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Agreed 100%. The pension system is great for those who have multiple pensions like the well connected on both sides of the aisle. While the regular Joe will work for upwards of 25 years and had the same money be put aside in a retirement account he would have been much better off. The most important point is that the money would 100% be his. What happens now is the public workers now pay a ridiculous 7% that they may not see. It only ridiculous because the money is not guaranteed to be theirs. Again this is all politics at its finest. Both sides of the aisle are equally wrong in this and I feel bad for the regular everyday worker who may get burned in the end.
Right. You could be like my father who dropped dead during his working years and didn't see a dime.
they don't skew my data. even when you account for equivalent education, the public sector worker comes out well ahead. also, nobody really mentions the fact that in government you probably have tons of people with college & graduate degrees doing the work of someone who only needs a high school degree.
Clearly you don't have all the perks I do. So sorry. Why don't you get a job that does? You do have choices you know.
what kind of response is this? I am not the average private sector worker either but I don't use my compensation numbers when talking about public/private workers. it wouldn't make any sense to use my numbers just like it doesn't make sense to use yours. you need to look at overall averages and compare them against public sector workers with comparable jobs.
haha, I like the tone of this question as im sure there is a certain amount of expectation that im just making stuff up that isn't reality. here is something from the cbo:
you are going to find im always right and what you will have is certain defenses/reasons why public sector workers are better compensated that are not really accurate. brady knows them.
they don't skew my data. even when you account for equivalent education, the public sector worker comes out well ahead. also, nobody really mentions the fact that in government you probably have tons of people with college & graduate degrees doing the work of someone who only needs a high school degree.
that's a very subjective statement. and there are plenty of people in the private sector with college degrees doing the work of someone who only needs a high school degree. the difference is, the public sector has defined job requirements. if you don't agree with those requirements, fine...but starbucks doesn't require a college degree and still they hire those people.
and I know you've made this argument before, but I don't see where you get that equivilent education/job requirements public sector worker is coming out "well ahead". If i took my equivilant job in the public sector, I'd be making substantially less. my wife is a pharmacist, and she'd also be making substantially less.
I don't feel like really doing the math so I'll make some of the numbers simple. Let's assume someone worked for the state for 40 years and made $60,000 each of those years. This equates to a pension payment of $40,000 a year for the 15 or so years you have left on this earth or $600,000 total(assuming you actually live 15 years). You got this by paying $4,200 a year.
Now let's assume that NJ had a defined contribution plan, and you were only putting in $2,100 a year, 3.5%, and the state matched you. Assuming an annual return of 6% this comes out to $650,000 when your retire after 40 years. The beauty of this is that all of this money is "yours" whether you live one year into retirement or 20, while saving you $2,100 a year which you could dump into an IRA or something and have even more money at retirement, and you're nest egg will still grow as you age.
Start writing to your unions about the awesomeness of defined contribution!
and that $650,000 you have in your scenario would leave you with annual income of about $26,000/yr if you followed the rule of withdrawing 4%/yr and increasing for inflation. so in the scenario of your saving your own money, you come out far behind the scenario of the pension. if you felt like doing the math, you'd have discovered that though.
problem with "make some of the numbers simple" is you ignored various assumptions and rules.
the difference is, the public sector has defined job requirements. if you don't agree with those requirements, fine
of course I don't agree with those requirements. the only reason why the government can require college degree, graduate degrees, etc. for certain jobs is because they overcompensate those jobs so the job seekers are going to do it.
Hey, first time poster here; have been lurking for a while, love this forum. The math about the state worker making 60k a year prompted me to join...
A 40 year state worker who is making 60k a year today probably wasn't making that 40 years ago. Assuming a 3 % inflation rate over that time (someone smarter than me can tell me if that's a reasonable approximation or not), was making about $18,400 40 years ago. This, of course, assumes that he was never promoted over 40 years, and received only cost of living increases; probably not realistic. If a 7% per year contribution was made by the worker, this means a grand total of $98,854 was contributed, and probably much less, if it is considered that this worker likely started out in a lower position then he retires at.
Not bad for pulling 40k per year out of the system in retirement, plus those sweet state health benefits...
Hey, first time poster here; have been lurking for a while, love this forum. The math about the state worker making 60k a year prompted me to join...
A 40 year state worker who is making 60k a year today probably wasn't making that 40 years ago. Assuming a 3 % inflation rate over that time (someone smarter than me can tell me if that's a reasonable approximation or not), was making about $18,400 40 years ago. This, of course, assumes that he was never promoted over 40 years, and received only cost of living increases; probably not realistic. If a 7% per year contribution was made by the worker, this means a grand total of $98,854 was contributed, and probably much less, if it is considered that this worker likely started out in a lower position then he retires at.
Not bad for pulling 40k per year out of the system in retirement, plus those sweet state health benefits...
except if you understood the big picture, you'd realize that state worker was given the pension benefit in lieu of a higher salary. Despite some people hammering away that compensation in the public sector is better, that was never the case. And as for pensions in general, I highly recommend reading a book titled Retirement Heist authored by a Wall Street Journal financial journalist. It explains a lot about the death of pensions.
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