For the anti-defined benefit people...

[Big_Hitter]

DB plans provide big key to retirement happiness

http://finance.yahoo.com/news/5-secrets-to-a-happy-retirement-150212406.html

cliffs: "Almost a third of retirees who get less than 25% of their income from a pension or annuity were worried about their financial future; of those who receive 50% or more of their income from such a predictable source, just under a quarter expressed the same anxiety."

 

[dtbach]

Not sure most people are "anti-defined benefit". It's just the way things have gone. I have both but get most of my income from non-defined sources. I don't see things going back to the old days anytime soon.

 

[MichaelB]

Not sure most people are "anti-defined benefit".

+1

Note - the link is to a Yahoo Money web page titled "5 secrets to a happy retirement" They are:

Create a predictable paycheck
Stick with what you know
Find four hobbies
Rent late in life
Keep your kids at arm’s length.

I think the thread title has little to do with the linked article.

 

[REWahoo]

I think the thread title has little to do with the linked article.

+1

Tabloid headline...

 

[Willers]

+1

Note - the link is to a Yahoo Money web page titled "5 secrets to a happy retirement" They are:

Create a predictable paycheck
Stick with what you know
Find four hobbies
Rent late in life
Keep your kids at arm’s length.

I think the thread title has little to do with the linked article.

+1

The article's comments on creating a paycheck seem to be income stream related. That can be from a DB program, but also from a TIPS ladder, annuity, etc. if that stream reduces stress.

I may be in the minority, but my anxiety goes down when I am in control of my funds and my future. I'd love to have a DB program, but would never completely trust it. DM received a letter from her ex-megacorp last month stating "I'm sorry, but we can't meet our obligations and will no longer be paying that pension we promised. Enclosed is your last payment" Talk about anxiety...

 

[audreyh1]

We have a monthly "paycheck" simply by depositing the annual portfolio withdrawal in a high yield savings account, and then having $X amount, enough to cover general expenses, deposited to our bank checking account each month.

 

[dtbach]

We have a monthly "paycheck" simply by depositing the annual portfolio withdrawal in a high yield savings account, and then having $X amount, enough to cover general expenses, deposited to our bank checking account each month.

+1 Pretty much how I do it.

 

[razztazz]

I may be in the minority, but my anxiety goes down when I am in control of my funds and my future.

Probably still in the minority but I feel the same way. I've been telling my fellow retired G.I.s for 20 years "Don't spend it all in the same place." Up until about a week ago private pensions have had some measure of protection by law. They have begun undermining that. Government pensions, at least the non-union ones like the military, have always been up for grabs whether people have thought that way about it or not.

I like having what's mine so I know what I have to work with. Letting someone else have what's mine to be controlled and defined by them is not my idea of financial security.

 

[Greencheese]

I wouldn't say I'm anti defined benefit, in fact I'd love to have one. But those days are past and new stories come out almost weekly saying how those plans are hopelessly underfunded. At least with the money in my pocket I know I have it instead of a vague promise 20-30-40 years down the road

 

[pb4uski]

Not sure most people are "anti-defined benefit". It's just the way things have gone. I have both but get most of my income from non-defined sources. I don't see things going back to the old days anytime soon.

+1 There was a reasons that employers drifted from DB to DC plans and I don't see those reasons changing.

I think the reason for the provocative thread title is that this is the poster who claims that it is very difficult to retire without a defined benefit pension who many have tried to convince that is not true but he ain't listening.

Lump sums are basically a coin flip assuming the lump sum is the true actuarial equivalent of the immediate annuity. If you die before expected (in this case you and your spouse) you get to live in a castle and eat prime rib every night. If you live past expectancy, you get to live in a tent by the river and eat cat food every night.


This is the value proposition of the defined benefit annuity; it's very difficult to retire without one.

(emphasis added)

 

[Big_Hitter]

in hindsight I guess I should have said "it's very difficult to retire anxiety-free without one"

 

[audreyh1]

But many of the of us never had the option of a pension, and yet we managed to retire early anyway. It's not that we are "anti", we simply didn't have the option.

Not saying it was easy either.

In terms of anxiety - actually, I'm OK a with managing our retirement assets. I don't have to worry about a company's financial position. I can always buy an annuity if I don't want to manage the income stream. That's an option for anyone.

 

[Big_Hitter]

I posted a somewhat dated set of statistics from the cbo (or similar) but I don't think holmes read it. I guess I'll have to find it again.

 

[Hermit]

My megacorp paid many billions into DBs the last few years. I think it hurt their performance and stock prices. The rules and regulations of these programs doesn't make it any easier to maintain them. The megacorp stopped the DBs for new hires years ago.

BTW, being on the receiving end, I'm not complaining.

 

[pb4uski]

in hindsight I guess I should have said "it's very difficult to retire anxiety-free without one"...

Which is part of the point that many of us are making, that we are comfortable with risk so are not at all anxious about retiring without a defined benefit pension. A bird in the hand...(lump sum) is worth two in the bush (DB pension benefits).

That's just the reality of today. And even define benefit pensions are not all rock-solid because of overpromising and underfunding.

Are you by any chance a pension actuary?

 

[M Paquette]

Bear in mind that the folks reading and commenting here are a self-selected group intent on taking control of their own retirement. In conversations with folks who are not E-R.org types, like the "work til I die" and the "Gosh, I think my pension plan uses something called Social Security" people, I find that they have no comprehension of how to save and financially plan for retirement.

So it goes. So it goes.

 

[Jack_Pine]

We have a monthly "paycheck" simply by depositing the annual portfolio withdrawal in a high yield savings account, and then having $X amount, enough to cover general expenses, deposited to our bank checking account each month.

Just curious, what is the "high yielding" account yielding?

 

[audreyh1]

Just curious, what is the "high yielding" account yielding?

Currently 0.85%. But you can get up to 1.05% these days. These are FDIC insured high yield savings accounts.

 

[jim584672]

My Megacorp pension was frozen on 12/31/2013. They added a few % a year in my 401k to make up for the loss.

One more reason to retire early.

 

[Walt34]

But many of the of us never had the option of a pension, and yet we managed to retire early anyway. It's not that we are "anti", we simply didn't have the option.

Not saying it was easy either.

Come to think of it that is probably an issue that most don't consider. Without a DB pension coming I seriously doubt that I would have bought an airplane at age 25.

But I still think it is a personality or maturity issue, or something along those lines. Some people just seem inherently unable to defer immediate gratification or save any money no matter their incomes. Why else would so many NFL star players be broke a few years after they have to stop playing? One would think that at least some of them would have gone to see a FA who told them "This level of spending is not sustainable when you can't play anymore. You have to save some money." But they don't, and keep spending anyway. And they go broke.

At the other extreme we have the pizza delivery driver who is on track to pull off ER. I don't know what explains the difference in behavior.

 

[daylatedollarshort]

At the other extreme we have the pizza delivery driver who is on track to pull off ER. I don't know what explains the difference in behavior.

Delayed gratification - the most important factor for success?

I do think maybe some of it might be hard wired.

 

[Mulligan]

+1

Note - the link is to a Yahoo Money web page titled "5 secrets to a happy retirement" They are:

Create a predictable paycheck
Stick with what you know
Find four hobbies
Rent late in life
Keep your kids at arm’s length.

I think the thread title has little to do with the linked article.

Money mag had this article or a very similar one this month. Couple of survey points I thought were humorous. 1) People who had travel or golf as one of their hobbies were happier than ones whose main hobbies were reading, hunting, or fishing. They implied they were isolating hobbies and not as inclined to leading a happy life. 2) Having or not having children had no impact on happiness, but having children living within 10 miles of personal residence did lead to an unhappier one. They speculated forced babysitting.
Pretty funny stuff... So don't live near kids and if you continue to hunt or fish be prepared to take Zoloft!


Sent from my iPad using Tapatalk

 

[razztazz]

2) Having or not having children had no impact on happiness, but having children living within 10 miles of personal residence did lead to an unhappier one.

George Burns once said Happiness is having a large, loving, caring, close-knit family in another city.

 

[ERhoosier]

I think these DB vs DC arguments are rather pointless. Either can be good or bad depending on specifics. Would you rather have a tiny DB from a bankrupt ex-employer or $5Mil in your personal 401K?

 

[clifp]

in hindsight I guess I should have said "it's very difficult to retire anxiety-free without one"

The Detroit autoshow is going on right now. I bet 20 or so years ago, plenty of workers (both city and Big 3) retired mostly anxiety-free. I'd say they've all had plenty of anxiety this century if they were solely dependent on their pensions. So a DB plan doesn't actually give you a worry free retirement, only the illusion.

I wish in Q4/08 and Q1/09 that I had a DB. It was scary to be in 50 with out of date skills and no job, and it would be downright terrifying if I don't have plenty of fat in my budget.

However, the same financial crash that threaten my retirement would have resulted inDetroit like cutbacks in probably 75% of the state, local, and corporate pensions in the country if the market hadn't comeback.