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View Poll Results: Which would you rather have? DB or DC plan?
DB 35 67.31%
DC 17 32.69%
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DB or DC plan
Old 05-29-2013, 08:28 AM   #1
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DB or DC plan

Which would you rather have if you were starting over? A DB plan or a DC plan?

Most of us know the pros and cons so I wont rehash them.
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Old 05-29-2013, 08:56 AM   #2
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To me it would depend on the investment choices available and the ERs of those investment choices. IOW, I'm fine with taking on the investment risk unless the investment choices are duds (which they are in many plans).

If I'm handcuffed on investment choices, I would prefer the DB plan.
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Old 05-29-2013, 09:37 AM   #3
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DC.

I'm assuming typical DB where benefit is based on highest __ years of earnings, non-COLA'd, and employer can shut down the plan at will.
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Old 05-29-2013, 09:40 AM   #4
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I have both a pension and a 401k. If I had to give up one when starting over, I would give up the 401k.
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Old 05-29-2013, 09:44 AM   #5
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final average pay DB plan hands down
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Old 05-29-2013, 12:58 PM   #6
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I chose my employer's DC plan over the DB plan 9.5 years ago because I wasn't sure how long I'd stay in the job. Now that I'm almost at the 10 year vesting threshold I wish I'd chosen the DB plan.

With 10 years employment, at 55 (3 years from now) I'd be eligible for 15% of my salary ($20k) with the first $13k COLA'ed. I will have to get an average annual return of 6% from my DC plan to make it equivalent to the DB plan, assuming I die according to the life expectancy schedule.
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Old 05-29-2013, 01:03 PM   #7
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How about both?? I have a Navy DB plan and assume SS is also by definition a DB plan. Plus I have contributed to 401K plans for 30+ years and am quite happy with them.
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Old 05-29-2013, 01:23 PM   #8
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I wouldn't want to be handcuffed to one job, one career by a DB plan. Things have changed since I started working regarding job longevity. And even if you do have the opportunity to stay at the same job, there are too many horror stories here on the FIRE Forum from folks miserable in their jobs but needing a few more years of DB plan participation before RE. I'd take a portable DC plan and focus on spending my working years in the most enjoyable situation possible, even if that meant changing jobs from time to time taking my DC plan with me.

Stories of folks handcuffed to jobs they hate and that are making them miserable make me cringe. Time is precious and spending years doing something that's killing you isn't a very wise choice, IMHO.
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Old 05-29-2013, 01:28 PM   #9
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Quote:
Originally Posted by nun View Post
I chose my employer's DC plan over the DB plan 9.5 years ago because I wasn't sure how long I'd stay in the job. Now that I'm almost at the 10 year vesting threshold I wish I'd chosen the DB plan.
Those "woulda, shoulda, coulda" deals get ya every time!

My son changed jobs after 10 years at 32 yo. He had a choice between a cash balance portable plan or a traditional defined benefit plan when he started and took the cash balance plan. Therefore he left with a nice check which he rolled into an IRA. With the DB plan, he would have left with approximately nothing, just a DB plan promise of a small, non-cola'd pension payable decades from now.

But that's typical. If you stay at one job for decades, DB usually wins. If you change jobs several times over a career, DC usually wins.
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Old 05-29-2013, 02:05 PM   #10
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If you stay at one job for decades, DB usually wins. If you change jobs several times over a career, DC usually wins.
depends on the vesting schedule - profit sharing plans can require 6 year graded vesting
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Old 05-29-2013, 02:08 PM   #11
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I'd pick the DB plan, but only if it was COLA'd and from the Federal Government.
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Old 05-29-2013, 02:25 PM   #12
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I had the choice and selected DB plan. Very happy with that decision now.
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Old 05-29-2013, 02:57 PM   #13
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I voted even though the question does not have enough info...

As an example... a long time ago I had a DB plan... it gave me 1% per year of work based on my 5 highest years of salary.... but the big gottcha was the payment subtracted your SS benefits!!!

So, lets say you worked 30 years and avg $50K.... you would be entitled to $1,250 per month.... but if SS was say $1,000.... you got a check for $250 from the company... big deal....

I also worked for a company that put 4% of your salary in a plan... but the % went up the longer you worked.... until it hit 15%.... (which, BTW they kept decreasing over the years until I topped out at 8%, I think the max was 6% when I left)....


So, it really matters what the real benefit is as to which I would want...
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Old 05-29-2013, 03:06 PM   #14
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^ I think the plan formula would be 1% final pay times YOS less 1% PIA times YOS so you would only subtract out 30% of PIA in your example or $300; then you would get $950 a month.
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Old 05-29-2013, 03:23 PM   #15
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Quote:
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I'd pick the DB plan, but only if it was COLA'd and from the Federal Government.
That would be me. One civil service DB and 4 yrs from now, one military reserves DB. My TSP balance isn't that big, but enough to draw around 10k annually, if I need/want to. My pensions and TSP withdrawals combined will only allow a $50k net (after tax, medical, life, survivor's). So, good but not exhorbitant. We won't be flying first class to exotic locales. However, we won't have to eat dog food either.
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Old 05-29-2013, 03:26 PM   #16
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DB isn't even an option for 90% of private sector employees (per BLS 2011), and public sector DB plans are under increasing scrutiny, both seemingly unlikely to change. So the poll is just for fun I gather...

http://www.bls.gov/opub/mlr/2012/12/art1full.pdf
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Old 05-29-2013, 03:29 PM   #17
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^ not if enough people start demanding it

I think we are about to be in a situation where private sector employers will be competing for talent (and, the only way to fund retirement benefits quickly to attract such talent is through a DB plan)
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Old 05-29-2013, 03:33 PM   #18
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Quote:
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I'd pick the DB plan, but only if it was COLA'd and from the Federal Government.
Oh yes. I never worked for the Feds but sometimes I envy friends/family who ER from there.
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DB isn't even an option for most private sector employees, and public sector DB plans are under increasing scrutiny, both seemingly unlikely to change. So the poll is just for fun I gather...
Sad, IMO, but true. I'm so thankful for my itty bitty non-COLA’d but "reliable" pension.

I just saw this (sorry if this is a re-post)
http://www.foxbusiness.com/news/2013...ur-401k-lunch/
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Old 05-29-2013, 03:35 PM   #19
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^ yes the penultimate paragraph in that fox story is right on target
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Old 05-29-2013, 03:37 PM   #20
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Originally Posted by Big_Hitter View Post
^ not if enough people start demanding it

I think we are about to be in a situation where private sector employers will be competing for talent (and, the only way to fund retirement benefits quickly to attract such talent is through a DB plan)
Let us know when you've got that organized, and how it works out...
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