Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-22-2013, 08:48 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
The advantage of private vs public pensions is that private pensions are not subject to direct raids conducted on behalf of the electorate by those they elect.

Decades ago, when the US Government spent just 5% of our national production, it was probably harder to see that safety net program started with good intentions might threaten the prosperity of our children.



Seeing what we've seen in the US and abroad, I think people will increasingly trust their future to things they actually own and control. The government now assists us (through tax breaks) in acquiring retirement assets that we actually own, but it's true that many folks aren't taking responsibility for their future. Maybe it will take the retirement "failures" of a generation for the lesson to be learned by their children.
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-23-2013, 10:06 AM   #22
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by samclem
The advantage of private vs public pensions is that private pensions are not subject to direct raids conducted on behalf of the electorate by those they elect.
We need to be careful here. SS is not a pension and can be change at will by the politicians. Government and state pensions are the property of the individual. I have a state mandated DC plan and there is no way the state can get at my money, the same goes for the parallel DB plan.
__________________

__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 04-23-2013, 10:11 AM   #23
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by nun View Post
We need to be careful here. SS is not a pension and can be change at will by the politicians. Government and state pensions are the property of the individual. I have a state mandated DC plan and there is no way the state can get at my money, the same goes for the parallel DB plan.
I would add that this also includes plans like a 401K or a 403B. Legally these are treated as pension plans under federal law -- unlike an IRA. This is why there are federal protections for 401Ks, for example, that don't exist (or exist to a limited degree) for IRAs. A 401K is protected by federal pension laws and an IRA isn't.

We often don't think of a 401K as a "pension" because usually, when we say "pension" we mean a defined benefit pension. But in the eyes of the law, a defined *contribution* pension plan like a 401K is very much a pension plan.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 04-23-2013, 11:08 AM   #24
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,359
Private pensions still get raided. They are just raided by management/shareholders/private equity.

Ultimately, I would never truly trust a DB plan unless I had a lot of faith in the specific people running it.

Quote:
Originally Posted by samclem View Post
The advantage of private vs public pensions is that private pensions are not subject to direct raids conducted on behalf of the electorate by those they elect.
__________________
Hamlet is offline   Reply With Quote
Old 04-23-2013, 11:56 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Hamlet View Post
Private pensions still get raided. They are just raided by management/shareholders/private equity.
Oh, yes, that can happen. That's why I wrote:
Quote:
Originally Posted by samclem View Post
. . . I think people will increasingly trust their future to things they actually own and control.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 04-23-2013, 12:01 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,816
Quote:
Originally Posted by Free To Canoe View Post
.... most I cashed in due to poor money management skills. Many think of the 401k as an emergency fund and therefore don't have a real emergency fund established. It is discouraging.
....
One is mistaken if they think the workforce (at least as I view it here) is going to retire on 401k and other retirement plans alone. Most Americans with poor money management skills are relying on the Social Security program for old age survival. What happens when they lose their job because they are not healthy enough to compete? SSA. No SSA, disability. No disability, welfare. Do we really want to talk about no welfare? Better to have them fund SS and at least pay for part of their own retirement than to be a complete burden to society.

I contend that a 401k, even with some matching by the employer is the wrong choice for some people. Unless a person has some saving ability and money management skills, it is usually a losing proposition. I never hear anyone discuss this aspect of retirement saving.
I'll agree that lots of people have poor money management skills. Left entirely on their own, they are likely to reach old age with no savings. As you mention, the US already has a system to deal with that. Social Security provides an income floor to anyone worked and paid SS taxes. Even for low income workers, it's enough to live indoors and buy food in grocery stores.

I can't think of much I'd want the government to do in addition to SS.

Mandatory savings? If you have enough restrictions on withdrawals to protect the fund from the foolish, it looks pretty much like SS.

DB pensions are nice for people who work their entire careers for one employer, especially if they get their maximum earnings late in their careers. That's a small percent of all US workers. People who change jobs frequently find that their DB pensions are cashed out and spent, just like their 401k distributions.

I think it's important the we keep SS, especially for low income workers. After that, those who value deferred rewards will spend more in retirement, those who value immediate rewards will spend more during their working years.
__________________
Independent is offline   Reply With Quote
Old 04-23-2013, 01:33 PM   #27
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
I'd say state and government pensions under 401a, 403b, 457 are probably the safest of all tax deferred accounts. You own them and it's far less likely that your employer will go bankrupt than a private company
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 04-23-2013, 09:41 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by nun View Post
I'd say state and government pensions under 401a, 403b, 457 are probably the safest of all tax deferred accounts. You own them and it's far less likely that your employer will go bankrupt than a private company
Well we will see what happens in Stockton and Illinois. I'd be surprised if pensioners in both places escape unscathed. They just don't have the money.
__________________

__________________
clifp is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 04:27 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.