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I retired from a job that had both a pension system and 401K.
I was lucky and have both as they phased out pensions in favor of bumped up contributions to 401K.
The pension..you just have to show up for work every day for x number of years.
The 401K you have to contribute. I signed up as soon as it became available (back then you had to be with the company for 1 year). Each year I bumped up my contribution percentage until I contributed the max.
Fast forward to today...I have a pension, a fat 401K that I haven't needed to touch and future SS.
For me I'll be getting more money as I get older.
I took a less paying job (slightly) simply for the bennies, and the biggy was the Pension....which at the moment, is at 2% per year served.....I'll have 25 years in when the time comes = 50% of highest earnings, along with a 403b, and SS, my Wifes 401k, and her SS, I'm thinking we should be okay
Careful with pensions as many of them are no longer around. It is best to convert 401K and pension to an IRA so you can control your own funds when the time comes. It is best to consult with a professional financial advisor to get the best information as no one on a public board can know all your situation.
I disagree. A pension is forever. An IRA only lasts until the money runs out.
I have both, and even with my 6 figure 401k. I still get nervous that when i retire, my 401k would not be enough for me to retire.
Now with my pension, i will receive 80% of my pay plus SS, Plus My 401K.
Go With the Pension and never look back kid!
In the old days, say pre-1990, companies helped you plan for retirement by setting aside money, which they invested on behalf of their employees, so that you could have an income stream once you retired at age 65. That was your pension.
Then came along the idea of giving that same money that was being set aside to the employees themselves, so each employee could invest that money the way he wanted to, and the results of that investment would allow the employee to have money to retire with. Notice that the big difference was who did the investing. With the 401K, usually the employee got the most value by investing some of his salary, with the employer giving some sort of matching funds.
Employees liked the idea of having control, and employers like the idea of the 401K since the money was out of their hands as soon as they gave it to the employee and the company no longer had to manage it or to worry about what would happen with bad investment years (of which there are always several).
So, some of us complain that the 401K is not as good as the pension, but it is largely our own personal fault for not using it to its maximum value. Sign up as soon as you can and put in at least as much as your company matches and it will grow tax free during your pre-retirement years. Then as soon as you can add more, do it! And you will have a much better outcome.
In the old days, say pre-1990, companies helped you plan for retirement by setting aside money, which they invested on behalf of their employees, so that you could have an income stream once you retired at age 65. That was your pension.
Then came along the idea of giving that same money that was being set aside to the employees themselves, so each employee could invest that money the way he wanted to, and the results of that investment would allow the employee to have money to retire with. Notice that the big difference was who did the investing. With the 401K, usually the employee got the most value by investing some of his salary, with the employer giving some sort of matching funds.
Employees liked the idea of having control, and employers like the idea of the 401K since the money was out of their hands as soon as they gave it to the employee and the company no longer had to manage it or to worry about what would happen with bad investment years (of which there are always several).
So, some of us complain that the 401K is not as good as the pension, but it is largely our own personal fault for not using it to its maximum value. Sign up as soon as you can and put in at least as much as your company matches and it will grow tax free during your pre-retirement years. Then as soon as you can add more, do it! And you will have a much better outcome.
Um, a company does not give you the majority of the funding in a 401K, each person deducts it from their own pay. I grant some companies match (generally up to a certain point) and that the combined investment power opens doors to instruments not normally available to individual investors below 7 figure invest-able assets. Nonetheless, having a pension is a major bene versus not having one since it is found money, and meanwhile, working at a place that only has a 401K a person will generally have a lower retirement income.
Some people look at pensions as kind of an unfair benefit (especially when talking about government employees, for example). But, originally, pensions were kind of "in lieu" of a portion of your salary since it was being invested on your behalf. So a government job might pay less than the private sector but you'd get a pension if you stayed and worked there long enough - you were giving up current salary for future security.
So a pension is a GREAT thing, but you have EARNED it by potentially getting a lesser salary - it's kind of paternalistic when compared to a 401k because there you get more choice in how much and how to invest. But I'm lucky, where I work we have both though there is a minimal match on the 401k - perfectly understandable in my mind. The closer I get to retirement, the more I appreciate it.
Some people look at pensions as kind of an unfair benefit (especially when talking about government employees, for example). But, originally, pensions were kind of "in lieu" of a portion of your salary since it was being invested on your behalf. So a government job might pay less than the private sector but you'd get a pension if you stayed and worked there long enough - you were giving up current salary for future security.
So a pension is a GREAT thing, but you have EARNED it by potentially getting a lesser salary - it's kind of paternalistic when compared to a 401k because there you get more choice in how much and how to invest. But I'm lucky, where I work we have both though there is a minimal match on the 401k - perfectly understandable in my mind. The closer I get to retirement, the more I appreciate it.
You are talking public sector. Back when many private sector firms still had them, pay was not notably lowered to factor in the pension. In places like that, one had to stay with the firm typically 5 years to vest or start vesting. The pension was a differed reward for years of service / loyalty, above and beyond the pay. Of course this is academic, since most private sector places of employment that had them either dumped pensions years ago, or themselves have ceased to exist.
There may not be any restriction or penalty as far as the Government is concerned but the 401K is under the terms of the employer and many if not most do NOT allow you to withdraw any funds and certainly not convert them to an IRA while you are still employed with them.
Not the case for everyone....moved mine 5 months before retiring without issues.
Sounds like an old school company if they have a pension, so they may do some matching funds in the 401k. THIS IS FREE MONEY! If they do provide matching funds, the OP should make sure he maximizes his participation to get as much free money as possible.
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