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Old Yesterday, 11:58 AM
 
Location: R.I.
1,037 posts, read 630,482 times
Reputation: 4479

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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.

I work for the Federal Government and will retire with a defined pension (FERS) along with a Federal Government sponsored 401K called the TSP. Believe you me with roughly 1/3 of my retirement income coming from my TSP/401K I most certainly have a clue about that income stream; geez I am even a member of an internet forum dedicated just to the TSP. And BTW, when I retire after a 46 year nursing career 1/2 of it was spent working in the private sector, and the last 1/2 with the Feds, so this lady was not held hostage for 30 years by any public or private sector job.

Those like yourself who paint those who will retire with pensions with such a broad brush stroke are the only ones who really don't have a clue especially since most of us don't have all our retirement income eggs in the defined pension basket.
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Old Yesterday, 11:59 AM
 
Location: Western Washington
9,163 posts, read 8,550,250 times
Reputation: 15863
Quote:
Originally Posted by beach43ofus View Post
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.
It also depends on the type of investing done by the pension fund. Mine invests almost entirely in bonds, so the vicissitudes of the stock market don't have much impact.
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Old Yesterday, 12:04 PM
 
Location: SW Florida
9,840 posts, read 7,137,930 times
Reputation: 14452
Quote:
Originally Posted by TuborgP View Post
Bada Bing, you have a lot of company!
That's good to know!
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Old Yesterday, 01:31 PM
 
Location: Venice, FL
2,619 posts, read 961,148 times
Reputation: 1821
Quote:
Originally Posted by fishbrains View Post
It also depends on the type of investing done by the pension fund. Mine invests almost entirely in bonds, so the vicissitudes of the stock market don't have much impact.
Bonds have such a low return right now, the income is not likely to keep up with the growth in retiree payouts due to Baby Boomers now retiring. Your pension fund may be running a deficit right now if heavily in bonds.

You are forunate to be in Washington State, the 9th highest ranked State Pension fund. Count your blessings.
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Old Yesterday, 01:50 PM
 
Location: Silicon Valley
131 posts, read 51,401 times
Reputation: 564
Quote:
Originally Posted by Mae Maes Garden View Post
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.

Yeah, right. I guess it was your use of the terms, "puff up", and "zero clue about 401k"s", that lead me to believe there was some bitterness there.

Despite your gross generalizations after having conversations with your friends who work for the state, I think you can see by the majority of responses by pensioners that many of us have thought a lot about our retirement incomes, and a pension was just one part of an overall strategy that included 401k's, IRA's, etc.

And for those posting that many pensions are underfunded? No duh, nothing is 100%. That's why we made sure we had multiple sources of income. Hell, the whole world economy could crash for any number of reasons and then we'd all be in the same sinking boat. Yes, even those of you who consider yourselves "in control" of your 401k or other retirement funds.

But until that happens, I'll take the monthly (stress free) pension check and let the other funds grow.
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Old Yesterday, 02:21 PM
 
Location: Washington State
19,079 posts, read 9,832,201 times
Reputation: 16248
Quote:
Originally Posted by TuborgP View Post
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.
Yep, wife has a pension which is a nice help in our retirement even though she only worked 18 years and retired young...it seems well funded at this point but we have planned to live just fine it it goes broke in the future. Our social security pensions do to us in a couple years are also a concern but that seems better funded than many of the state and city run pensions. I would be more concerned if my pension came from Illinois, New Jersey, or Connecticut state pensions.
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Old Yesterday, 02:52 PM
 
9 posts, read 5,213 times
Reputation: 32
[quote=fishbrains;55960902]Most pensions are guaranteed by a federal agency, the PBGC (Pension Benefit Guaranty Corporation). The pension would still be paid in most cases.


I am not certain but I think that a benefit would be paid by the Pension Benefit Guaranty Corporation but I do not think benefits are paid at 100%. Something less.
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Old Yesterday, 03:13 PM
 
2,373 posts, read 830,217 times
Reputation: 6066
[quote=AZPurdue;55967035]
Quote:
Originally Posted by fishbrains View Post
I am not certain but I think that a benefit would be paid by the Pension Benefit Guaranty Corporation but I do not think benefits are paid at 100%. Something less.
It's more generous than I expected. See this link.


https://www.pbgc.gov/wr/benefits/guaranteed-benefits

It depends on when the plan went under and your age, but if you're 65 and the plan fails this year they guarantee up to $5,700/month, less if you want a Survivor benefit.

They also say it's "very different" for multi-employer plans. I'm guessing it's less generous. In my area, one large trucking company is a participant in a multi-employer plan and it's under-funded. Many of the companies that used to participate have gone BK so they're not around to help with the deficit.

I guess my two $900/month pensions, both from single-employer plans, are safe.
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Old Yesterday, 04:44 PM
 
421 posts, read 169,115 times
Reputation: 1237
".....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......" Beach 4 3 of Us.


In 15 years my husband and I will be 78. I may be nursing home bound by then. That is only if our retirement fun is "poorly funded."

Glad you have a "crystal ball." Whether I had a pension, or in our case 2 pensions, it doesn't matter. We all have to save and enjoy what we saved until we "kick the bucket." What if SS is bankrupt? What if there are cuts to our SS check? What if our investments with our stocks fail? That is why living in a paid off house and having income property makes sense. Also, in California, our property taxes remain low. What if Proposition 13 is overturned???

Whatever. Yes, they can get rid of these pensions, but a lot can happen. The banks can fail and the insurance not pay up. I can go on and on.
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Old Yesterday, 06:06 PM
 
Location: Coastal New Jersey
56,860 posts, read 55,193,200 times
Reputation: 67658
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!
Good chart, thanks for posting. I knew my New York pension was one of the good ones, but it's nice to see it's at 91%, No. 4. The pension for the state where I reside, however, is in deep doodoo.

Partway through my career, my employer began to offer the public 401k alternative (403b?), but I never had the money to put away. I wish I could have, but I lived paycheck to paycheck and in debt for most of my life. That's behind me now, but so is the opportunity to have saved more.

Still, I've got a decent pension and my job led me to some well-paying post-retirement gigs that helped catch me up in some ways. I am better off in retirement than I was most of my working life, and at 61, I should be able to save on my pension even though I'm paying extra on my mortgage to get that down.

Also, I thought that the reference upthread to the "union being God" or some such was odd. I worked in the public sector for 37 years, but I was never in a union. About half of the 7500 employed at our agency were non-union.
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