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Old 01-18-2017, 11:44 AM
 
77,790 posts, read 59,941,914 times
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FYI- Hey not sure some of you are aware of this but around 2012 the gov. tacked on a law allowing pension plans to calculate (discount) their liabilities using 30-year average returns instead of the previous 2.

Long story short, this gives them relief from the very low interest rates in recent years and by relief I mean....they don't have to put more money in to fund them.

This could get scary if interest rates continue to stay low for an extended period as it basically gives these pension plans a pass on the fact that their assets aren't growing as fast as the "average".

So, just something to consider....businesses can lobby the government to change funding rules.
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Old 01-18-2017, 11:46 AM
 
77,790 posts, read 59,941,914 times
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Quote:
Originally Posted by David A Stone View Post
There are many retired people who never saw a 6% match of 100%


The places that did match matched only 50% of your 6% and every time profits for the company slowed, suspended the match entirely for awhile.


I'm quite sure I am not the only retired person who never saw close to a 100% match of the 6%
1. Did you also have a pension plan where you worked? Places with both tend to match less for obvious reasons.

2. Changing the match to 50% of 6% in the scenario I described has them reach 1mil around age 63-64 instead of age 60.
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Old 01-18-2017, 11:47 AM
 
Location: Living rent free in your head
42,743 posts, read 25,939,939 times
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Quote:
Originally Posted by MLSFan View Post
401k also get employer match

what low income person is getting a $50k/year pension? pensions today are a % of the salary... a low income person would have a low pension $
No, not all 401k's have an employer match. My husband retired from a Fortune 500 company, until 5 years ago they offered defined benefit pensions, they froze those and began offering 401k with a 6% match, the following year they reduced the match to 2%, the next year they offered no match. He has friends who still work there and they still do not offer an employer match, and they have the 401k managed by a firm with exceptionally high fees.

I never said a lower income person would get a 50k pension, but a 15k or 20k pension might keep them out of poverty.
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Old 01-18-2017, 11:53 AM
 
Location: Living rent free in your head
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Quote:
Originally Posted by Mathguy View Post
Most employers have a 401k match and thus also contribute.
  • 49% of employers with 401K plans match 0%
  • 41% match a percentage of employee contributions between 0-6% of salary.
  • 10% match a percentage of employee contributions at 6% or more of salary.
  • The median is a 3% match.
https://www.bls.gov/ncs/
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Old 01-18-2017, 11:59 AM
 
Location: Arizona
296 posts, read 316,306 times
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Would never want a pension. Too many cases of mismanagement and retirees getting swindled out of portions of it near the finish line. Illinois bankrupted itself by mismanaging pension money and now pensioners have to fight to get what is owed to them.

With a 401k, the politicians can't steal my retirement.
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Old 01-18-2017, 12:25 PM
 
Location: USA
6,230 posts, read 6,892,304 times
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Originally Posted by Heterojunction View Post
Would never want a pension. Too many cases of mismanagement and retirees getting swindled out of portions of it near the finish line. Illinois bankrupted itself by mismanaging pension money and now pensioners have to fight to get what is owed to them.

With a 401k, the politicians can't steal my retirement.
One aspect I have reminded myself of is the fact that many older workers get thrown onto the chopping block before they can retire. I have seen guys working for a company 30+ years just to be conveniently let go before they can collect that pension.

The traditional pension was probably a great thing in the past. But with today's volatility in the workplace a 401k is a way to go.
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Old 01-18-2017, 12:34 PM
 
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I would guess pensions don't fit a huge part of the population anymore- those who bounce around and don't stay at a government job for 30 years. The 401K is more portable and ends up being your money. Most pension plans don't have a cost of living increase either.
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Old 01-18-2017, 12:37 PM
 
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Quote:
Originally Posted by s1alker View Post
One aspect I have reminded myself of is the fact that many older workers get thrown onto the chopping block before they can retire. I have seen guys working for a company 30+ years just to be conveniently let go before they can collect that pension.

The traditional pension was probably a great thing in the past. But with today's volatility in the workplace a 401k is a way to go.
My last company had a big layoff in engineering. Big. It was clear they were targeting people who were grandfathered into the pension plan, yet had many years to go. In that 45 year old range. Companies don't want to be on the hook for them anymore.
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Old 01-18-2017, 12:39 PM
 
2,094 posts, read 1,914,173 times
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Quote:
Originally Posted by MLSFan View Post
401k also get employer match

what low income person is getting a $50k/year pension? pensions today are a % of the salary... a low income person would have a low pension $
Right. A low income person might be better off with a 401K if he did it right.
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Old 01-18-2017, 01:18 PM
 
Location: Living rent free in your head
42,743 posts, read 25,939,939 times
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Quote:
Originally Posted by Mathguy View Post
As for "lower income people" I'd be happy to discuss an actual example with you but I'm generally talking about people working at a level where they'd historically have been provided a db pension.
Defined benefit pensions are common in the public sector and cover many low wage workers. There are also companies like Coca Cola which provide defined benefit pensions to all full time employees regardless of salary. Of course the pension benefit varies according to length of employment and salary, but for a lower wage worker who earns 30k a year, a 10k defined benefit pension is a lifesaver when combined with social security benefits.
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