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Defined Benefit Plan impact on RE
Old 01-10-2006, 02:41 PM   #1
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Defined Benefit Plan impact on RE

We all know that DB plans are surely a vanishing part of the retirement scene.* However, many employees and retirees are still part of a DB plan, either as a current beneficiary or a future beneficiary.

Fewer and fewer employees these days have a vested interest in a DB plan, however those who do have such a vested interest in a DB plan have a valuable asset indeed!

Forgetting about SS for the moment, what percent (%) of your retirement expenses (or projected expenses)* are covered by a DB plan (or, for non-retirees, how much will be covered by a DB plan) in which you have a vested interest ?

401(k) plans were initially structured to be retirement suppliments to pension plans (DB plans), but their nature has changed drastically over the last 10 years.* They now are the main retirement vehicle, often the only retirement vehicle, of many/most workers.

What percent will your 401(k) or 403b retirement investment plan play in your total retirement income?
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 02:47 PM   #2
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Re: Defined Benefit Plan impact on RE

My stats depend on what part of retirement we are talking about. Early, middle or late. The answer changes for each phase but to greatly simplify my numbers would be more or less:

Pension: 25%
401(k); 50%
After Tax: 25%

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 02:50 PM   #3
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Re: Defined Benefit Plan impact on RE

I'm figuring about 25% from DB pensions (self's and wife's), about 15% from SS when it kicks in, and the rest via SWR.

I'm conservatively planning to make do on the SWR if we have to.
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 02:56 PM   #4
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Re: Defined Benefit Plan impact on RE

I have an ESOP that the employer contributes to each year. No guaranteed payout, just whatever the account is worth when I retire.

ESOP-10%
401k (for me+wife) - 50%
IRA's/Taxable accounts - 40%

approximately. We max out 401k contributions and get a match of 4% (me) and $3000 (DW).

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 03:00 PM   #5
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Re: Defined Benefit Plan impact on RE

Quote:
Originally Posted by SteveR
My stats depend on what part of retirement we are talking about. Early, middle or late.
Same here. Right now it's 100% after tax savings, but over the long run I project it to be:

After tax savings:10%
Pension: 5%
SS: 30%
SWR: 55%
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 03:01 PM   #6
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Re: Defined Benefit Plan impact on RE

For both of us together:

~ 45% taxable accounts (we had little or no 401k matching, plus a large emergency fund, plus some stock options panned out)
~ 30% Social Security
~ 20% IRAs
~ 5% DBP
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 03:19 PM   #7
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Re: Defined Benefit Plan impact on RE

My DB plan plus my DW's cover about 95% of our regular living expenses. Only things not covered are extras like vacations.

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 03:48 PM   #8
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Re: Defined Benefit Plan impact on RE

I agree with SteveR, it will change over the course of retirement. I'm 40 now and cannot draw until 65. I have listed the % of present value at 65 anticipated at that time, assuming I am able to ER at 45.

80% 401K/IRA's/Taxable
10%Taxable Money
DB
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 03:50 PM   #9
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Re: Defined Benefit Plan impact on RE

Sticky fingers

I agree with SteveR, it will change over the course of retirement. I'm 40 now and cannot draw until 65. My DB has been suspended and grows with inflation while I work. After ER, inflation may ravage it. I have listed the % of present value at 65 anticipated at that time, assuming I am able to ER at 45.

80% 401K/IRA's/Taxable
10% SS
10% DB

If I need either SS or Db to survive in retirement then I count as a failure.

job

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 04:04 PM   #10
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Re: Defined Benefit Plan impact on RE

Great topic, I was just looking at the numbers today and had thought of posting a similar question. I guess I was lucky to get in on two DB's for me and one for the wife. Combined total will cover about 80% of our expenses. The trick will be funding the gap between age 55 and drawing on the DB's and SS. When the SS for wife and I kick in, we are at 300% of estimated expenses.
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 04:18 PM   #11
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Re: Defined Benefit Plan impact on RE

I had both a DB pension and a 401K from a major oil company* DW only worked the first two years we were married so she doesn't even have SS on her own.

DB (rolled over into 401K as a lump sum)* - 25% (small since I left at 50)

401K - 61% (first 7% was matched 1 to 1)

Personal IRA - 4%

Aftertax - 11%
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 05:21 PM   #12
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Re: Defined Benefit Plan impact on RE

age 49-62, 1993 -2005:

roughly 40% Norwegian widow dividend stocks
60% defined non cola pension

expected age 62-84.6. 2006 till
22% non cola defined pension and declining.
30% early SS
12% Norwegian widow stocks
36% IRA @ 2% SWR and rising.

Trying to lighten up on cheap bastard and throttle up a tad. Also a small amount of Roth - in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.

Dat's da plan - wonder how life will deal out the cards.

heh heh heh

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 05:29 PM   #13
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Re: Defined Benefit Plan impact on RE

Quote:
Originally Posted by unclemick2

...Trying to lighten up on cheap bastard and throttle up a tad. Also a small amount of Roth - in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.

Dat's da plan - wonder how life will deal out the cards.

heh heh heh
That is the crux of the matter. No one, well almost no one, knows when your number is up. All we can do is plan for the longest reasonable life and hope our money runs out the same time we do. The "sleep at night factor" is the buffer between eating cat food because you guessed wrong or leaving some money on the table.

I think the worst thing would be to deny yourself so much to have a very fat buffer and then die with a ton on the table. You sure as @ell can't take it with you so at some point one has to say.... "Ok lets spend some more on what makes me happy."
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 05:32 PM   #14
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Re: Defined Benefit Plan impact on RE

My wife & I have DB plans which should equal 100% of basic expenses, not counting younger son's (who is in high school now) college costs. Our TSP(401k)/403B, IRA, Roth, dividend stocks and credit union savings are to play with.
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 05:47 PM   #15
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Re: Defined Benefit Plan impact on RE

My DH DBP covers all our living expenses, plus medical. Our savings, IRAs, etc. will be the safety net.
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 05:57 PM   #16
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Re: Defined Benefit Plan impact on RE

Quote:
Originally Posted by unclemick2
in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.
You stick around long enough, you'll live forever. Or is it "4ever" with the 15 year old girls in missoula?
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 06:12 PM   #17
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Re: Defined Benefit Plan impact on RE

No DB plans at all. About 15% of our current retirement assets are in 401k and about 1% in IRAs. All the rest in post tax accounts.

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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 06:27 PM   #18
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Re: Defined Benefit Plan impact on RE

100% from age 60-62.* After 62, ss kicked in and percentage dropped to (estimate) 75%. Tricare covers medical.* All investment gains are re-invested.
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Re: Defined Benefit Plan impact on RE
Old 01-10-2006, 06:47 PM   #19
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Re: Defined Benefit Plan impact on RE

My DBP was frozen at $21k when I was downsized in '98...

Estimate 401k will provide 2/3, SS will provide 1/3. Health insurance costs will be shared by myself and megacorp, assuming that doesn't disappear...
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Re: Defined Benefit Plan impact on RE
Old 01-11-2006, 08:11 PM   #20
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Re: Defined Benefit Plan impact on RE

DB 0%
401(k) 14%
After tax Savings 86%
SS 0% (will be ~20 years from collecting at time of retirement with any luck)

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