When personal finance expert Dave Ramsey heard about a fire department with a pension that’s more than $1 billion underfunded, his first guess was Illinois. “Sounds like Illinois or Chicago,” he said on a recent episode of “The Ramsey Show.” But when co-host Ken Coleman told him the firefighter was actually writing from Texas, Ramsey was floored: “Where in the crap in Texas is something run that poorly?”
A firefighter named Brett had written in to share his concerns. He said he loves his job but is starting to question whether staying is worth it, given the financial state of his department. “The city takes 13% of my paycheck for my pension, and they do match those funds,” Brett explained. “I don’t have a say in how the money is managed or used.”
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To finish off the letter, Brett asked, “I had always dreamed of making my career here, but with the pension and a few smaller issues, I’m left wondering if I’m currently a passenger on a sinking ship.” He asked the show, “Is a poorly managed pension a good enough reason to consider leaving?”
Coleman said he’d already lean toward leaving if the department feels like a sinking ship. Ramsey agreed, adding that the situation isn’t just concerning, it’s financially irresponsible to stay.
“It’s not the pension going down that bothers me. It’s the 13% of your income they make you put into something that’s going down. That concerns me,” Ramsey said. “In order to keep this job, you have to take 13% of your income into the middle of the floor and burn it every week.”
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He emphasized that if Brett were able to invest that same 13% in a solid 401(k), he could eventually become a millionaire. Instead, he’s being forced to contribute to something that doesn’t even look viable long term.
“A billion underfunded? Oof,” Ramsey said. “Feels like that should be a news story. That’s a lot,” Coleman added.
Ramsey and Coleman concluded that Brett should probably start looking for a different department. While it’s painful to walk away from a dream job, staying could result in long-term financial harm. “You’re probably just moving to a different fire department, my man. That’s the thing,” Ramsey said.
