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Re: Defined Benefit Vs. Defined Contribution Pension
Old 01-17-2006, 11:38 AM   #21
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Re: Defined Benefit Vs. Defined Contribution Pension

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Originally Posted by LEX
As interest rates have declined over the past five years, defined benefit pension plans are increasingly expensive — as plan sponsors are well aware. Plan participants, on the other hand, often do not fully understand or appreciate how much their defined benefit plans are worth.
I am very much aware of this since this is why I decided 2-1/2 years ago to take my DB pension as a lump sum instead of taking it as a non-COLA annuity either now or later. I am almost 55 - when I was 49, the company's benefit calculations said that the lump sum value at 55 would not even be $100,000. When I took it out at 52-1/2, I was able to roll over $330,000 to an IRA (most of the increase was due to lower 30 year Treasure interest rates and part of it was due to a benefit calculation change in the employees' favor). This rollover IRA has subsequently grown to $460,000.
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Re: Defined Benefit Vs. Defined Contribution Pension
Old 01-17-2006, 07:55 PM   #22
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Re: Defined Benefit Vs. Defined Contribution Pension

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Originally Posted by LEX
As interest rates have declined over the past five years, defined benefit pension plans are increasingly expensive — as plan sponsors are well aware. Plan participants, on the other hand, often do not fully understand or appreciate how much their defined benefit plans are worth. This study has good metrics as to just how valuable the certainty of a Defined Benefeit Plan can be. Their annuity value is at least a rational means to guage their value as they provide important certainty of cash flow in retirement. In August 2000, a deferred annuity for a 60-year-old man that would start paying out $1,000/month at age 65 cost about $74,000. Buying the same annuity today would cost about $145,000 — roughly 97 percent more. The increase was even steeper for younger participants.
The average person getting a DB pension doesnt really have to know how it is annuitized via actuarial methods and with projected interest rates. He just has to know he is getting x amount each year for life, cola or non-cola, thats it.

When we turn on the tap for some nice cool water, do we care where it came from, no, we simply enjoy the drink. Means jack spit to the average Joe, just dole out the bucks, all there is to know. We cant analyze everything, takes the fun out of life.

Jug,

Not to know where the Beavers came from, just be sure to be at Broad to watch them, yummmmmmmy!!!!!!!!!
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Re: Defined Benefit Vs. Defined Contribution Pension
Old 01-17-2006, 08:18 PM   #23
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Re: Defined Benefit Vs. Defined Contribution Pension

I visited the land of civil servants today when I went to apply for Medicare at my local SS office.

If I had had to go to that place day in and day out, I wouldn't have made it to age 30. It was almost like chlorine gas enveloped me when I walked in the door, went through the barrier, read about 100 signs-NO WEAPONS!* NO KNIVES! NO BEVERAGES!, and asked the guard-"Is this the place to sign up for Medicare?

"Medicare? I wouldn't know about that." Or anything else, I daresay.

Ha
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Re: Defined Benefit Vs. Defined Contribution Pension
Old 01-17-2006, 09:26 PM   #24
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Re: Defined Benefit Vs. Defined Contribution Pension

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I visited the land of civil servants today when I went to apply for Medicare at my local SS office.


Ha: Make sure you keep that damn medicare card tucked away, and out of sight.

As in, Ha to "Salsa Girl", "Mid 50's here, but don't feel a day over 40."

"Salsa Girl" to Ha: "Whose Medicare card is that in your wallet?"

If your picture that you sent in a while back was recent, you can probably pull it off.

Jarhead, a fellow "Geriatric"


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Re: Defined Benefit Vs. Defined Contribution Pension
Old 01-18-2006, 09:02 AM   #25
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Re: Defined Benefit Vs. Defined Contribution Pension

The local SS office amazed me. I was the oldest person in the room, this being when I applied for my social security benefits last year. Could all of the people in there have some sort of disability? There were long waiting lines. This must be a method to disguise welfare, which we "reformed" a few years ago.
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