|The 19.7 million people living throughout New York State are living longer than ever before — and while that’s great news for them, it’s giving the state’s budget-makers a headache.
According to a February 15 Buffalo News article, State Comptroller Thomas DiNapoli first took longer lifespans into account in September to craft the public plan, estimating that the state’s pensioners would likely live an extra two years. This extended life expectancy translates to an increase in the $176.8 billion pension fund’s liability, raising the 2016 state pension bill to $355 million more than Gov. Andrew Cuomo had originally projected.
From 2000 to 2014, the life expectancy of the average 65-year-old American man rose two years to 86.6; for women, life expectancy rose 2.4 years to 88.8.
New York State is far from the only organization struggling to adjust to the cost of senior citizens living longer. Each year, businesses lose billions of dollars when replacing retired employees and fulfilling senior care obligations.
But for a state government, the extra costs associated with living longer aren’t as easy to absorb. Despite the fact that Cuomo has closed more than $12 billion in budget gaps since taking office in 2011 and placed a cap on the state’s annual spending growth at 2%, Standard and Poor has warned that pension borrowing is posing a risk to the state’s retirement liability.
Nor is New York the only U.S. state facing this problem. According to the Buffalo News, state and local retirement plans across the country are short an astonishing $1.3 trillion due to investment losses and lack of funding.
So while the increase in pension costs might be hurting New York State’s credit, many other states are facing similar budget strains.
“We don’t see it as weakening New York substantially relative to its peers,” said Marcia Van Wagner, an analyst at New York-based Moody’s Investors Service.