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Old Yesterday, 01:58 PM
 
29,994 posts, read 35,077,747 times
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Quote:
Originally Posted by Travelassie View Post
Different strokes and all that....

I'm happy to say that my husband and I both have defined pensions (these form the majority of our retirement income) and healthy 401K , 403b savings. We also made plans long ago to be as debt free as possible in our retirement, and overall are reaping the benefits of that planning.

We've always been entirely aware that we're responsible for ourselves in retirement, despite your apparent disparaging comments about "pensioners". I suspect we aren't alone in that regard.
Bada Bing, you have a lot of company!
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Old Yesterday, 03:57 PM
 
Location: Western Washington
9,162 posts, read 8,546,357 times
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Quote:
Originally Posted by BBMW View Post
Saying you're confident in your pension is saying you're confident in the ability of the organization paying the pension to keep doing so. If it's a private pension, what happens if the company declares bankruptcy? This has burned a lot of people.
Most pensions are guaranteed by a federal agency, the PBGC (Pension Benefit Guaranty Corporation). The pension would still be paid in most cases.

Quote:
There are also a lot of government pensions are grossly underfunded. There well be a huge amount of political sturm und drang when these hit the financial wall.
Some are, some aren't. My state has several pension funds, and all but the oldest are funded from 91% up to 135%. The oldest, most generous plans which have not been open to new employees since the 1970s or so are funded at 61% or so. They are also pretty small in comparison to the size of the rest of the retirement portfolio, so if the rest of the plans had to pick up the slack, it isn't a big deal.

Quote:
With a 401K, at least it's your money under your control. You just have to save enough and invest correctly.
Which relies on a reasonable amount of financial literacy on the part of most people that is simply not evident. Sure, it is under your control, but you get just as hungry in retirement if it is your own fault.
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Old Yesterday, 04:32 PM
 
226 posts, read 84,169 times
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Which relies on a reasonable amount of financial literacy on the part of most people that is simply not evident. Sure, it is under your control, but you get just as hungry in retirement if it is your own fault.[/quote]


Depends on the pension and how it is managed and funded. If done right, you get professional money management. With 401k it is do it yourself and most people don't know enough or have the time. The 401k can work, but for many it does not. One of the main issues is that it is a percentage of salary. So somebody making 100k can save far more than somebody at the bottom, making say 25k. A well managed pension with IRA's is probably the best most can hope for.
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Old Yesterday, 09:37 PM
 
744 posts, read 454,291 times
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Quote:
Originally Posted by Mr5150 View Post
Pensions are forever. A 401k is not. I worked for two government agencies at a lower pay scale, compared to what I could have made in the private sector, because of the promise of a pension. A pension requires no thinking or strategy.

And to the OP, most pensions only require 10 years to be vested. Some outfits only 5. Not 30 years.
Not necessarily. If you're in a public sector job and work for the federal government, you're probably right. The federal government can print money. But if you work for a state or municipality? No such guarantee. If the government goes belly-up (see: Detroit), you're essentially screwed.

I'm very happy with my private-sector 401(K).
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Old Yesterday, 09:43 PM
 
744 posts, read 454,291 times
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Quote:
Originally Posted by fishbrains View Post
Which relies on a reasonable amount of financial literacy on the part of most people that is simply not evident. Sure, it is under your control, but you get just as hungry in retirement if it is your own fault.
This was partly combated years ago with the passage of an amendment to ERISA allowing companies to default people into a target retirement mutual fund. These funds usually have a target retirement year in their name and you pick the one with the date closest to when you think you'll retire (say, 2030, 2035, etc.). The fund gradually goes from aggressive to more conservative as it gets closer to the year in the fund name.
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Old Yesterday, 09:54 PM
 
Location: Western Washington
9,162 posts, read 8,546,357 times
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Quote:
Originally Posted by Flyers Girl View Post
This was partly combated years ago with the passage of an amendment to ERISA allowing companies to default people into a target retirement mutual fund. These funds usually have a target retirement year in their name and you pick the one with the date closest to when you think you'll retire (say, 2030, 2035, etc.). The fund gradually goes from aggressive to more conservative as it gets closer to the year in the fund name.
I agree. Partly. I have a portion of my 403(b) in a fund of this type.

The problem is that is only a small part of the retirement picture. How much should one set aside? A typical company offers a 4/4 match on a 401k. That is nowhere near enough to save. 8% of a salary? That will see you running out of funds in a decade or two, and that is if you do it for your entire working career. I know that at 25-30 I did not earn enough to save anything. I currently put aside about 25% of my salary to make up for that lack.

I also earn many, many multiples of what I earned in those years. I don't want to go back to living hand to mouth as I did in my early years, but back then I could not have imagined earning what I do now.

Those are only a few things to consider. Retirement savings is complicated, and simply telling people to put something aside is inadequate.
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Old Today, 03:21 AM
 
Location: Silicon Valley
129 posts, read 50,953 times
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Quote:
Originally Posted by Mae Maes Garden View Post
Just curious...tho pensions are “old school”, are people more financially comfortable mentally if they have a pension vs a 401K? It seems that pensioners puff up declaring having one but they have zero clue about 401Ks and how one can be expected to be responsible for their retirement income. Always an interesting convo. I mention that I could never be held hostage to the promise of a pension if it means I have to stay at one employer for 30 years to earn the pension. This is usually a convo with a government worker.

Sour grapes much, op?
You're right about a pension allowing you to have much less mental stress knowing that that check will be coming in every month for the rest of your life. I made a choice about where I was going to work - a choice anybody else, including you, could have made. That's not puffing up, it's just a fact. And no, I wasn't held hostage to 1 employer for my 32 year career. I was able to work for 3 employers in varying geographical areas - all covered by the same statewide retirement system.

Zero clue about 401K? Nope. Also had money going into my deferred comp accounts as well as a Roth for several years.
Zero clue about how one can be expected to be responsible for their retirement income? Wrong again. I started being responsible for my retirement income years before I actually retired. A pension was only part of the calculation, albeit the most important part.

Your last sentence sounds like you may have actually considered working for an employer that offers a pension but chose not to. That was your choice. No need to be envious now.
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Old Today, 04:18 AM
 
738 posts, read 340,003 times
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Quote:
Originally Posted by TuborgP View Post
In what living universe did you conclude pensioners have no clue about 401Ks. Is it perhaps because public sector employees have the 403B equivalent?
The world I refer to are State employees that I know personally. They only know state govt employer. They have worked their entire life never having been in the public sector. The “union” is god. I have never worked for the govt in any capacity. I have always participated in employer-Match 401k plans since day one. They were new when I started working. I recall the HR manager at the time ( my first employer) who was discussing them as a “benefit” but she had not explained exactly what a 401K actually was...

I appreciate this conversation on my thread. Good info from everyone.

Last edited by Mae Maes Garden; Today at 04:34 AM..
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Old Today, 04:25 AM
 
738 posts, read 340,003 times
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Quote:
Originally Posted by ComoAmero View Post
Sour grapes much, op?
You're right about a pension allowing you to have much less mental stress knowing that that check will be coming in every month for the rest of your life. I made a choice about where I was going to work - a choice anybody else, including you, could have made. That's not puffing up, it's just a fact. And no, I wasn't held hostage to 1 employer for my 32 year career. I was able to work for 3 employers in varying geographical areas - all covered by the same statewide retirement system.

Zero clue about 401K? Nope. Also had money going into my deferred comp accounts as well as a Roth for several years.
Zero clue about how one can be expected to be responsible for their retirement income? Wrong again. I started being responsible for my retirement income years before I actually retired. A pension was only part of the calculation, albeit the most important part.

Your last sentence sounds like you may have actually considered working for an employer that offers a pension but chose not to. That was your choice. No need to be envious now.
Snarky much? Seriously....All of my employers offered 401k employer match options vs any pensions. I have collected a few that have grown nicely over the years. Congrats on your stellar career and success. And, no, I am not envious.
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Old Today, 06:34 AM
 
7,992 posts, read 11,733,706 times
Reputation: 10486
I have a little of both and constantly worry about them both disappearing.
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