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P.S. I'm 40 years old (41 next month), so retirement is still at least 15 years away... probably longer, since in my profession we joke that you retire when you keel over at the desk.
I have saved additional funds in a deferred savings account. I put in between 25 to 30% of the amount I contribute (plus the employer match) which is 2.5 to 3% of my pay. Over my 38 years of work the account now have about $300,000.
It was 100% in the stock market but I recently moved a chunk into cash large enough to pay my mortgage when I retire
One thing that comes out in all of these posts is how fortunate government workers are with their pensions. I've known several people in the corporate world, working for companies with b-i-g names, whose employees didn't fare as well at all.
IBM, AT&T, the Bell Telephone Companies, etc all had fabulous pension plans. Then later on the plans were stripped to nothing and retirees expecting X dollars wound up with anywhere from 1/3 to 1/2 of what they were promised. I know of someone who received 1/4 of his promised pension.
...
What struck me as unusual was the fact that she says they are saving nothing privately for retirement at all and are plowing everything into the house and cash savings. We only talked for a half hour, but this just seemed odd. She said she's counting on the state pension. If she made $65,000 as her final five year average compensation and after 28 years of service (this puts her at 50 in 2035), and retired this year, the monthly pension benefit would be about $1,450. Between both of them, it is doable but not a ton of income. Furthermore, a teacher with a doctorate and thirty years of service would only top out at a little over $58,000 here....
Why in the world would you assume they will retire at age 50? By 2035 people will routinely be working until age 70. Add another 15 years of service, along with what they will then be investing by having the house paid off and the potential equity in selling that house for a smaller retirement home and the result changes.
Luckily I found a great financial advisor who helped us save a comfortable nest egg and gave us the discipline to keep at it. I do carry a mortgage on the house with payments less than rent. I only rarely touch the savings, usually for home maintenance or improvement projects. My monthly (state) pension and ssa is sufficient for expenses and I still tuck a little away each month for travel or other expenses.
One thing that comes out in all of these posts is how fortunate government workers are with their pensions. I've known several people in the corporate world, working for companies with b-i-g names, whose employees didn't fare as well at all.
IBM, AT&T, the Bell Telephone Companies, etc all had fabulous pension plans. Then later on the plans were stripped to nothing and retirees expecting X dollars wound up with anywhere from 1/3 to 1/2 of what they were promised. I know of someone who received 1/4 of his promised pension.
We're the fortunate ones.
All of my family and friends that work in the private sector have better retirement benefits. When IBM ended their pension the 401K plan and match was fantastic. The person I knw their was contributing 6% of his pay and they gave him a 10% match. I have other examples where the benefits are way better than my pension.
Why in the world would you assume they will retire at age 50? By 2035 people will routinely be working until age 70. Add another 15 years of service, along with what they will then be investing by having the house paid off and the potential equity in selling that house for a smaller retirement home and the result changes.
They are government pensioners. I believe the pensions caps out with thirty years of service. At least for her, that will be when she's either 51 or 52. She's never worked anywhere else since graduating college. I'm not sure I see her quitting then, as she's wanted to be a teacher since we were in elementary school, but it's a possibility.
Keep in mind that you can't count on a lot of appreciation in this area. I was looking at a well-built, brick home in a high demand area last month. It lasted about a month on the market and recently went pending. It appreciated worse than inflation since it was built in 2009.
Quote:
Originally Posted by tom1944
All of my family and friends that work in the private sector have better retirement benefits. When IBM ended their pension the 401K plan and match was fantastic. The person I knw their was contributing 6% of his pay and they gave him a 10% match. I have other examples where the benefits are way better than my pension.
Historically, that was on the tail end of its lifespan a generation ago. Today, it is virtually unheard of for private sector workers to get a pension.
Quote:
Originally Posted by bungalowdweller
One thing that comes out in all of these posts is how fortunate government workers are with their pensions. I've known several people in the corporate world, working for companies with b-i-g names, whose employees didn't fare as well at all.
IBM, AT&T, the Bell Telephone Companies, etc all had fabulous pension plans. Then later on the plans were stripped to nothing and retirees expecting X dollars wound up with anywhere from 1/3 to 1/2 of what they were promised. I know of someone who received 1/4 of his promised pension.
We're the fortunate ones.
My grandfather retired from what was then Eastman Kodak in 1993. He took a lump sum on his pension thinking he wouldn't live very long with the medical problems he had. He lived until 2009, but cuts for existing beneficiaries began to some degree before that.
As a local govt. employee I have contributed (forced to actually) 6.5% of my salary since I started working 35 years ago and the govt. has matched my contribution and it goes into the Public Employees Retirement Association. I will retire in 5 years and will be fine with my pension/SS combo. I personally think I would have amassed a similar amount in 401k situation with same combination of contribution/match. But it is what it is. What I find interesting today is that the local government is having a hard time attracting and retaining millennials. They much rather have a 401k match and work for a few years and move on. They do not want to be locked in to a pension system that only pays out if you put in decades of service.
All of my family and friends that work in the private sector have better retirement benefits. When IBM ended their pension the 401K plan and match was fantastic. The person I knw their was contributing 6% of his pay and they gave him a 10% match. I have other examples where the benefits are way better than my pension.
You'd be very hard pressed to find a private pension with better terms than most government plans. Where do you work?
As a local govt. employee I have contributed (forced to actually) 6.5% of my salary since I started working 35 years ago and the govt. has matched my contribution and it goes into the Public Employees Retirement Association. I will retire in 5 years and will be fine with my pension/SS combo. I personally think I would have amassed a similar amount in 401k situation with same combination of contribution/match. But it is what it is. What I find interesting today is that the local government is having a hard time attracting and retaining millennials. They much rather have a 401k match and work for a few years and move on. They do not want to be locked in to a pension system that only pays out if you put in decades of service.
I know many Millennials, myself included, who would much rather "settle down" into a government job in a fairly desirable area (for me, NOT somewhere like the Bay Area or backwoods nowhere - something in between) than to keep dealing with consistent uncertainty in the private sector.
I graduated college in 2010. I stayed at the first job out of college for two years, but it was a call center and nothing else was done at the job site. There was no reason to stay. I moved from here to Iowa, sight unseen, and probably should have stayed there for longer than I did. I moved to Indiana after coming back here to Tennessee and losing my ass financially in 2013. I stayed there three years, got into a really crappy job, and came back here when a good offer came up.
Since 2012, I've had four jobs in my home area. Those jobs go like this. The contracts were all in 2013 and were all six months or less. I've been at my current job a year and a month.
1) IT contractor at a small glass company - office is now closed. Contractors were laid off and some employees were given the option to relocate to new HQ in Atlanta.
2) IT contractor for a project with the VA state government - company is losing contract and operations to be phased out next year. With those jobs being eliminated, the entire site is likely to close, and remaining staff will probably be told to move to Dallas or lose their jobs. The company did something similar with another site they had in Colorado.
3) IT contractor for a Fortune 500 HQ - contractors were laid off and jobs were sent to Hyderabad, India.
4) IT employee at hospital system - possible merger decision with another hospital system in the next week. No guarantee of any layoffs, but people are nervous.
If I were to lose my current job, there's no way I could make what I do now and stay in the local area. I'd be fortunate to make 2/3 of what I do. Aside from a couple of large employers, places around here pay peanuts. A couple of my colleagues that worked at the Fortune 500 ended up getting jobs with local government. However, they were paid poorly to begin with ($12/hr range) so they didn't have much to lose. I'm paid much better and cannot go down to $12-$15/hr, and I won't do that.
I've known the woman in the OP since literally preschool. She's been in the same school for about a decade now. She's already a third of the way to the thirty years of service for the full pension. I make quite a bit more than they do, but I've never felt secure enough anywhere to buy a home (much less in an economically depressed area like this). As a contractor, you're basically living life on a ninety day basis. You can't make any kind of commitment or long-term decisions like that. In a lot of ways, she is extremely fortunate.
While I know government certainly isn't immune from upheaval, they are generally far better protected than what I've experienced in the private sector.
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