Recession over in Pittsburgh (Dallas, Houston: 2015, foreclosures, mortgage)

[Hopes]

OMGoodness! You two need to get a room!

[Copanut]

Originally Posted by wanderlust76

Age 67 is a baby boomer. Younger Gen X'ers and Gen Y'ers - by the time we are that age things will be a lot different. As in..WORSE. Jobs that give a pension are becoming a thing of the past...most are, and were, union jobs. We're left with a country that is in pathetic shape compared to 1950, the dollar is garbage compared to then and job opportunities aren't near as good across the board.

I tend to agree. I worked at US Steel for a few years in the 70's. The benefits were incredible but I hated the corporate structure. I've been self-employed since then. Pensions will be a thing of the past. Other than govt workers.

[ML North]

Originally Posted by Clint.

It's UPMC, by the way, which offers a pension in addition to 401K, but not a defined pension in the traditional sense...it's a prefunded amount based on current earnings, which though probably less generous is more rational than the old way of promising the moon to people who are no longer productive.

I also work for a company that still has a pension program. For being a member of the plan (contributing a percentage of your salary), you earn a proportional annual payout from retirement until death.

For a lot of our generation, however, one issue is going to be that few people are likely to remain at the same company for long enough to accumulate a large benefit in a pension plan. That dynamic suggests that the portability of defined contribution plans may be advantageous to job-switching Gen Yers (however, in practice such plans have not worked out so well for now-retiring boomers).

In my situation, if I switch employers, all of my contributions will be returned with interest. So even though the potential of me ever receiving a payment from the plan is small, the risk associated with participating in the plan is also pretty small. Of course, if every company for which I'll ever work offered a similar defined benefit arrangement, and if I were to switch employers every 10-15 years, I don't think that the aggregated value of returned contributions and a small dollar-constant pension benefit would be near enough to reach retirement. So for us, we're going to need 401ks, disciplined saving, and a little luck.

[BrianTH]

What we really need is voluntary pension accounts with an option of employer contributions that would be portable, safely and low-costly invested during working years, and automatically invested in large pool annuities on retirement.

In other words, we need something like a voluntary add-on to Social Security.

[Clint.]

Our pension plan is actually technically referred to as a 'cash balance plan' - the employer makes 100% of the contribution in one annual payment. The payment is a certain percentage (which varies depending on employee age,length of service, job title, and location...employees within designated urban zone get a slightly higher %) of the previous year's earnings. The money then is placed in an individual account that collects tiny daily interest rate. Vested after 3 years and payable upon termination at any age, so it is portable in a way, but I'm unaware of how to avoid tax implications if leaving the company (taxes are deferred until redemption) unless it can be rolled over or something like a 401k...I have never looked into it. For people who make a career out of it the company will disburse it according to a few options, monthly, annually, reduced rate with survivor benefits, etc.

The rates are all pretty small so the 401K is where the bulk of retirement income would be (social security notwithstanding) and it is voluntary and a typical 401k plan. I'm told that until a couple years before I started it had a 100% match, unlike the current one which sort of abuses the meaning of 'match'. I have no idea how many people contribute and how much they contribute. Probably not enough in either case. And combined, even with reasonably high 401k contributions, they would in most cases not as generous as government pensions, or even most defined benefit pensions from the past.

[eschaton]

Originally Posted by BrianTH

What we really need is voluntary pension accounts with an option of employer contributions that would be portable, safely and low-costly invested during working years, and automatically invested in large pool annuities on retirement.

In other words, we need something like a voluntary add-on to Social Security.

What we really need is something which doubles the current worth of Social Security for retirement, full stop. I don't care if it's a defined-benefit expansion, or a defined-contribution with a guaranteed rate of return. But it has to be mandatory, or virtually no one will use it.

Dollar for dollar, defined-benefit pensions are cheaper than 401(k) plans for two reasons. One, the administrative overhead is lower. Two, a pension stops paying benefits when you die (unless you select for survivor benefits and thus reduce your monthly payout), whereas with a 401(k) you should ideally over save, because you have no idea how long you're going to live after retirement.

401(k) plans became popular for companies because they were cheap. Even if you contribute the mandatory amount to get your full match, a typical plan is around 1/4th of the loaded hourly cost of a pension. Meaning even if you match what the company puts in, you're typically only going to get around half of what you would from a pension. Really people should be saving 10%-12% annually at a minimum, but of course barely anyone dues this.

Compounding this, most people (even most intelligent people) just don't have the skills to manage their investments. Pensions put investment decisions into the hands of professionals who know what they're doing. The "advice" given for 401(k) and IRA plans often fleeces investors - non-wealthy account holders typically only get a 3% rate of return, because they make poor choices and suffer very high fees due (from limited choices in mutual funds, etc).

That's not to say the historic pension system was a be all end all. There were major issues. For example, a company is typically supposed to shrink when it is unprofitable, shedding business lines which don't work, and becoming leaner and meaner. You can't do this with a defined-benefit pension structure, because current employees will have to bear a proportionately larger share of retiree costs. It's the whole reason pensions imploded in many industries. Still, perfectly healthy companies followed the lead merely because once the pattern of national pensions was broken, it was easy to chip away.

[Moby Hick]

Originally Posted by eschaton

What we really need is something which doubles the current worth of Social Security for retirement, full stop.

For the sake of clarity, let's call it a "brain drain."

[trackstar13]

“In 2011, the teenage employment rate -- the percentage of 16- through 19-year-olds who have jobs -- fell to 26 percent in the U.S., which is a 42 percent decline from 2000.”

“In Pennsylvania, the teen employment rate in 2011 was 39 percent, down from 46 percent in 2000. That puts the state tied for seventh nationally.”

“While the 2007 recession significantly lowered the numbers, the employment rate for young people has been in decline for the last decade.”

http://www.post-gazette.com/stories/business/news/recession-could-impact-teens-life-earnings-664843/#ixzz2E6YcTcBQ

[globalburgh]

"Even those states where employment among teenagers is the highest have seen a big decline in the percentage of teens who hold jobs, said Laura Speer, one of the authors of the report and the foundation's associate director for policy reform and data."

Read more: Recession could impact teens' life earnings - Pittsburgh Post-Gazette

[globalburgh]

Originally Posted by track2514

“In Pennsylvania, the teen employment rate in 2011 was 39 percent, down from 46 percent in 2000. That puts the state tied for seventh nationally.”

"Seventh nationally" as in 7th best and well above the national average.