Ellen Simmons has modest plans for retirement. She wanted to buy an R.V. and  travel around the country visiting family. The 63-year-old breast cancer survivor retired this January after working for 31 years as a librarian at a public library in Detroit. 

Now, her future is dangling in limbo after Detroit, which she called home for the majority of her life, filed for Chapter 9 bankruptcy protection last week and the fate of her--and all city workers’--pensions are hazy.

Simmons says she is terrified and not sure whether her pension is safe.  She hasn’t filed for Social Security and was hoping to wait until 65 so she would be of full retirement age so she could get her full benefits. But if she doesn’t have a pension to withdraw from, she’s not sure she can wait two years.

“We all put in all of those years,” Simmons says. “We are average Joes, Mr. and Mrs. Americas—I can’t believe the speed with which the bankruptcy happened. We were all dedicated to Detroit, and it wasn’t the safest thing to do.”

Motor City, has lost more than half of its population over the last 60 years as companies left the former manufacturing powerhouse. The city also took a substantial blow during the 2008 financial crisis and never fully recovered, and now it can’t afford to pay the pensions it has promised to city workers.  

A promise that attracted Simmons to move to the city. 

“We were given promises when we hired on. Health coverage was a promise,” she says. “I am angry, betrayed and afraid. I have no future whatsoever. I feel like we have been manipulated.”

She says she stood by the struggling city despite its financial woes, and high-crime, because of the promise of this secure retirement. She actually retired early, with a promise her pension would be greater. She feels betrayed by the city she dedicated her career to.

Constitutional Protection?

Michigan’s state constitution says “the accrued financial benefits of each pension plan and retirement system in the state and its political subdivisions shall be a contractual obligation which shall not be diminished or impaired thereby,” but residents that rely on these pensions are holding their breath as the city awaits a hearing Wednesday that will determine if the lawsuits filed by retired public workers can block the bankruptcy filing.

According to reports, the city’s two pension funds have more than $9 billion in unfunded pension and retiree health-care liabilities. Three lawsuits have been filed so far in an attempt to prevent retirees’ benefits from being part of the bankruptcy restructuring.

It is unclear yet how pension recipients will be impacted, although some labor union reps claim the constitutional provision bars pensions from being impacted. Others say the bankruptcy filing throws the provision out the window.

Simmons says her pension, pre-tax, is about $3,000 a month and retired early because of a promise of a bigger pension. She is now angry and feels betrayed by the city she dedicated her career to. “I had workers who were seriously injured, assaulted at work,” she says. “We all had our cars broken into, but we cared about Detroit and provided a valuable service to these people—we were important in their lives. “

An interesting ripple in the story is that teacher pensions are actually from any cuts, according to a spokesperson for the Detroit Federation of Teachers, because they are funded through the state.

The Medical Benefits Issue

What happens to Detroit pensions depends on the legal framework for the state, says Tracy Gordon, Brookings Institute Economic Studies Program fellow. Despite the provision in the state constitution, she says courts will still have the final say in the solvency of pensions.

“The liabilities are so huge and went up so quickly,” Gordon says. “Health care is not protected in the same way by the state constitutions. It’s been a hard time for so long, and the pension fund was short-changed for some time. Detroit was borrowing to make pension contributions for some time.”

At the end of the day, Gordon says that  lawsuits might not be able to protect pensions from being restructured under a bankruptcy plan because the promised money wasn’t necessarily there to begin with.

“It’s not clear that if Detroit stayed out of bankruptcy, that it would have been any better for them,” she says.

Losing health insurance is a big fear among the city’s retirees. Bob [who didn’t want to share his last name] worked for Detroit Water from 1968 through 1998 and now receives $3,400 a month from his pension. He later worked for the IBW Local 58 union as an electrical worker and retired with a 10-year pension in 2012, after hurting his leg on the job.

With medical problems at age 63, two years away from Medicare eligibility, Bob is extremely concerned on  how he will afford his medical costs.

“At the very least, my medical benefits will go away,” he says after Detroit’s bankruptcy. “I will have to pony up money for my health-care until I am 65. They may also cut the pension to some degree—no one has any idea.”

The bankruptcy is likely tied to the city’s corruption, he says.

“We got huge contracts for Detroit Water,” Bob says. “I saw many contracts that became bloated with change orders. There was so much corruption at every level—the contracts were basically pay-to-play. City workers just stood back and thought, ‘what can I do?’”

Waiting on Social Security

Former city workers are now weighing whether or not to start taking Social Security early to help make ends meet.

Paula Kaczmarek, 64, retired in April 2012 as a city librarian. She doesn’t want to start claiming Social Security benefits before her full retirement age  at 66, and be stuck with lower payments for the rest of her life. But now that her pension is in jeopardy, she may have no choice.

“I moved to Detroit in 1978, and had a good pension and a lot of security,” she says. “Now I feel like the final shoe has dropped, and I’m not sure if it’s still falling or if it has hit the floor. I was going to pull Social Security in 2014, but that isn’t much money.”

She is also underwater on her mortgage, due to the city’s real estate bust owing  $31,000 on a mortgage that is worth nearly half that amount.

As for Simmons, she started looking for jobs this week. Waiting for guidance from the city is too risky, and she is scared for her own financial future.

“I started actively and earnestly looking for work,” she says. “Having a 30-year pension is a huge incentive. I got 1% raises over the years, I weathered a lot of storms. I feel like the village idiot—this thing just went ‘boom.’”

Follow Kate Rogers on Twitter at @KateRogersNews