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A 401/403 is a defined contribution plan while a pension is a defined benefit plan. In many cases the employer and employee contribute to both.
The difference is how the benefit is determined and who is responsible for the result.
DH is still working and has a 401k with a company match. He had 25 years in a pension with the same company before they switched to 401k’s. He opted for an annuity for the pension rather than a lump sum, with benefits paid to me if I outlive him. I had a 401k with no match, but it had profit sharing instead which was good. I rolled that over into an IRA when I retired. Our plan, at this moment, is to both start SS at FRA, he retires in March.
I wouldn't group 401k and pension together, since they are different. A 401k is not JUST from the employer; the employer contributes SOMETHING to it, but it is a joint employer-employee contribution investment retirement account.
A pension is 100% from the employer.
Those statements about 401k accounts vs. pensions are not strictly true.
There are plenty of 401k plans with no employer matching contribution. Ours originally started out that way.
There are also lots of pension plans where the employee makes a healthy contribution. In WA state, the employee contribution rate for the PERS2 public pension just went up on July 1 to 7.9%.
Ah, that is true. Although government employees will get a government pension rather than a 401K so they will have a comparable (or possibly better? I don't know anyone who worked/works for the government) revenue stream to a 401K.
I work for the Federal Government and will retire with a defined pension which is calculated on the average of high 3 salaries x years of service x 1.1 for 20 years and > and 1.0 < 20 years. In addition I will also have a Federal 401K called the TSP which has a 5% match. The former Federal Government retirement system that was eliminated in the 80s was called the CSRS retirement system. Employees under that system did not contribute to Social Security so they had a higher pension calculation, and also they could contribute to the TSP but they got no match. The big benefit to the CSRS system was for those who started employment young, had no breaks in service, they would max out their pension in year 40. So if you started at age 20 you could retire at 60 with a pension that would be around 80% of your high 3 salaries. And since they could continue with Federal health insurance that would cover the gap to Medicare age 65 eligibility.
I maxed out my SS contributions for a number of years, but my ex maxed out his for quite a few more. My SS benefit will be good, but his will be better. That's the penalty I paid for taking time out from the workplace to raise children and run our home.
I had a sizeable 401k from my career in high tech, which ended up at Fidelity. At some point, years after leaving my last high-tech company, Fidelity informed me that my 401k plan administrator had decided to charge former employees a WHOPPING fee based on our total assets in the plan. (The 401k admin fees had been reasonable prior to this policy change.)
Unfortunately, I was in the middle of an international move when the notification letter was mailed from Fidelity, and I never received it. When I saw those massive fees hit my 401k account for the first time, I told my Fidelity representative "you must be joking." That's when I rolled all my Fidelity 401k assets into a Vanguard IRA and said goodbye to greedy, opportunistic fees once and for all.
I will receive a public pension, but I came late to public service, so it will be small--not like pensions earned by government employees who've stuck it out for 25, 30, or 35 years. I won't be eligible to receive my pension until I'm 65, either, even if I separate from my employer at a younger age. Not enough years on the job.
My home is paid off, and I'm planning to draw from my IRA after retirement for the years running up to age 70, before I claim SS. I'm hoping I won't have to touch my non-taxable Vanguard accounts or ROTH account at all. I'm thinking of retiring next year. I got cancer last fall (age 59), so I don't know how much time I'll ultimately have to enjoy retirement.
Another measure of different this board is than the population in general.
Absolutely.
My mind can barely wrap around these stories.
I've been out of college for a decade, and have had ten jobs of various types, lengths, and in various sectors of the economy since then. I've never held a government job. I've worked everywhere from a major defense contractor, to a small glass manufacturing facility, to a bank, to a software company, to a healthcare system. I've probably run the gamut of industries in a way most people never do, yet with all that moving around, the retirement benefits often cited here are so far above and beyond what is a current standard that it's just mind-boggling to me.
I saw where someone had a 6%/11% employee/employer 401k contribution ratio. Most places I've been have been 6%/3% or similar. Where I am now does 6%/6%, but with a lot of contingencies where it's actually difficult to have that 6% contribution match on any given year. I believe this is the best match I've ever had. 3/10 jobs were W-2 with no benefits of any kind.
I have friends who are low wage government employees (making 1/2 to 2/3 what I do) who would have by far the better retirement benefit at their wage/contribution vs. me at a higher wage/contribution level. These are often for low skill jobs that don't require a college degree or any special training.
Only one of these private sector employers offered a pension. In hindsight, I shouldn't have moved there to begin with, but once I was "in," I should have stayed.
At my current salary level, my employer match is about $4,000 annually. I have to be there for another year to be vested in their current contributions. The match accrues every two weeks, but is deposited into the account in a lump sum annually, and if you hire in or depart after/before the plan starts, respectively, you get a goose egg for a match for the entire year.
Seeing all these pensions, high match %ages, etc., is way more than I'll ever be able to achieve.
You cashed out your 401K to build a new home, and both you and your husband took Social Security at 62, that being said I hope there are other assets in the picture because if one age 62 Social Security check goes away when either of you passes and there isn't a bigger survivor benefit for either to move up to the survivor may have a very difficulty maintaining the home even without a mortgage.
Good Luck
Thanks. Wise words.
He takes his SS at 67 yrs- $1660 a month
55K in HSA & 105K in savings
I have a small housekeeping business cleaning vacation homes earning about $125 a week
A couple of employers had 401k, but some had tough conditions to join. None of the smaller employers offered them. All mployees should have the option regardless of employer size. About half of workers do not have access.
I believe Obama started some sort of bare-bones retirement plan through the government for those who weren't otherwise eligible through their employers.
I work for the Federal Government and will retire with a defined pension which is calculated on the average of high 3 salaries x years of service x 1.1 for 20 years and > and 1.0 < 20 years. In addition I will also have a Federal 401K called the TSP which has a 5% match. The former Federal Government retirement system that was eliminated in the 80s was called the CSRS retirement system. Employees under that system did not contribute to Social Security so they had a higher pension calculation, and also they could contribute to the TSP but they got no match. The big benefit to the CSRS system was for those who started employment young, had no breaks in service, they would max out their pension in year 40. So if you started at age 20 you could retire at 60 with a pension that would be around 80% of your high 3 salaries. And since they could continue with Federal health insurance that would cover the gap to Medicare age 65 eligibility.
IIRC, you are a nurse.
If you weren't a veteran, how do you overcome veteran's preference? From what I've seen, it's almost impossible for someone who was not a veteran to get a civilian fed job.
If you weren't a veteran, how do you overcome veteran's preference? From what I've seen, it's almost impossible for someone who was not a veteran to get a civilian fed job.
My husband got it. White male, with a British accent to boot, no preferences. He almost turned it down but I said to take it.
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