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In addition to our 401Ks there was at least one time that I was VERY glad we have a moderate stock fund and savings separate from the 401ks. We wanted to help our kids out with a down payment and would have been forced to pay a penalty if we had taken it out of the 401K. It just gives me an added sense of security in case anything happens.
You still have time to make changes to your plans. You can always downsize the type of life you expected to have at retirement.
I recently interviewed two different people who did this: One who retired (with no pension or social security) and moved to Costa Rica, and the other who retired and is living in an RV.
So don't despair! You will come up with something that suits your lifestyle and the money that you have. Remember, all of us had nothing when we first left our parents' homes and for many of us, these days with nothing are the fondest memories.
Yep, it never hurts to stay positive. Thanks for the reminder!
Pension freeze can mean a lot of things. As it's just rumors at this point, stay calm and wait until the facts emerge. You are on the ball, and while this is certainly had the potential to be unpleasant, at least it is recoverable.
Thanks everybody. The longer there's no news the better...my hope is that it'll be announced months from now and they'll give everyone some time before anything actually happens. It'd be nice if they do it that they have a multi-step grandfathering plan rather than just, you make it or you don't.
Aren't you already vested in the pension? So why wouldn't you keep what eve that earned amount?
When a pension is "frozen" I don't think you LOSE what you have. That "pot" just doesn't' grow anymore, and they create a new pot -- or set up a different deal/arrangement going forward, whatever that might be.
For more than half my career there were consistent rumors of future dire happenings. It's a terrible way to live. You can drive yourself nuts worrying about this stuff and it ruins the life you have NOW. It's just one of those things you have no control over. You are right saying the longer you go without news, the better!
I'm going crazy...there are lots of recent rumors that my company is going to make big changes to the current pension plan. Based on my SS, 401(k) and Roth, and pension I was planning to retire at 62 - about 10 years from now. The rumors give a formula of age + tenure*2 = 100 to be "grandfathered" in - and I won't hit that until after my birthday in August of NEXT year in 2017.
I've been planning so carefully...and the pension was going to allow me to wait until 70 to take SS. I have this dread that I'm just going to miss the cutoff and there's no way I can replace that income...even if I work until 70.
Does anyone have experience with the kind of "deals" you get? A percentage of salary added to your 401(k) every year? A lump sum given now or at time of retirement? I have to get a handle on this...even though I know it's just a rumor what I'm hearing is just too specific to be baseless.
My Megacorp announced in March that as of next March, our pensions will be frozen. That is, they will stop contributing new money to the pension (roughly 6% of salary/year), but what we already have earned will potentially continue to grow from interest credits. As a partial offset, we will now also get a new 2% of salary in our 401(k), in addition to the current 100% match on up to 5% contribution from us. Anyone hired after April 1st of this year is not enrolled in the pension program, but will be part of the 2% contribution to 401(k) and match. Pension options for when we leave the company remain the same (lump sum, single life annuity, joint & survivor annuity, cash refund).
Interestingly, they are also starting to auto-enroll people in the 401(k), beginning next March. If an employee has not made a 401(k) decision, they will be auto-enrolled at 5%, increasing at 1% a year until it reaches 10%. They will receive notification and can opt out.
I was hoping someone else would weigh in on what happens when a pension is frozen. To allay the OP's concerns.
I know I'm not the only one who has had to deal with that situation.
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