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Old Yesterday, 07:51 AM
 
Location: SoCal
13,840 posts, read 6,596,086 times
Reputation: 10417

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Actually my sister did get a job with the state of California for much less in salary due to the pension lure, but they let go of her after the first year. Too political. So she went from making $50k-$60k to $85k. If she can bank the difference, she comes out ahead.
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Old Yesterday, 08:20 AM
mlb
 
Location: North Monterey County
3,283 posts, read 2,906,599 times
Reputation: 5049
My state pension was non-contributory and that coupled with just MY Social Security is exactly what we lived on pre-retirement. I was lucky to be hired well before the state made changes to the pension benefits in 2010 during the recession.

But we took nothing for granted and shoveled money into my 401K for over 18 years. And we actually know how to manage it, contrary to those posters who think we pensioners are dumb as doorknobs. That plus my spouse’s Social Security and a healthy inheritance - all that is gravy but probably will be needed to finance our end of life care.
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Old Yesterday, 08:47 AM
 
Location: Venice, FL
2,619 posts, read 961,148 times
Reputation: 1821
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. (I totally agree)

fishbrains replied:
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. (I agree Washington State is in good shape, but most are in trouble)

Here's my take: It's true that "some are and some aren't" when it comes to public pensions being properly funded, but it would be more accurate to say "some are, but most are not." This article has a map of the U.S. showing % funded:

https://taxfoundation.org/state-pensions-funding-2018/

This article says collectively, pension plans are poorly funded:

https://www.investopedia.com/article...an-underfunded

If you have a Federal Government pension, you can sleep well at night. Those are bulletproof.

If you have any other government (State, County, and City) you need to find out what the funding ratio is.

This article says the once considered safe funding ratio of 80% is a myth:

https://www.actuary.org/sites/defaul..._IB_071912.pdf

Only 12 States are funded at 80% or better, so at best 12 are safe and 38 are unsafe. This supports my claim that most are NOT safely funded. Some are, but MOST are NOT.

This article has a chart that shows local & State government pension funding as a % of GDP, and that reveals how bad the unsustainable trend line really is:

https://www.pewtrusts.org/en/researc...nding-gap-2017

The FDIC-like insurance organization that backs pensions is in financial distress. The backstop is full of holes. I would not be putting my financial future in their hands.

If I had a pension that was funded only at <70%, I'd be extremely concerned, & I'd be taking immediate steps to increase retirement savings, and reduce my monthly burn rate...starting today!
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Old Yesterday, 08:58 AM
 
Location: Washington State
19,079 posts, read 9,832,201 times
Reputation: 16248
Quote:
Originally Posted by beach43ofus View Post
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. (I totally agree)

fishbrains replied:
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. (I agree Washington State is in good shape, but most are in trouble)

Here's my take: It's true that "some are and some aren't" when it comes to public pensions being properly funded, but it would be more accurate to say "some are, but most are not." This article has a map of the U.S. showing % funded:

https://taxfoundation.org/state-pensions-funding-2018/

This article says collectively, pension plans are poorly funded:

https://www.investopedia.com/article...an-underfunded

If you have a Federal Government pension, you can sleep well at night. Those are bulletproof.

If you have any other government (State, County, and City) you need to find out what the funding ratio is.

This article says the once considered safe funding ratio of 80% is a myth:

https://www.actuary.org/sites/defaul..._IB_071912.pdf

Only 12 States are funded at 80% or better, so at best 12 are safe and 38 are unsafe. This supports my claim that most are NOT safely funded. Some are, but MOST are NOT.

This article has a chart that shows local & State government pension funding as a % of GDP, and that reveals how bad the unsustainable trend line really is:

https://www.pewtrusts.org/en/researc...nding-gap-2017

The FDIC-like insurance organization that backs pensions is in financial distress. The backstop is full of holes. I would not be putting my financial future in their hands.

If I had a pension that was funded only at <70%, I'd be extremely concerned, & I'd be taking immediate steps to increase retirement savings, and reduce my monthly burn rate...starting today!
True, I mentioned the emotional aspect of managing 401K but there is going to be angst with many of these pensions that are underfunded.
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Old Yesterday, 10:35 AM
 
29,995 posts, read 35,084,332 times
Reputation: 11902
For those of you without pensions who are worried when we with aren’t, I want to thank you.
Your being worried for me alleviates my need for angst and will help me to continue sleeping better knowing you are carrying the load for us.
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Old Yesterday, 10:39 AM
 
29,995 posts, read 35,084,332 times
Reputation: 11902
Quote:
Originally Posted by Tall Traveler View Post
True, I mentioned the emotional aspect of managing 401K but there is going to be angst with many of these pensions that are underfunded.
That is why as has been noted in multiple threads many of us with pensions are continuing to invest in retirement. It is that fixed income that enables us to have excess income to invest and add taxed investments to help grow our nest eggs along with our tax sheltered 401/403 funds.
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Old Yesterday, 11:06 AM
 
421 posts, read 169,115 times
Reputation: 1237
Quote:
Originally Posted by NewbieHere View Post
Actually my sister did get a job with the state of California for much less in salary due to the pension lure, but they let go of her after the first year. Too political. So she went from making $50k-$60k to $85k. If she can bank the difference, she comes out ahead.
That is a big "if."
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Old Yesterday, 11:28 AM
 
421 posts, read 169,115 times
Reputation: 1237
I don't have a big pension. I only worked part-time, as I preferred to stay home the other working hours. Less money, but we always seemed to do fine without my full-time income.

I ended up at 63 with a part-time teachers pension after working 7 full time years. This pension was 4 times that of the private sector pension I got from a Big Pharma pharmaceutical company (8 years). Not bad. I also received SS (minus the windfall), and I have my IRAs and other savings. I could have put money into a 401K as a supplement, but my employer would not have contributed to it. I opened IRAs instead.

My husband worked private sector for about 12-15 years. No pension but private IRAS. He then completed his degree and got a job with a city municipality in our state. He worked his way up to management with two different cities. He was never the city manager, but his salary was still high (well over 6 figures). After 25 years, his pension is at 70% of his salary, plus his deferred compensation and private IRAS. If he predeceases me, I will get 80% of the pension he has received as his wife. He is waiting for FRA to collect SS, which will be in 3 years.

Our houses, commercial property, and cars are all paid off. We also have stocks and savings accounts, as we are fairly frugal and don't buy much. I still like to buy used things at estate sales and thrift stores. Most of my furniture is used, except for mattresses and couches. Close family members have given me nice furniture and other things before they died.

I like to clean a friend's office (very clean) once every two weeks for extra money. It is an O.K. job, and the employees there are kind and very clean. They let me take vacations and switch days whenever I want. I also am an English language tutor and Citizenship preparation tutor. I have a client once or twice a month at $50.00 an hour, or $30.00 a half hour. I have more clients than time. I just don't want to tutor more than twice a month. My husband is a paid councilmember with a small monthly stipend. We are asked to go to many events with which the meals are covered. We also like to donate to local charitable groups.

My big question is Medicare. We are covered by my husband's former employer and we pay $500.00 extra per month for my coverage. I am 4 months younger than he is. When he turns 65 he is no longer covered by his city employer but he will be on Medicare. For the 4 months before I qualify for Medicare, do I ask his employer if I am covered by "Cobra" or do I have to sign up for Obamacare if it still exists in April 2021? Just curious about what people do.



Last edited by suziq38; Yesterday at 12:02 PM..
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Old Yesterday, 11:35 AM
 
Location: Venice, FL
2,619 posts, read 961,148 times
Reputation: 1821
Quote:
Originally Posted by Tall Traveler View Post
True, I mentioned the emotional aspect of managing 401K but there is going to be angst with many of these pensions that are underfunded.
If most are woefully underfunded now, on the back end of the longest Bull market in history at 3641 days, what will they look like at the back end of the next Bear market? Retirees are going to be adversely impacted, putting it softly.

Most projections I see say w/in 15 years, most of the poorly funded pensions will have failed. Some will fail sooner (Illinois, Kentucky, New Jersey, Connecticut, Colorado), and it will start out slow, but then gain momentum. The back stop will fail when Illinois, or New Jersey fails.

The good news is that most Cities, County's, and State now have "closed pension plans" which means new hires no longer get the pension benefits. Local governments finaly figured out that they are unsustainable.

I live in Sarasota, and ours is closed, however, the pension plan today is paying out more to retirees than is being paid out in wages to current active employees! Plus, its <76% funded. We'll be selling our home in 8 years so we don't caught in the New Jersey trap. The New Jersey trap will ensue in most places ~10 years from now when property taxes start getting jacked up to the max year after year to try to bail out the failing pensions, and then homeowners won't be able to sell homes due to the ulta high property taxes. Instead, they'll buy homes in later blooming County's that learned from the mistakes of older established County's.

Underfunded Pensions are the biggest financial problem looming in our economy, but they get very little press. The press likes to focus upon student loan debt, and China trade tarriff's instead.
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Old Yesterday, 11:41 AM
 
Location: Knoxville, TN
1,398 posts, read 639,185 times
Reputation: 3199
Quote:
Originally Posted by athena53 View Post
A former HS classmate told me that her savings plan as a teacher was "just like a 401(k)" because she had to contribute to it. I asked her if it provided a lifetime income she couldn't outlive. Yes, it did.

That ain't no 401(k), honey.
Prior to 1974, 403B plans were limited to annuities, which would pay out a lifetime income. After 1974, 403B's became more like 401K's, with more investment options, but your friend could still opt to take a lifetime annuity.
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