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I have two defined benefit pensions, one from a public agency the other from a private company. My husband also gets a defined benefit pension and we both get Social Security. It would take a lot of inflation for us to be impacted in any significant way.
How are pensions coping with zero interest rate,they usually expect 11-13% return each year.
I know they are switching to stocks.
most pensions have always held lots of stocks , hedge funds and private equity .
pensions and annuity's also work very differently when it comes to fixed income .
imagine 30 of us buy a 30 year bond paying 2% .
typically all we get is 2% a year and 60% over 30 years .
but if the deal was if we die the money goes back in to the pot and one of us dies a year , you can see last man standing has a whopper of a return.
here is a breakdown of the new york state pension system allocation . 74% is non fixed income
nys pension
Asset Class Allocation
US Equity 32%
International Equity 15%
Fixed Income 23%
Private Equity 10%
Real Estate 9%
Credit 4%
ARS/Opportunistic 3%
Real Assets 3%
Cash 1%
It doesn't have to be an either or situation. Some companies offer a pension and a defined contribution plan. Pension, SS, 401k, IRA, personal portfolio, investments, etc. One can use multiple streams of income built over decades to fund retirement.
when the company goes under,the Fed takes over the pension assets but you will receive less,much less?
can always buy an annuity if you dont have pension
Pensions are insured to $50K per year. $50K plus SS is more than adequate for a comfortable retirement if you are debt free and own your own home.
They do if you spend less than you make. You choose your cost of living.
not the same thing regardless
colas are based on price changes on goods and services in 1250 different mini economies that make up this country .
it does not consider what you personally use or buy nor how many times you personally buy or use it .
it does not reflect the quality of goods and durability either . higher end goods tend to see bigger price increases but last longer .
it does not reflect out of type substitutions . like if i cant get my no added sugar klondikes on sale i will buy pudding or something else .
it has been demonstrated in multiple studies that seniors with discretionary income tend to spend in a smile shape .
they spend more in the early go go years , then spending falls off a cliff during the slow go years ,then-ramps up again from health care in the no go years .
a lot of price increases are absorbed by what is no longer bought or done …
many seniors dont even need the yearly inflation adjusting the calculators build in.
that is unlike someone raising a familywith spending increasing
so cpi cola adjustments have little do do with personal cost of living regardless
Last edited by mathjak107; 11-17-2021 at 10:05 AM..
Pensions are insured to $50K per year. $50K plus SS is more than adequate for a comfortable retirement.
It's not enough if you were expecting 100K a year.
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Pensions are insured to $50K per year. $50K plus SS is more than adequate for a comfortable retirement if you are debt free and own your own home.
why would you ever say what anyone else needs or considers adequate with no regard for location nor the lifestyle they consider to be as low as they want to go .
would you tell everyone what they should be earning while working too.
most people develop lifestyles and locations based on what they have to work with …
those that earned higher incomes have lines in the sand higher then those with lower incomes .
there is none of us that cant move somewhere cheaper or down grade our lifestyles to lower levels . but we dont because we have lines in the sand we developed below which we rather not change to.
even a paid off home may mean nothing .. my sons real-estate taxes , hoa and insurance are way way more then my rent not even considering if it is paid off .
sorry , but no one should speak for anyone else but themselves
Last edited by mathjak107; 11-17-2021 at 10:20 AM..
colas are based on price changes on goods and services in 1250 different mini economies that make up this country .
it does not consider what you personally use or buy nor how many times you personally buy or use it .
it does not reflect the quality of goods and durability either . higher end goods tend to see bigger price increases but last longer .
it does not reflect out of type substitutions . like if i cant get my no added sugar klondikes on sale i will buy pudding or something else .
it has been demonstrated in multiple studies that seniors with discretionary income tend to spend in a smile shape .
they spend more in the early go go years , then spending falls off a cliff during the slow go years ,then-ramps up again from health care in the no go years .
a lot of price increases are absorbed by what is no longer bought or done …
many seniors dont even need the yearly inflation adjusting the calculators build in.
that is unlike someone raising a familywith spending increasing
so cpi cola adjustments have little do do with personal cost of living regardless
But isn't it better to get more money with a cola than not? With a cola if prices go up you are not that affected. With that extra money you can afford the things you like without facing an ever decreasing income stream. With good health and prescription insurance plus medicare you don't spend more on health care as you age. 5-1/2 years ago I got a hospital bill for $375K and paid $1700 out of pocket. I've been retired for 16 years and our spending habits and life style haven't changed at all. Our go go years were before we retired. Getting a pension was a choice. Having good health insurance is a choice. Spending less than you make is a choice. We have and buy everything that we want and still save 10% of our gross income. Statistics don't govern how anyone will choose to live.
Last edited by bobspez; 11-17-2021 at 10:37 AM..
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