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I received a lump sum settlement when I left my long time employer, so that invested with small amounts from other jobs, and my lifetime savings gives me about 50% of my last salary. With SS it gives us an adequate income stream.
My wife teaches at a private school. She has been there for 30 years. When she retires next year her pension will be $800 a month. This is about 30% of her last salary amount. Is this common? Typical?
If you are getting a pension, how much is it in comparison to your previous earnings?
30 years with added 8 years of military service to come to 38% of my last salary gross. However as TuborgP says in the following quote it is a better comparison to net which really for me equates to about 51%
Quote:
Originally Posted by TuborgP
Depends on the pension plan. Typical for some and not for others. The real comparison is not gross amount but net amounts which might be a heck of a lot closer.
That is a much better comparison T. Great point.
Quote:
Originally Posted by Burkmere
Private pensions are generally much less than he more lucrative public pension plans. Applying your formula to he public agency I retired from, I would receive 78% of the average monthly salary of my final two years. Of course, I contributed a variable percentage of my paycheck each month also...roughly 7% on average.
That is a bit of an over exaggeration and simplification of pensions. Current pension plan offered in private industry are now almost exclusively a 401k plan. Few companies offer the traditional pensions and those that do have a much better plan than a public pension. This is to include the vaunted CALPers whom everyone wants to jump on. The private pensioners that are left are executives that get parachute deals as they leave the company.
In CA teacher pensions can go as high as 85% of the average of the last 3 years you taught. I know teachers who retire with $90k a year pensions for life. You can look at list at transparentcalifornia.com .
I worked for 23 years for a company which started out with a defined benefit plan (pension) then changed to a defined contribution plan (401K) after I worked there for 7 years. Only people over 40 years old and at least 10 years of employment could stay in the pension plan.
From what I learned, people who retired with the full previous pension plan got about 40% of their last salary.
Out of my curiosity, I did some calculations to compare my 'hybrid' retirement benefits with the lucky folks who had the full pension benefit.
Using the 7.57% annuity payout instead of lump sum payment for the 'prior pension plan' amount in my retirement account and apply it to the total contribution by the company (prior pension plan + company match to my 401K), the 'equivalent' pension I will receive when I turn 65 comes out to be ~20% of my last paycheck.
When I did the calculation for my 'equivalent' pension using the total of my retirement fund in this company (401K + prior pension plan amount), I got 50% of my last paycheck.
I do not know the average percentage of contribution of public employee to their pension plan. For my 401K, I had contributed whatever the maximum annual allowable amount averaging about 10-15% of my salaries.
In the end, I did not do too bad in comparison to the folks who had the full pension benefit (50% vs 40%). However, without my 401K contribution, I would be far behind (20% vs 40%).
This is just an example of private pension and 401K plans. From what I have seen, public pensions are a lot more generous then private pensions. In addition, many private pension plans have become the things of the past.
If I had one, I'd feel like a very fortunate man, who could retire right now, and never worry about a thing again!
I understand your feeling, but in reality you well could worry and a lot. Pensions like SS have not been getting a COLA of late worth a hill of beans. In Fact mine had a negative COLA a couple of years ago which technically meant a reduction but being nice they deducted it from the next years minimal COLA. Could have been different with several negative years. Several states are freezing and or doing away with pension COLA.
If you had a pension and took SS at age 70 that is a big difference than if you took it at age 62.
A pension with SS kicking in later along with a sizable portfolio is yes the foundation for a worry free retirement. After over 8 years I can tell you a pension alone is not without sleepless nights.
If I had one, I'd feel like a very fortunate man, who could retire right now, and never worry about a thing again!
Wait a minute! You are only in your early 30. Even if you had worked for the government or a company which offered pension since you got out of college, you would have had less than 10 years of service. I very much doubt that anybody could retire living on the pension they collect after working for only 10 years!
I don't know anyone had suggested this before but if you are envious of people with pensions, why not try to get a job with the government? I have 3 sisters who worked for their states. They started working for the states in their 40's and 50's after getting laid off from private companies. They did not have any connections, just took many state exams and got in on their own merits. They also did not mind getting low-paying starting jobs and steadily moved up by taking more exams.
My understanding is that the Federal hires people based on their qualifications (degrees, work experience) and not on exam scores. I learned that filling the application form and questionnaires are by themselves the 'exams'.
I strongly suggest people who are interested in government jobs should ask friends/acquaintances who are working for the government to learn the tips and tricks in how to get hired.
Just take some actions. Being envious of others gets you nowhere and it's a waste of time.
Mine is about 1/3. But if I live long enough to get SS, it will go up to a little more than 1/2.
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