Are you "lucky"if you have a secure retirement?

[Capricious]

Excellent point.

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

 

[riptides]

... They have stated that the salaried employee's pensions will be frozen. As of right now, I (an hourly employee), am "protected" as my pension benefits are part of our union contract. I am speculating ....

I think it is a trend that will require due dilligence and scrutiny on your part.

Seems these days with contracts, nothing is set in stone. Best you can do is hedge your bets and stick monies everywhere. Distribute best you can with perhaps different risks associated with each. The 401k they are offering would get more monies if I were you. Seems that is under "your" control more or less.

 

[riptides]

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

Longevity, I'd rather have quality!

 

[ovrszd]

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

I have 100K in a plan that my job offered. I could choose to pull it all out and invest it myself with no tax penalty. It's divided into 3 accounts. The lowest account gain (safest) was 3% this past year. The highest account gain (most risk) was 24% this past year. I don't think I could have individually invested that money and gotten that return.

 

[Capricious]

"...It goes up about a dollar per year..."


Is that increase a dollar amount, or a percentage? If it is a percentage, then (assuming no changes) it could amount to quite a sum after 40 years or so.




"..As some of you said they will probably offer an alternative that they will try to make sound like a better deal for the employees, and my fellow "brothers" will fall to their knees and accept it..."


Usually what is offered is the "signing bonus". A lump sum paid up-front. And, yes, a lot of people will look at the lump sum and sign a deal that they would not have otherwise. They see a new ATV, or a new tractor or a new pick-up truck.


Same deal with a lump-sum pension pay-out.

Some people can't pass up a few dollars up-front even if it costs them many dollars in the future:
Hyperbolic discounting - Wikipedia, the free encyclopedia



Again, the only way I would take a lump-sum pension pay-out is if I saw some likely impairment of those future payments.

 

[mikehaugen]

"...It goes up about a dollar per year..."

Is that increase a dollar amount, or a percentage? If it is a percentage, then (assuming no changes) it could amount to quite a sum after 40 years or so.

It's a dollar amount. It is spelled out in each new contract "currently $30, next year $31, next year $32...."

The way I understand it, that dollar amount is determined by the year you leave the company, then when you get to retirement age that number is multiplied by the number of years you were with the company and you receive that much each month.

 

[Capricious]

It's a dollar amount. It is spelled out in each new contract "currently $30, next year $31, next year $32...."

The way I understand it, that dollar amount is determined by the year you leave the company, then when you get to retirement age that number is multiplied by the number of years you were with the company and you receive that much each month.

If it's a figure subject to negotiation that frequently, then it would difficult to predict that far into the future what the returns will be.

What I do is this: I have a pension that is supposed to replace about 30% (+,-) of my pay, if it is set up for the surviving spouse to receive 50% of that figure after I am killed by someone I pissed-off on an internet forum. In addition, she has a (smaller) pension, and it will be set-up so that I get none if she dies first (unlikely, since men usually die first, plus she is several years younger and a lot better looking than me). We will also have some social security. All of this is our "guaranteed" (such as it is) income.

We also have the 401K IRA's etc. that we invest on our own. If we do good, then we haven't given-up much by not betting the "whole farm" on investing. If we do bad on the investments, then we still have income to live on. If one of the pensions goes bad, we can survive. If social security is reduced, we can survive. If the stock market/bond market tanks, we can survive.

The old adage, "not having all of the eggs in one basket."

 

[ultrarunner]

Just about the only people I know with great retirements are public safety and some with other government retirements...

The newspapers here consistently have stories of pension spiking and rank and file police officers/fire that retire at 51 with 100k to 180k retirements... the high number is 15k per month plus lifetime benefits.

Knowing 12 from my High School in local law enforcement... each one will say they simply got lucky... they were not thinking about it at age 21... not a single one.

It is interesting in that the retirements through manipulation can be as much or slightly more than highest pay... the most common way is when all unused vacation and sick leave is added to the final year and the officer takes all overtime... even a case or two of promotions awarded the last 12 months... so a 23 to 27% spike in the last year pay or more will carry through in retirement...

Some of the older officers have even better plans... their retirement with 30 years is tied to what the person in that position is now paid... so officers that retired as a sergeant 30 years ago are paid on what a sergeant earns nows...

Last year there was a lawsuit because the city said it was no longer going to count overtime of those holding the position now in calculating the pension of those retired.

Again... all have told me they simply were lucky in the pension lottery.... one of my best friends did prisoner transport for nearly 30 years... jail to courthouse... he is the first to say he earned his 104k pension driving a taxi...

For lack of a better word... luck is always a factor, no matter how small... living long enough to benefit, being at the right time/right place, being of the right age... etc.

 

[newbury]

I'm with ya. I don't get it either. It is my belief that if I need a prenup, I'm marrying the wrong person.

A prenup might prevent many marriages.

In some ways a prenup is similar to picking a company or organization that you will work for until retirement.

In this day and age of frequent job switching I basically had one employer from 1975 thru 2011. I picked it because of stability, travel, and challenges. PLUS a locked in guaranteed pension plan which allows me to sit on my butt and type on TBN. My retirement funds my lifestyle, but not much more. But thanksto the Army I traveled most of the world so I don't desire to travel.

That guaranteed pension has all gone away. Now it is a combination of SS, TSP, and a "Basic Benefit plan". SS may go away, TSP is heavily dependent on the stock market and the Basic is darn small.

 

[JDgreen227]

I think it's on topic because it's been discussed as a measure of success/failure by several posters including yourself. And I think marriage should be one of the most critical decisions when young and trying to establish a retirement plan. In today's world prenups seem to be a part of marriage for second or third timers. So it is a reflection of a person's perspective about what it takes to ultimately be successful financially. It's extremely important to you, for example, in your determination to remain financially successful in regards to your retirement.

Good argument on your part so I withdraw my objection....who wants to change this thread to "Are you lucky if don't need a prenupital agreement.....?"

 

[DFB]

Two sayings come to mind for me

"The best laid plans of mice and men"

"And you never truly know a woman until you meet her in court"


I've been around long enough seen companies fold, see pension plans lost, see sickness and or despondency take it toll, stock investments ruined, divorce, foreclosure, lawsuits, business plans crash, there's probably a few more things I could think of


I just got a letter from the entity in charge my old factory pension plan sent letters to everyone requesting you take your money and roll it over elsewhere They don't even want to be bothered managing it anymore.

You guys have already covered it well there is a lot variables in life and you do the best you can with the hand that you are dealt. A lot can happen wether you plan or not

Oh one more comes to mind

"There is no free lunch"

 

[300UGUY]

"...It goes up about a dollar per year..."


Is that increase a dollar amount, or a percentage? If it is a percentage, then (assuming no changes) it could amount to quite a sum after 40 years or so.




"..As some of you said they will probably offer an alternative that they will try to make sound like a better deal for the employees, and my fellow "brothers" will fall to their knees and accept it..."


Usually what is offered is the "signing bonus". A lump sum paid up-front. And, yes, a lot of people will look at the lump sum and sign a deal that they would not have otherwise. They see a new ATV, or a new tractor or a new pick-up truck.


Same deal with a lump-sum pension pay-out.

Some people can't pass up a few dollars up-front even if it costs them many dollars in the future:
Hyperbolic discounting - Wikipedia, the free encyclopedia



Again, the only way I would take a lump-sum pension pay-out is if I saw some likely impairment of those future payments.

One of the auto companies offered lump sum buyouts to salary employees a few years ago. It was covered pretty widely in the local press. They interviewed several financial advisors, and they recommended that virtually nobody take the buyout. The amount offered is never enough to buy a equivalent annuity. I treat my pension as if it was a very conservative investment. My 401K and IRA's are mostly in equities. We also have a business and rental income.

I have a friend that took a pension buyout in 2006. He did very well for a couple of years. Nice vacations and a new 45 ft motorhome. 2008 the Great Recession came, and now he works nights as a security guard. His wife complains a lot....

 

[riptides]

Good argument on your part so I withdraw my objection....who wants to change this thread to "Are you lucky if don't need a prenupital agreement.....?"

I think what this thread is exposing, is that there are many factors to consider in a secure retirement. Agreements in place, or not, between partners may present huge problems in the future.

Luck, trust, alignment of stars, timing not withstanding.

 

[300UGUY]

I think what this thread is exposing, is that there are many factors to consider in a secure retirement. Agreements in place, or not, between partners may present huge problems in the future.

Luck, trust, alignment of stars, timing not withstanding.

When I was young, the old guys always said that it was better to be lucky than smart. I thought I was smart..... Later I realized what they were saying: No amount of skill or planning can overcome bad luck.

 

[ovrszd]

A prenup might prevent many marriages.

In some ways a prenup is similar to picking a company or organization that you will work for until retirement.

In this day and age of frequent job switching I basically had one employer from 1975 thru 2011. I picked it because of stability, travel, and challenges. PLUS a locked in guaranteed pension plan which allows me to sit on my butt and type on TBN. My retirement funds my lifestyle, but not much more. But thanksto the Army I traveled most of the world so I don't desire to travel.

That guaranteed pension has all gone away. Now it is a combination of SS, TSP, and a "Basic Benefit plan". SS may go away, TSP is heavily dependent on the stock market and the Basic is darn small.

I think you are right about the prenup thing.

I too retired from the military and also traveled a lot. My wife often talks about taking trips. I have no desire. I also can spend all day in my shop, alone. She is a very social person and often asks me who I talked to or saw today. I often say no one, except communication on the Internet if I choose. I'm not worthy of the great retired life I have.....

 

[murphy1244]

If I needed a prenup, I am with the wrong woman.

 

[ovrszd]

When I was young, the old guys always said that it was better to be lucky than smart. I thought I was smart..... Later I realized what they were saying: No amount of skill or planning can overcome bad luck.

True that. Especially in regards to health.

 

[ovrszd]

If I needed a prenup, I am with the wrong woman.

True that Murph.

 

[murphy1244]

When I was young, the old guys always said that it was better to be lucky than smart. I thought I was smart..... Later I realized what they were saying: No amount of skill or planning can overcome bad luck.

And bad luck is better than no luck at all.

 

[riptides]

And bad luck is better than no luck at all.

That's too deep for me, care to explain?