Saving for retirement.....that seems to be what it's AAAAALLL about!!!! (conversation, state)
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I never wanted kids, ever, and have always been one income (not coupled). Nevertheless, I didn't start thinking about saving or any such until my mid-40s (although I did do many of the things people hope to do in retirement, making a mess of my life overall and costing lots of money/opportunities).
I also stumbled into a pension job. I've come and gone four time at one hospital (became an RN at age 28). When I first came here at age 28, I didn't think beyond one year at a time, figured I'd be moving, traveling, etc. The vesting at that time was ten years, and I didn't pay any attention to it. Was gone for three years, came back for two more, still not thinking about anything. I was gone for four more years, but stayed perdiem, which apparently kept me in the cycle (and if I worked 1000 hours a year, that year counted towards vesting. One year I worked 920 because I didn't have a clue). Back on staff for four years, off to perdiem for two more. I got a pension statement that was pretty nice, and didn't understand why I got it. Turned out, the perdiem years did keep me in the cycle (including seniority, which helped in the downsizing 1990s), plus it turns out that the "professional staff" (not RNs, not counselors) had a five-year vesting, and it wasn't legal to have some with five and some with ten, so everyone got five. I perked up and took notice, and when I changed jobs again, I made sure to come back here for the fourth time. Have been here full-time for 11 years (a world record for me) and the pension is very handsomely piling up. Sheer luck, god loves a fool, eh?
The vesting was just changed to three years, not sure why, but it'll help keep those new grads here beyond the year or two they often put in before graduate school.
I am really grateful for my own unconscious falling into the pension. I still put something in my 403b, but don't count on it. Of course, I worry about losing my pension, like an Enron thing, but feel relatively safe in that my fortunes rise and fall along with the Old Guard medical docs (Harvard affiliates) and they aren't gonna take any mess.
I certainly know baby boomers who had kids late in life (usually the guy being older and maybe having kids from a first marriage, often kids that he didn't overly stay involved with) and there are these people in the 50s-60s who have kids in elementary school. These are the "I'll just work until I die" people, without sense that they might not have that work option (health, layoffs).
I personally don't think parents owe their kids anything financial after age 18, especially not college or an inheritance, but it's very generous if you keep that in mind in your planning. They're fortunate.
Your comparisons are off a bit. FERS isn't as bad as you think. If your parents retired with a pension of 75%, that means that they worked for 39 1/2 years under CSRS. If a FERS employee works for 39 1/2 years, their basic pension would be 43.56%, not 25-30%. Moreover, in addition to the 43.56% basic annuity,FERS employees also get full Social Security credit, plus matching contributions on their TSP contributions up to 5% of salary.
All-in-all, a FERS employee can end up with a higher retirement income than a CSRS employee. The only difference is that a FERS employee must contribute to TSP to ensure a good retirement income. For CSRS employees, the TSP is a nice optional benefit.
Sorry I was not clear, my parents were not federal employees but state employees. Their pensions are 2.5% per creditable year. They worked 30 and got 75%, how you like them apples? That's the other thing that kills me... 40 years! People actually figure in 40 years of productive work. Most people nowadays are in their mid 20s before they see an income they can begin capitalizing on as opposed to the "treading water" 40-50K/yr. Few in my age bracket got into civil service straight off college, the majority struggle through unstable private jobs until they bump into the realization 401Ks are never going to feed you for 20 years, so they try to go for the relative stability of gov jobs. This means most FERS folks will be starting their calculations at age 30. I ain't working to the age of 70, pension or no pension. Nevermind I'm 28 and I'm still trying to get into civil service (DOD side).
So to re-tackle, using the 30 year yardstick as the gage then yes, FERS will yield you a 30% pension. And that's me getting into the system by 30, and working till 60, a full three years longer than my parents had to work (they retired at 55-57). TPS, please, everybody is drinking that kool-aid, yet their defined contributions continue to tank and stay way underfunded. Nevermind that as uniformed members of DOD, we get no matching on TPS (Guard/Reserve)....As to Social security,I consider the mere fact the govt outright labels SS as part of the retirement legs of FERS as an outright front to my intelligence, an insult. We all know Gen Y won't see a dime of SS, this is not hyperbole, it's simple math. So yeah 30% is what you get.
As to those who question how I'll feel about retirement when I'm in my late fifties-early sixties and no 401k contribution, recall I didn't say I wasn't saving any money, but that I merely do not subscribe to the idea that I can successfully tuck money away for retirement in my late 20s and not miss it, nevermind put it under a tax penalized cage of a 401K. Even Roth IRAs, the de facto "swiss account" of the Gen Y + will be disbanded in short order by the government, mark my words. So yeah, I'm not sweating the outcome of this decision in 40 years, as we will either all be on some form of dole or expatriate retirements will abound in 40 years anyways and the america we're fussing about will be a foregone conclusion. Couple that with the fact I no longer sweat the idea of subsidizing my future children's education, and I sleep like a baby.
In short, I subscribe to the idea of finding value in what you do today and enjoy the journey, regardless of if you're doing it on money you could have convinced yourself to put on a 401K (to later retrieve it at a tax penalty like the peanut gallery cause you really couldn't afford to in the first place). I find that opportunity costs more suitable than being unhappy for life so I can halfway fund my lifelong wait to a final hospital stay....
I never wanted kids, ever, and have always been one income (not coupled). Nevertheless, I didn't start thinking about saving or any such until my mid-40s (although I did do many of the things people hope to do in retirement, making a mess of my life overall and costing lots of money/opportunities).
I also stumbled into a pension job. I've come and gone four time at one hospital (became an RN at age 28). When I first came here at age 28, I didn't think beyond one year at a time, figured I'd be moving, traveling, etc. The vesting at that time was ten years, and I didn't pay any attention to it. Was gone for three years, came back for two more, still not thinking about anything. I was gone for four more years, but stayed perdiem, which apparently kept me in the cycle (and if I worked 1000 hours a year, that year counted towards vesting. One year I worked 920 because I didn't have a clue). Back on staff for four years, off to perdiem for two more. I got a pension statement that was pretty nice, and didn't understand why I got it. Turned out, the perdiem years did keep me in the cycle (including seniority, which helped in the downsizing 1990s), plus it turns out that the "professional staff" (not RNs, not counselors) had a five-year vesting, and it wasn't legal to have some with five and some with ten, so everyone got five. I perked up and took notice, and when I changed jobs again, I made sure to come back here for the fourth time. Have been here full-time for 11 years (a world record for me) and the pension is very handsomely piling up. Sheer luck, god loves a fool, eh?
The vesting was just changed to three years, not sure why, but it'll help keep those new grads here beyond the year or two they often put in before graduate school.
I am really grateful for my own unconscious falling into the pension. I still put something in my 403b, but don't count on it. Of course, I worry about losing my pension, like an Enron thing, but feel relatively safe in that my fortunes rise and fall along with the Old Guard medical docs (Harvard affiliates) and they aren't gonna take any mess.
I certainly know baby boomers who had kids late in life (usually the guy being older and maybe having kids from a first marriage, often kids that he didn't overly stay involved with) and there are these people in the 50s-60s who have kids in elementary school. These are the "I'll just work until I die" people, without sense that they might not have that work option (health, layoffs).
I personally don't think parents owe their kids anything financial after age 18, especially not college or an inheritance, but it's very generous if you keep that in mind in your planning. They're fortunate.
My initial thoughts on the pension were similar to yours, that is, I didn't even think about it. That changed once I became vested. I thought, "now I'm vested," and promptly forgot about it.
About 3 years later was when I really started thinking about and planning for retirement. That's when I realized how lucky I was. After that, I would tell all the younger employees to stay until they were vested and to leave the money in the system. Unfortunately, some left, taking their portion with them because they thought the "free" money was worth more to them now than in retirement.
One nice thing about being within 5 years of retirement, other than being within 5 years of retirement, is that the numbers become less abstract. For instance, 10-15 years ago, I figured I needed $1 million in my IRA in order to retire. I had no idea what my expenses might be, so I used the 100% of income as my starting point. About 5-7 years ago, I dropped the $1 million down to $500K, based on my pension income. About 3 years ago, that number dropped to $350K and I started including SS as a source. Last year, the number dropped to $240K and we should be able live on pensions and SS only, once the mortgage is paid.
I kind of agree that we don't owe our kids a college education, but my wife thinks differently. I think we should help where we can, but the responsibility is theirs.
Pick a number you think you'd need to retire on, then work backwards from there. Example, if you think you'd need $5 million to retire at age 60, then you need to find a way to get there. At age 28 with $137K, if you invest that with an annualized return of 12%, you would hit $5.1 million by age 60 (in 32 years). That's without adding one more dime to your initial kitty. Of course, 12% returns may be too optimistic, so you probably should continue to save.
........ 10-15 years ago, I figured I needed $1 million in my IRA in order to retire. I had no idea what my expenses might be, so I used the 100% of income as my starting point. About 5-7 years ago, I dropped the $1 million down to $500K, based on my pension income. About 3 years ago, that number dropped to $350K and I started including SS as a source. Last year, the number dropped to $240K and we should be able live on pensions and SS only, once the mortgage is paid.......
It looks like in a few more years you won't need anything?
It looks like in a few more years you won't need anything?
Wouldn't that be nice.
I know we'll need something until SS kicks in. At this point, I'm not going below the $240K for any of the gotchas that will occur. It's just nice to know we won't have to struggle in retirement.
What if SS is not there for us 50 + folks? We keep on swimming I guess. LOL
It shouldn't be a problem. Even after they use all of the surplus, they will still be collecting something like $0.75 for every $1.00 they pay out. So they'll either pay out less or borrow to pay the full benefit. The main reform being talked about is delaying payouts (i.e., older age before receiving benefits, say 65 early and 75 normal?), reducing payouts for those under 50, and collecting more $$ from those working. There's a chance those in the 50-55 range might see reduced benefits.
They could reduce benefits for all once collections are less than payouts and the surplus is spent, but they would be committing political suicide if they do it.
The reforms the breaux commision came up with under Clinton was reduced benefits and large increases in withholding.Of course since it was not immediate they decide to do nothing.Byht eway the reason he appoitned the commisio is he by law was warned by OMB that a crsiis was coming and he had to respond by law.By the way medicare and medicaid are in worse shape and they will have to use out of the budget for those they learned. It figures give were alarming. At that time the governamtn took in somethig like 18% of GDP for all revenue sources. *% by far the largest portiotn of any expenses was for SS;medicare and medicaid. Project cost were 16% in coming years of that 18% leaving 2% for everything else.If they pass the healthcare bill as is they will reduce medicare spenidng by 500 milion ;so no its not suicide exactly.Look at some of the drastic things being done in california also.
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