The TEXPERS Blog

HB 2608 is easy in intent: it would get rid of the Legislature’s review of retirement benefits changes that metropolitan areas and their pensions work out for their local police, firefighters and municipal employees. Proponents say the Legislature interferes in city affairs which HB 2608 provides people paying local fees “an obvious voice” in how their pension system operates.

But is some of that true? A good many local pensions, by using their city government authorities, searched for years ago to enshrine employee-contribution and city- rates, retirement age advantage formulas, and cost of living adjustments in state code. Mayors and city councils have fleeting political and budget goals in the long life of a city.

Pensions, on the other hand, are designed with long-term profits in mind. They estimate hard financial mathematics every day to ensure that their investments will meet future pension benefits. While local elections and competing budget priorities among council members may resemble a tennis match, the pensions are playing chess. Considering that our pensions are one of the better performing in the country, the system has worked well. So along comes HB 2608, wanting to persuade a majority of legislators that the problems now being experienced in Houston warrant wholesale change to the structure of pensions across Texas. Inside our view, Houston’s issues with its pensions didn’t stem from relating to the legislature in pension issues.

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Decades back, various leaders started short-changing the pensions of the money they had a need to remain actuarially viable. Initially the pensions proceeded to go along, recognizing the city’s claims for re-payment. As time on went, and the town kept digging holes, the pensions balked at agreeing to any more “deals” that offered the city’s short-term budget goals, but ignored the long-term liabilities of their pensions. TEXPERS maintains an attention on the investment performance of local pensions. Our yearly research shows most pensions, when given a chance by their cities, do a great job of getting the investment returns needed to keep the promises their city makes to public employees. Only once cities balk at honoring their commitments do pensions enter trouble, such as has happened in Houston. Keep the current system of balances and assessments which includes worked so well across the great state of Tx.

On a time-adjusted basis, dividend investing is one of the most attractive value propositions out there. Dividend investing is a real way to earn unaggressive income without working in any way. Take time to pay yourself first by investing to live off of dividends. Use dividend income tracking software to know whenever your dividends shall come in. This will help you deploy additional capital continually.

As Albert Einstein once said, “Compound interest is the 8th wonder of the world.” Dividend investing is the best way to capture compound interest on the long haul and maximize your total return. What will you need to do next to live off dividends? Remember dividend investing is additive to your present retirement goals. You should be contributing the maximum amount to your 401(k) and maxing out your Roth IRA / IRA each year.

Then, move forward with a dividend investing portfolio. Start investing and evaluate what it will take so that you can retire early. If you wish to retire early, you’ll need to supplant your current income since your retirement accounts can’t be touched until your later years. By building an effective dividend stock portfolio, you’ll earn additional income that also features residual value once you hit your age threshold for your pension accounts.

I use Blooom to do a free 401(k) and IRA analysis to determine my proper allocation. It has been very helpful for me as I continue steadily to invest in index funds for my 401(k) and focus on increasing my income with a dividend development portfolio. You can live off dividends in early pension and retirement. There are a few simple things to consider as disadvantages of dividend investing. I always like to consider the cons side of the equation with investing for passive income.

You tend to learn much more from the cons to improve your tale on advantages. Taxes associated with dividends: Oftentimes, we are taxed at a higher bracket. If you are a high-income earning (like myself), you effective tax rate is 40-50% on your dividend income. I am taking a little hit on my taxes for an enormous benefit for future years. Taxes associated with dividends debunked by Millionaire Mob: We are trading for dividend development people.