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Old 07-18-2008, 08:22 AM
 
58,211 posts, read 45,704,358 times
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Quote:
Originally Posted by HappyTexan View Post
Other retirees from the Top 500 firms get pensions and health care although in the last couple of years the price for them is rising.

Workers today get nothing..no pension plan nor health care after retirement. We are on our own with a 401K which will never compare to a pension plan. Big companies have been phasing out retirement benefits for quite a few years now by either increasing costs so much you can't afford it or just plain dropping it.

What I'm worried about is what happens in 20 years when these workers that only have a 401K to retire on starting hitting the retirement age.
Not quite true. Most workers get a 401k plan with company match.
Frankly, I like this because it's MY money and it is not subject to the company changing their pension plan or it being underfunded etc.

You can do just fine on 401k savings and many people over-value the benefit of a pension. Lets say you were going to have a pension that paid 30,000 a year at age 65....the "present value" of that pension might only be 250,000 as it only has to last until death(s). The same employee socking away 6% plus a 3-6% match for 40 years would have A LOT more than 250,000 stored up by that time and convert some or all of it to an annuity duplicating a pension.

A guy starting at 30k and getting 3% raises annually, with 9% contribution (total) and 8% return on his 401k will have about a million dollars in their 401k in 40 years. Their ending salary would be around 95k so assuming a pension of 50k which would you rather have?
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Old 07-18-2008, 08:27 AM
 
58,211 posts, read 45,704,358 times
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Quote:
Originally Posted by evilnewbie View Post
Would the retirees like no pension plans as well? If GM goes bankrupt they get nothing...
Pension plans can be underfunded to some degree but if GM goes bankrupt they do not get "nothing". To those losing their health benefit, sorry, times are tough and the current workers are losing their jobs so perhaps some sharing of the *pain* is in order. This reinforces my philosophy that I would rather rely on my own 401k etc. than the future goodwill of my employer etc.

The current generation of retirees has had the trifecta working for them. Pensions, combined with 401k's for a decent portion of their years so thats gravy and a better social security platform than later generations will see.
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Old 07-18-2008, 09:21 AM
 
Location: Great State of Texas
86,068 posts, read 76,326,317 times
Reputation: 27642
Quote:
Originally Posted by Mathguy View Post
Not quite true. Most workers get a 401k plan with company match.
Frankly, I like this because it's MY money and it is not subject to the company changing their pension plan or it being underfunded etc.

You can do just fine on 401k savings and many people over-value the benefit of a pension. Lets say you were going to have a pension that paid 30,000 a year at age 65....the "present value" of that pension might only be 250,000 as it only has to last until death(s). The same employee socking away 6% plus a 3-6% match for 40 years would have A LOT more than 250,000 stored up by that time and convert some or all of it to an annuity duplicating a pension.

A guy starting at 30k and getting 3% raises annually, with 9% contribution (total) and 8% return on his 401k will have about a million dollars in their 401k in 40 years. Their ending salary would be around 95k so assuming a pension of 50k which would you rather have?
That 8% is not guaranteed and currently 401K's have lost money..some up to 15-20% of their value since last summer.
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Old 07-18-2008, 09:55 AM
 
Location: Londonderry, NH
41,478 posts, read 53,927,238 times
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All the 401k schemes depend on the market staying intact. Not very likely.
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Old 07-18-2008, 10:16 AM
 
58,211 posts, read 45,704,358 times
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Quote:
Originally Posted by HappyTexan View Post
That 8% is not guaranteed and currently 401K's have lost money..some up to 15-20% of their value since last summer.
You can invest in the same type of assets that the pension fund is investing in if that makes you feel any better.

So, change the number to 5% and answer the question.

Would you rather have 50,000 pension starting at age 65 or 750,000 in a 401k?

Pensions aren't guaranteed either. I will take my chances with a 40 year average return and you can wave your hands all you like about single bad years, which will certainly occur. Sit down and look how much a 401k can grow to over 40 years, use your own assumptions.

Currently I'm putting in my 401k about 10% and getting another 6% from the company. I also have 3 pensions from previous employers that will pay me tiny amounts. My 401k is around 250k right now and I'm still a long way out from retirement.
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Old 07-18-2008, 11:05 AM
 
Location: Wouldn't you like to know?
9,114 posts, read 16,174,793 times
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Quote:
Originally Posted by HappyTexan View Post
That 8% is not guaranteed and currently 401K's have lost money..some up to 15-20% of their value since last summer.
Texan, why do you and others continue to data mine and quote performances of certain funds over the past 9 months?

If you invest in equities OVER THE LONG TERM like you should with a diversified portfolio, the past 6-9 months ARE A BLIP IN THE ROAD if you are heavily invested in US large cap funds......

The only guarantees of course are cash like options (CD's, etc), however over the long term the returns are paltry if you compare them to a diversified portfolio of low cost equity/bond funds.....

Please stop scaring people w/o giving an accurate picture of how not to invest.
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Old 07-18-2008, 12:00 PM
 
Location: Great State of Texas
86,068 posts, read 76,326,317 times
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Quote:
Originally Posted by CouponJack View Post
Texan, why do you and others continue to data mine and quote performances of certain funds over the past 9 months?

If you invest in equities OVER THE LONG TERM like you should with a diversified portfolio, the past 6-9 months ARE A BLIP IN THE ROAD if you are heavily invested in US large cap funds......

The only guarantees of course are cash like options (CD's, etc), however over the long term the returns are paltry if you compare them to a diversified portfolio of low cost equity/bond funds.....

Please stop scaring people w/o giving an accurate picture of how not to invest.
I did not quote performance of ANY fund.
I did not tell people to not invest in 401k's. If you look back I posted that I do max out my 401K.
I have shifted my investments as the market shifts after doing research.

The discussion was about 401k vs pension. Pensions are administered by professional investment companies. 401K's are managed by the individual.
There's not a whole heck of a lot of education given to people when they are signed up for a 401K and what that means 30 years down the road.

And this whole discussion started off by me saying that I worry what happens in 20-30 years from now when all people have is their 401K's to retire on..no pension and probably no SS.

Employees see sizable shrinkage in their 401(k)s in Q1 - Financial Week
Pensions Outperformed 401(k) Plans During Last Bull Market, Watson Wyatt Analysis... | Reuters
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Old 07-18-2008, 12:11 PM
 
Location: Wouldn't you like to know?
9,114 posts, read 16,174,793 times
Reputation: 3704
Quote:
Originally Posted by HappyTexan View Post
I did not quote performance of ANY fund.
I did not tell people to not invest in 401k's. If you look back I posted that I do max out my 401K.
I have shifted my investments as the market shifts after doing research.

The discussion was about 401k vs pension. Pensions are administered by professional investment companies. 401K's are managed by the individual.
There's not a whole heck of a lot of education given to people when they are signed up for a 401K and what that means 30 years down the road.

And this whole discussion started off by me saying that I worry what happens in 20-30 years from now when all people have is their 401K's to retire on..no pension and probably no SS.

Employees see sizable shrinkage in their 401(k)s in Q1 - Financial Week
Pensions Outperformed 401(k) Plans During Last Bull Market, Watson Wyatt Analysis... | Reuters
Texan, again why specifically do you think pensions are better than 401k's?

Because its "guaranteed"?

Because someone is managing your retirement money for you?

Because you can lose money in a 401k?


You haven't given 1 legitimate reason why a pension is better than a 401k plan over the long term. I'm really curious what your rationale is....
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Old 07-18-2008, 12:41 PM
 
485 posts, read 1,832,005 times
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A 401K at least belongs to you.

Now, I'm a government retiree and a disabled vet, I don't have this difficulty, and I feel bad for those who do.

But look at the poor souls who have been done by the likes of MCI, or the Union funds looted by criminals.

Retirements can vanish in days.

Best advice-TRUST NO ONE!
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Old 07-18-2008, 06:16 PM
 
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,248 posts, read 22,320,820 times
Reputation: 3587
Quote:
Originally Posted by Oildog View Post
Agreed...unfortunately it will lower the standard of care. I know a number of Canadians who wish they had US healthcare as they are not satisfied with the government sponsored version. But what do you expect when a 'free' service is provided to all.

Save your money folks in case you get sick...you don't want to go to the charity hospital...
It may lower the standards of care and will probably bring about some degree of rationing. Depends on how well it is designed. But at the moment it would be better than what we have now for most people. Employers are getting out of the medical business.
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