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Old 03-08-2010, 10:08 PM
 
Location: Planet Eaarth
8,958 posts, read 8,559,806 times
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Quote:
Originally Posted by 58robbo View Post
fair enough, have you made other provisions in case this happens to you? the reason i ask is because i doubt there'll be any pensions left standing by the time i reach retirement age.
I will be dead due to old age.
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Old 03-08-2010, 10:08 PM
 
Location: Sierra Vista, AZ
15,952 posts, read 12,596,554 times
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Trying to predict that far ahead is truly impossible, my pensions were wiped out at least three times in my life and I'm fine
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Old 03-09-2010, 12:10 PM
 
Location: Sacramento
13,473 posts, read 16,332,000 times
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Quote:
Originally Posted by Boompa View Post
Trying to predict that far ahead is truly impossible, my pensions were wiped out at least three times in my life and I'm fine
Very true. My dad had a pension with his employer, and then they used up the pension funds to try and shore up the business in their last few years of operations. As a result, what was supposed to be a $6,000 per year supplemental income (on top of social security) dwindled down to under $900 per year.

In my case, the obvious answer to the original question would be to save 10% of my annual income, and hope to find employers that matched the contribution to the extend possible (such as up to 5%). Do this for 40 years and invest all that timeframe, and you should have a decent pot of funds. Add that to social security, and you should be in good shape.

However...who is to say what tax policies would be put in place, and that the interest on this money won't be "defacto" confiscated when you actually draw it in retirement?

Planning is near impossible, no matter how hard you try.
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Old 03-09-2010, 12:58 PM
 
23,901 posts, read 19,964,172 times
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Quote:
Originally Posted by 58robbo View Post
If you couldn't rely on govt to rescue underwater pensions, what provisions would you make/ have made?
Public pensions at the state level are not underwater and in fact government is begging for them to bail government out. Yup pension funds bail government out so forget the misinformation.

Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash - BusinessWeek
March 8 (Bloomberg) -- The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.

Oregon’s retirement fund may contribute $100 million as regulators seek “the support of state pension funds to solve the crisis surrounding ongoing bank failures,” Jay Fewel, a senior investment officer at the Oregon State Treasury, said in a presentation at the fund’s Feb. 24 meeting. New Jersey’s fund may also participate, said Orin Kramer, chairman of New Jersey’s State Investment Council.

So readers who is really the best funded? State public pension funds or the government which is seeking our help in bailing government out. Maybe we need to start a thread and movement to protect our cumulative assets from years of investments being used to bail out the American banking system.
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Old 03-09-2010, 01:02 PM
 
23,901 posts, read 19,964,172 times
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Quote:
Originally Posted by 58robbo View Post
fair enough, have you made other provisions in case this happens to you? the reason i ask is because i doubt there'll be any pensions left standing by the time i reach retirement age.
Many of the public issues associated with pension funds today are the result of accounting law changes from a few years ago. Seventy five percent of state pension payouts are from return on investment. The height of the worry was March 9, 2009 and where has the market done since then? Don't worry. Check out N.J. and the changes Christie wants to make there aren't earth shattering changes to the payout for current workers. Wait there are no changes to their actual payout but to a lot of the other perks associated with retirement. One of the main things he wants to do is to legally require the legislature to make their payment each year.
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Old 03-09-2010, 01:15 PM
 
3,283 posts, read 3,123,388 times
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Quote:
Originally Posted by NewToCA View Post
Very true. My dad had a pension with his employer, and then they used up the pension funds to try and shore up the business in their last few years of operations. As a result, what was supposed to be a $6,000 per year supplemental income (on top of social security) dwindled down to under $900 per year.

In my case, the obvious answer to the original question would be to save 10% of my annual income, and hope to find employers that matched the contribution to the extend possible (such as up to 5%). Do this for 40 years and invest all that timeframe, and you should have a decent pot of funds. Add that to social security, and you should be in good shape.

However...who is to say what tax policies would be put in place, and that the interest on this money won't be "defacto" confiscated when you actually draw it in retirement?

Planning is near impossible, no matter how hard you try.

thanks for the post ntca. i sympathise with the position your father found himself in and i think it goes a long way to proving the point i'm trying to make. the reality is that while the concept of a pension sounds great, they're not risk free. as such i don't think that it is prudent to rely on them totally as many people do.

i have found that many people have neglected other areas of their lives to focus on one source of income and one source of retirement. what i wanted to try and get people to consider what people used to do before pensions became mainstream. how did people provide for themselves?
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Old 03-09-2010, 01:45 PM
 
23,901 posts, read 19,964,172 times
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Quote:
Originally Posted by 58robbo View Post
thanks for the post ntca. i sympathise with the position your father found himself in and i think it goes a long way to proving the point i'm trying to make. the reality is that while the concept of a pension sounds great, they're not risk free. as such i don't think that it is prudent to rely on them totally as many people do.

i have found that many people have neglected other areas of their lives to focus on one source of income and one source of retirement. what i wanted to try and get people to consider what people used to do before pensions became mainstream. how did people provide for themselves?
Your question is a good question but anyone who has worked with a financial planer or has done any research knows the three legs to a successful retirement. If you have all three wonderful. The most difficult leg is the pension as you need to seek employment with a company or government that offers them. The three well recognized legs are:

1. Tax Sheltered investments
2. Social Security
3. Pension

If you are not aware of or planned it is out of foolishness and many people are.
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Old 03-09-2010, 09:09 PM
 
183 posts, read 211,912 times
Reputation: 173
One of my biggest worries, especially considering I start drawing this summer at age 43, is that the pension goes away. I think its safe, state government, not corporate. I could have 40 to 50 years to draw on the pension. That is a long time! Sadly, I probably would not have saved nearly enough, early enough to retire at and early age.

Last edited by flyfishnevada; 03-09-2010 at 09:22 PM..
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Old 03-09-2010, 11:33 PM
 
Location: Sacramento
13,473 posts, read 16,332,000 times
Reputation: 5314
Quote:
Originally Posted by TuborgP View Post
Your question is a good question but anyone who has worked with a financial planer or has done any research knows the three legs to a successful retirement. If you have all three wonderful. The most difficult leg is the pension as you need to seek employment with a company or government that offers them. The three well recognized legs are:

1. Tax Sheltered investments
2. Social Security
3. Pension

If you are not aware of or planned it is out of foolishness and many people are.
The problem though is trying to predict future tax laws. For example, what if they decide to make an ultra progressive tax system to try and fund multiple government programs? Let's just assume for a minute that they ramp up the rate to a high of 70%, based on $150k per year for single folks and $250K for joint returns. Let's also assume they change the tax laws as they apply to social security, making 80% of it taxable.

If you have social security and a defined benefit pension, and made a good income when working, isn't it possible that you'll end up getting killed financially if you were a good and aggressive saver during your work life? Factor in some of the state funding issues, and the possibilities of state tax on retirement fund withdrawls over and above the federal tax...
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Old 03-10-2010, 09:14 AM
 
Location: Floyd Co, VA
2,631 posts, read 2,231,158 times
Reputation: 5208
I recently got a letter regarding my pension fund and that they are not in good shape. They are required to provide iinfo on what one would get if the fund goes belly up. From the PBGC I would get sixteen cents on the dollar of what I get now. That would not even cover 1/2 my mortgage, never mind any other expenses at all. I would be absolutely SOL.
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