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View Poll Results: is someone who REs with a pension less FI then someone who REs without a pension
yes 22 21.15%
no 82 78.85%
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Old 03-16-2009, 11:32 AM   #21
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If I choose the 100% survivor income option (i.e. worst-case, lowest payout), it would be about $260 a month at age 55 or $600 a month at age 65 (based on 12 years of service at an old job from 1987-99). It certainly beats a poke in the eye, but it's not really something that would sustain me. It could slightly reduce the amount of investments I need to FIRE, but not that much lower, especially if we have much inflation between now and then.
Thanks - - That's interesting. My tiny federal pension after working about the same amount of time would yield about the same as yours, if I had to take the survivor annuity option. So don't feel bad. We're all together in this.
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Old 03-16-2009, 11:46 AM   #22
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I answered "no" because I assumed all else being roughly equal. Someone who has no pension (or a very small one like me) coming to them needs to have a LOT more of their own savings to FIRE than someone who does.
Actually, this is true whether one has a large or small pension. A pension is just an annuity purchased by the company. As others have said, those with the cash can purchase their own annuity. Regardless of the amount of the annuity, one can only be Financially Independent with other savings -- especially if they plan on Retiring Early. One can have all the cola'd or non-cola'd pensions in the world, but if you're too young for that 'other' annuity called social security, you need other income.

There are plenty of folks who work for large companies today who have no access to a pension, just their 401(k). As we all know, ability to LBYM and save is what allows those who are FIRE to be able to RE.

Some are envious of those who worked for a company that provided them with an annuity at the end of their career. Others are envious of those who have amassed a good amount of wealth. So the question is moot.

I voted No.
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Old 03-16-2009, 11:52 AM   #23
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Thanks - - That's interesting. My tiny federal pension after working about the same amount of time would yield about the same as yours, if I had to take the survivor annuity option. So don't feel bad. We're all together in this.
Of course, mine's not COLA'd and those are the absolute amounts I'll get -- they are in 2020 dollars or 2030 dollars, not 2009 dollars. Still, beats a poke in the eye and it's certainly more than a lot of folks will get.

Oh, and I don't get any retiree health insurance. That's huge, probably more so than the pension, at least for FIREing before 65. [Edit to add -- of course, there's a good chance we'll have nationalized/universal health care by the time I retire, which could make that relatively moot.]
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Old 03-16-2009, 12:06 PM   #24
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I viewed this as a simple fulcrum (seesaw), setting the pension on one end and the investment portfolio on the other. I did not include SS because of the RE factor.
I voted yes only because of the uncertainty of pensions in current times.
If a person has to rely on a pension for the majority of their RE income as opposed to their own investments, then they are more at risk.
Conversely, if a person's portfolio is their only income source for retirement, and things like 2008 happen, then the lack of a pension as backup (until recovery comes around) is the breakpoint.
Obviously, a balanced combo of both is ideal.
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Old 03-16-2009, 12:08 PM   #25
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I voted yes only because of the uncertainty of pensions in current times.
If a person has to rely on a pension for the majority of their RE income as opposed to their own investments, then they are more at risk.
Conversely, if a person's portfolio is their only income source for retirement, and things like 2008 happen, then the lack of a pension as backup (until recovery comes around) is the breakpoint.
Obviously, a balanced combo of both is ideal.
Well, this points out the value of the "three-legged stool" model.

I do agree with this, but because the OP phrased the question in a way that led us to make our own assumptions, I assumed "all else being equal," meaning similar investment portfolio sizes -- and with that, sure having a pension would be more secure than not. But if you assume that someone who doesn't have a pension has saved considerably more in their 401K and IRA plans, that's not *necessarily* a foregone conclusion.
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Old 03-16-2009, 12:21 PM   #26
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Well, this points out the value of the "three-legged stool" model.

I do agree with this, but because the OP phrased the question in a way that led us to make our own assumptions, I assumed "all else being equal," meaning similar investment portfolio sizes -- and with that, sure having a pension would be more secure than not. But if you assume that someone who doesn't have a pension has saved considerably more in their 401K and IRA plans, that's not *necessarily* a foregone conclusion.
That third leg could be book royalties, rental income, part time work, horticulture, lots of different things - most here seem plugged in to the stock & bond markets, but there are those who depend on other income sources as the strong leg of their stool.
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Old 03-16-2009, 12:21 PM   #27
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Of course, mine's not COLA'd and those are the absolute amounts I'll get -- they are in 2020 dollars or 2030 dollars, not 2009 dollars. Still, beats a poke in the eye and it's certainly more than a lot of folks will get.
Mine's not COLA'd either.... y'know.... we get a "diet COLA" which is sort of a no-man's land in between non-COLA'd and COLA'd. I'll qualify to get mine about 10 years before yours, though I am 17 years older than you. Anyway, after those 10 years have passed I will buy you and your DW dinner with the difference.

I don't resent the size of my pension. It was the deal that I made when I took the job. It's not worth it to me to undergo great angst when I had my eyes open at the time I took the job. I had a job with the State of Louisiana prior to this one that would have given me a much larger pension, but I took a bet - - that bet was that Louisiana would go broke, so I quit without being invested in that pension plan and took my present federal job. Louisiana hasn't gone broke but my decision is nobody's fault but mine. With reward comes risk and I was too risk averse to go for that pension.

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Oh, and I don't get any retiree health insurance. That's huge, probably more so than the pension, at least for FIREing before 65.
Health insurance? Now that's another topic. I am grateful for that too. It mean that I can get (and pay for) health insurance from age 62-65, at which point Medicare will take over. Given the mood in Washington, I don't expect there will be a post-retirement pre-Medicare insurance gap for more than another year or two if that. Again, I don't resent the fact that things will change so that everyone will get the health insurance benefits I signed up for and they didn't. I made some mistakes along the way too, but I did the best I could and do not expect any "do-overs". That's life and although some of us have been expecting an impact of the baby boom on health care, they probably just didn't foresee it. At any rate, they didn't cause the market crash that is impacting us all.
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Old 03-16-2009, 12:24 PM   #28
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That third leg could be book royalties, rental income, part time work, horticulture, lots of different things - most here seem plugged in to the stock & bond markets, but there are those who depend on other income sources as the strong leg of their stool.
I'd give an arm and a leg if I could add a stream of rental income to my retirement plans. But I don't know how to fix things, and I am too much of a softie. I would be a terrible landlord.
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Old 03-16-2009, 12:31 PM   #29
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I'd give an arm and a leg if I could add a stream of rental income to my retirement plans. But I don't know how to fix things, and I am too much of a softie. I would be a terrible landlord.
Same here. I'm just not handy. And if you're not handy, you lose too much money to maintenance issues to make rental real estate profitable.
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Old 03-16-2009, 12:37 PM   #30
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Same here. I'm just not handy. And if you're not handy, you lose too much money to maintenance issues to make rental real estate profitable.
Had I only known, I would have decided to pursue a career as a plumber. They make decent money, don't have to pay for an education, and (I think) a hardbitten plumber would probably make a lot of money as a landlord as well.
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Old 03-16-2009, 12:40 PM   #31
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Had I only known, I would have decided to pursue a career as a plumber. They make decent money, don't have to pay for an education, and (I think) a hardbitten plumber would probably make a lot of money as a landlord as well.
And it's pretty hard to replace the plumbing in a house or fix leaky pipes from India or China.
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Old 03-16-2009, 12:52 PM   #32
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And it's pretty hard to replace the plumbing in a house or fix leaky pipes from India or China.
Yeah!!!

And my house would be a lot better to live in. I'd have beautiful remodeled bathrooms, and also that outside faucet on the side of the house wouldn't be drip-drip-dripping all the time. Got to get around to calling a plumber about that.

No "office politics" or other politics to worry and get ulcers about, either.
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Old 03-16-2009, 12:54 PM   #33
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So you do a h**us or a Nords (working title suggestion: steely eyed stalker, deep,deep) or sculpt, or create high buck websites (Retire on $5/day!!), or bcome a renouned pastry chef, or lead tours to Indja or China...
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Old 03-16-2009, 01:02 PM   #34
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Some are envious of those who worked for a company that provided them with an annuity at the end of their career. Others are envious of those who have amassed a good amount of wealth. So the question is moot.
You left out being envious of folks who received both excellent pay and a generous retirement annunity. They're not mutualy exclusive by any means. An example would be teachers fortunate enough to have landed jobs in high tier suburban school districts. Here in "nicer" Chicago suburbs, beginning high school teachers (lucky enough to secure employment since it's extremely competitive) start at $50k+ and end in the low six figures. Then they FIRE on a pension annunity paying 75% of their final salary. And, if they were taking advantage of their attractive salaries, well funded 403b"s.

Just mentioning this as it is possible to have it both ways.
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Old 03-16-2009, 01:05 PM   #35
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So you do a h**us or a Nords (working title suggestion: steely eyed stalker, deep,deep) or sculpt, or create high buck websites (Retire on $5/day!!), or bcome a renouned pastry chef, or lead tours to Indja or China...
I have a friend at work who is about 55 and single. She has taken up a hobby of making stained glass creations, and she is pretty good at it. She is planning to retire and to custom make stained glass items to order. People will pay big bux for a custom made stained glass window, for example. The income from her stained glass will allow her to bridge the gap until she is old enough to start withdrawing from the TSP without penalty.
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Old 03-16-2009, 02:44 PM   #36
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I voted yes. I think the NO pension group is more financially independent (free), but less financially secure than the pension group.

To keep things as equal as possible, assume Mr NP retires with $100m, and Mr DB retires from an insurance company with a pension which pays the exact same amount as the immediate annuity the company would sell Mr NP for $100m. Mr DB has the slight advantage of partial government insurance of his pension.

However, the main difference in my mind is that Mr NP has the freedom to do wise or stupid things with his money. Mr NP can blow it all riding a rocket into orbit, or can spend it running for political office, or can donate it to charity, or can give it to his kids, or can put it all into institutional index funds, or can just wait a few years and then get a better deal on an immediate annuity. Mr NP can basically duplicate Mr DB's lifestyle by purchasing an immediate annuity, but Mr NP is also free to spend his money on lots of possibilities not available to Mr DB, so I think Mr NP is more financially independent.
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Old 03-16-2009, 02:55 PM   #37
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You left out being envious of folks who received both excellent pay and a generous retirement annunity. They're not mutualy exclusive by any means. An example would be teachers fortunate enough to have landed jobs in high tier suburban school districts. Here in "nicer" Chicago suburbs, beginning high school teachers (lucky enough to secure employment since it's extremely competitive) start at $50k+ and end in the low six figures. Then they FIRE on a pension annunity paying 75% of their final salary. And, if they were taking advantage of their attractive salaries, well funded 403b"s.

Just mentioning this as it is possible to have it both ways.
My sister had a great 403B deal, for every $1 she put in,they university put $2 in as a match.......
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Old 03-16-2009, 02:57 PM   #38
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Hmmm - don't we grade on the curve? No pension gets the most gold stars.

Bring out the Four Yorkshiremen and who is the cheapest CB. Go team.

And the real estate landlords are still getting no respect. And I for one shall not mention the 'A' word.

One more time - pssst Wellesley.

Have we got it all covered yet?

heh heh heh - if I had a cola'd pension plus heathcare - I would say - let'em eat cake - er something. Bye the bye - I got old enough for early SS. Snuck in some temp work early in the stretch, non cola pension at 55, let her work one extra year and owned a duplex for a while. What's a little cheating among friends - .
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Old 03-16-2009, 03:30 PM   #39
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My sister had a great 403B deal, for every $1 she put in,they university put $2 in as a match.......
Now THAT I would envy (would have envied)
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Old 03-16-2009, 04:07 PM   #40
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Anymore, guess I don't know what I am and always wondered how I would stack up. Retired at 52 (now in my 21st year of retirement) with a defined benefit pension of just over $1600/month net. Lost all health care 1-1-09. We are both on a Medicare Advantage Plan. No premium in addition to the $96/mo to SS. Social Secutity nets us both $1900/month. All investments are in CD's and provide about $14k/yr. Roughly, that equates to approx $4666/month clear ($56000/yr). No debt except for car lease of $333/mo. Guess it all depends on your life style but I feel like we are doing well. Don't know how I would make out if my company went belly up and the pension went to the government to provide.
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