What is better a pension or a 401k? (rates, Texas, lawyer)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
And I didn’t say govt workers, Im talking building trades unions, LIRR, etc.
Nyc teachers are almost at 100k after 10. Here on Long Island the cops and teachers are there within 6-7 years and fully funded pensions.
Quote:
Originally Posted by TexasLawyer2000
That's not the norm for NYC metro area either. Most government workers are not getting a base of 100k. Teachers, for example, with 8 years of experience, and a masters degree, in NYC, earn about $85k.
Where I work, the police & firefighters under the old pension plan can get 90% after 30 years. Needless to say, the pension plan got reformed.
My dad was in a similar boat when he retired from teaching in Ohio. When he began in 1971 up until he "retired" in 2006 a teacher in Ohio who put in 30 years of service could leave with 66% of their best 3 years in retirement. If they did 35 years of service they could max out at 88.5%. My dad put in 35 years, got out in 2006 as mentioned then got rehired at 10 years of service in another school district for a few years. At his peak I guess he was making well over $100k as a classroom teacher when you combined his annual pension amount with his 10 year teacher salary.
Not too long ago the state put a stop to that. Now in Ohio there is only one retirement tier. I believe one can still retire and rehire aka "double dip" but now once you get to 30 years you either keep going or call it a career.
Mine in South Carolina is not nearly as generous. I'll teach for 28 years and receive 50% of my best 3. The good news however is I'll be able to retire at age 51. After that we'll see what's next. Not in a hurry by any means.
I would LOVE to get 80% of my ending salary when i'm around 65 or however i'll old I'll be.
Yes, 80% income replacement would put you way above average.
Using a 401k, and assuming you can get a real return of 6%, you'd have to contribute 18% of your salary for 35 years to get to that level of income replacement (using 4% spending rule of thumb).
Yes, 80% income replacement would put you way above average.
Using a 401k, and assuming you can get a real return of 6%, you'd have to contribute 18% of your salary for 35 years to get to that level of income replacement (using 4% spending rule of thumb).
This kind of ignores a few things.
1. Many public pensions have you contribute to the pension instead of a social security, so in that case you're ignoring the social security you could draw as an annuity from 67 to death.
2. and in the case of income from 55 or 60 to 67 the 4% rule, which assumes a COLA is going to be too conservative, over 30 years most of the time the 4% rule puts you with more money than you started with, when after you pass in most instances you lose your pension. You'd likely be fine with a more normal retirement (which is typically when you can start drawing pensions) at 5 or 6%.
3. It understates the real return the market has historically had over a 35 year period by at least 1-2%.
It's kind of like saying...well if everything about the 401k is estimated as conservatively as possible and you get the best possible pension, then the pension is better. Which is pretty obvious.
The answer lies in the details - is the pension COLA (adjusted for inflation)? Can the pension be assigned to a beneficiary, and if so, what are the restrictions? And it depends on how long he worked to get the pension at 80% and what the 401k program looked like (is there an employer match, if so, how much?).
Pensions can be a great deal, but so can a 401k. It all depends on the program details.
Many especially well educated workers with pensions don’t see it as either or and have both. They work actively at building portfolios even with healthy pensions.
And I didn’t say govt workers, Im talking building trades unions, LIRR, etc.
Nyc teachers are almost at 100k after 10. Here on Long Island the cops and teachers are there within 6-7 years and fully funded pensions.
And you didn't say "building trades unions", "LIRR" etc. Also, LIRR workers are government workers.
NYC teachers are only making about $85k after 10 years. The base is about $81k and the maximum (teacher with a masters degree, 10 years of experience AND 30 extra credits) is $96k. Sure, if you have maximum qualifications (very few do), you are making near $100k.
So let's stop the lying. They aren't making $100k.
You can think whatever you want to think. I know the pay scale I have family and friends in all the unions I listed above. Maybe the nyc teachers union may be a tad off but not by much.
Quote:
Originally Posted by TexasLawyer2000
And you didn't say "building trades unions", "LIRR" etc. Also, LIRR workers are government workers.
NYC teachers are only making about $85k after 10 years. The base is about $81k and the maximum (teacher with a masters degree, 10 years of experience AND 30 extra credits) is $96k. Sure, if you have maximum qualifications (very few do), you are making near $100k.
So let's stop the lying. They aren't making $100k.
Many especially well educated workers with pensions don’t see it as either or and have both. They work actively at building portfolios even with healthy pensions.
^^This would be me.
I didn't know what I was doing when I started. I didn't understand much about the pension plan. But I knew I didn't want to be 100% dependent on it. Over 22 years later, I've accrued a livable pension and a 457 plan balance that is a decent multiple of my gross income. I'm glad the pension isn't my only option. I won't have to work the full 30 years to max out my pension if I don't want to.
Many especially well educated workers with pensions don’t see it as either or and have both. They work actively at building portfolios even with healthy pensions.
I fully agree. It's nice to have multiple sources of potential income streams. Pensions, SS, 401k, 403b, 457 and private accounts. They all are helpful in providing income in retirement.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
