We have a friend who is retired from the NYPD. He’s now 71 and has been retired for 30 years. Twenty and out. He receives a lovely pension and his wife is a retired NY teacher. To say they have a very comfortable lifestyle would be an understatement.
The "good" news is that most of the financial abyss consists of unfunded projected obligations to retiree pension and health care systems. This is not the same as actual debt to actual borrowers, though lefties will try to elide the distinction. Cities have current borrowing requirements. If they welch on bond repayments, lenders will stop lending and cities will have to go on a strict cash basis. That's not the end of the world, but it can be pretty upsetting when services and payroll have to be suddenly slashed.
Future benefit obligations are a different matter. Employees can lose their health benefits; they'll just have to go on Medicare. Tough noogies, but they'll survive. Pensions can take a haircut. That's painful, but public sector retirees will still be better off then their private sector peers. The early retirement scams will come to an end. No more 20 and out, 30 and out nonsense. This does not frighten me, though it may horrify the public employee crowd.
In the long run, Social Security on its present course can only pay about 70 percent of promised benefits. We shouldn't flinch from that haircut either. But the solution, again, is to shift to fully funded pension systems.