $3 trillion. Since numbers that large can be hard to comprehend the author put the number in perspective. He estimates that there is a 5% chance of these pensions being paid as promised (or stated differently a 95% chance they won't be paid as promised). Next to Fannie and Freddie public pensions are likely the largest problems looming on the horizon.