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I never had a pension or a 401K. I chose to manage my money for retirement by putting it into income properties. My husband has a good police pension and retired as a sergeant after nearly 30 years. I personally never trusted any of the hospitals I worked for to give me much of a retirement and I always worried about them closing. I have more money from the rentals than most people have in their 401K and about 300K more than John's deferred comp, which we invested nearly $900 dollars a month in for his entire career. The crash of 2008 was a disaster but it didn't affect the rentals. You can always find someone who needs a place to live. I tried to talk John into buying a couple more properties (cash only), but he wouldn't budge. It was the perfect time to buy. The demand for rentals was high and so were the rents. I was able to retire at 58 and my husband at 56. We could spend 2K a month from the rental money and now, the sale of the properties and that will take us well into our 90's. I was always worried that social security would never be there for me either, so I planned for that as well. Moral of story? Be responsible for your own financial security. Depending on anyone for your retirement is foolish. Granted the police pension is a huge given, but not everyone has that option. We could survive without it, but it would mean some drastic lifestyle changes. We could sell our house and buy in a lower tax area for cash and live just fine. As long as you have options, you are ahead of the game.
Not necessarily, I know people with teamsters pensions that are worried.
Well, they may have a hard time substantiating their feelings if in fact the plan is fully funded, and whether or not the payments are federally guaranteed.
My husband had a good pension at his company and they changed it in 2003 but he was grandfathered so he acrrued the good pension and new employees got a reduced pension. Then they hired a bunch of execs (who were not in the good pension, put them on the pension committee and axed it for everyone else who still had the good pension). But only after the CEO had accrued the entire amount he could accrue.
I never had a pension or a 401K. I chose to manage my money for retirement by putting it into income properties. My husband has a good police pension and retired as a sergeant after nearly 30 years. I personally never trusted any of the hospitals I worked for to give me much of a retirement and I always worried about them closing. I have more money from the rentals than most people have in their 401K and about 300K more than John's deferred comp, which we invested nearly $900 dollars a month in for his entire career. The crash of 2008 was a disaster but it didn't affect the rentals. You can always find someone who needs a place to live. I tried to talk John into buying a couple more properties (cash only), but he wouldn't budge. It was the perfect time to buy. The demand for rentals was high and so were the rents. I was able to retire at 58 and my husband at 56. We could spend 2K a month from the rental money and now, the sale of the properties and that will take us well into our 90's. I was always worried that social security would never be there for me either, so I planned for that as well. Moral of story? Be responsible for your own financial security. Depending on anyone for your retirement is foolish. Granted the police pension is a huge given, but not everyone has that option. We could survive without it, but it would mean some drastic lifestyle changes. We could sell our house and buy in a lower tax area for cash and live just fine. As long as you have options, you are ahead of the game.
Great post!
I only have one example to counter your comment about rentals not being impacted by the 2008 crash in that the home next to us was a rental and it changed hands three times as two different over-leveraged owners suffered from renters who lived paycheck-to-paycheck and when they lost their jobs, they were unable to pay their rent and two different owners suffered foreclosure on it when they couldn't afford to cover the mortgage themselves.
It was really a train wreck by renting to the most risky renters who were also pretty bad neighbors. Since then, we've had two others live there as owners and it's (slightly) better now. See what we get for living way below our means? Bad neighbors. lol
So if you work somewhere that has a pension with mandatory participation and the company reneged on the deal, wouldn't that be wage theft?
In my case I was paying 10% of my hourly wage.
If they default I'm going to be doing a lot of stealing.
This is exactly why I took my pension in a lump sum when I retired. I wanted control of my money, plain and simple.
My husband’s employer removed the lump sum option. Now he’ll get a monthly amount (with survivorship for me if he takes less) and it’ll all go poof when we’re gone. That’s his reward for 40+ years of making the company lots of money.
About 12 years ago my company Verizon froze pension contributions for managers with 15+ years of service. Those with less time lost their pension. TBH I'm not sure if that meant they lost everything or if they get to keep their cash balance.
Anyway I had the time + so with my retirement looking very likely next month my cash balance gives me the option of an annuity with no COLA from Prudential or taking the lump sum equivalent.
Vz did increase the match on our 401k as a sort of compensation, it's variable but is usually in the 8% range. So fortunately I have a generous 401 as well as having enough time to be grandfathered in to the frozen pension.
My wife will have a pension through her teacher's union.
My husband’s employer removed the lump sum option. Now he’ll get a monthly amount (with survivorship for me if he takes less) and it’ll all go poof when we’re gone. That’s his reward for 40+ years of making the company lots of money.
Sorry, but, then what was the purpose of his annual salary for each of those 40+ years?
If your retirement plan options were $1,500 per month for life, or $150,000 lump sum, I'd take the monthly payments if my only other income at the time would be SS or my 401(k). If I had both available to me, I'd consider delaying retirement altogether.
Sorry, but, then what was the purpose of his annual salary for each of those 40+ years?
If your retirement plan options were $1,500 per month for life, or $150,000 lump sum, I'd take the monthly payments if my only other income at the time would be SS or my 401(k). If I had both available to me, I'd consider delaying retirement altogether.
What annual salary? He’s a 100% commissioned salesperson paid a percentage of his sales. And believe me, the company makes out WAY better than he does.
But, that’s not the point. Why are companies permitted to change the rules on their pension plans? I get changing them for new hires, but everyone else should be grandfathered in on the plan in effect when they were hired. Especially if employees contribute to the plan. Spend decades contributing just to have the rug pulled out from under you. Nice.
What annual salary? He’s a 100% commissioned salesperson paid a percentage of his sales. And believe me, the company makes out WAY better than he does.
But, that’s not the point. Why are companies permitted to change the rules on their pension plans? I get changing them for new hires, but everyone else should be grandfathered in on the plan in effect when they were hired. Especially if employees contribute to the plan. Spend decades contributing just to have the rug pulled out from under you. Nice.
Right - I get that - but usually the lump sum is the worse deal, like they're secretly hoping you take it, then you're off their books for good. Unless someone is 80 or older, it's not advisable.
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