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Old 08-01-2011, 02:20 PM   #41
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Oh man 36 years CSRS.... I am jealous.
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Old 08-01-2011, 02:35 PM   #42
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I'm not understanding how those who did (or will get) a pension didn't see the point in calculating the payout until close to retirement. ... I want to know the full financial picture when determining how large our investments have to be to retire with a 95% success rate.
Sure, if you're deciding how much spare cash to invest. But some people don't have spare cash in the run-up to retirement. I didn't. There's no point in discovering that you need to save more for retirement if you don't have anything to save. It would just make you sad.
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Old 08-01-2011, 02:52 PM   #43
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Most Americans do not have pensions, .........
Is this true if you include all government workers, military etc?
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Old 08-01-2011, 02:56 PM   #44
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Most Americans do not have pensions, and in addition, if the check comes every month, (retired)the pensioner doesn't really care about all that other stuff.........
I agree. For most folks (those in non-governmental j*bs, it's a mute point) the word pension means nothing at all.

I retired from a company that had a union (I was white-collar) and the union folks knew exactly what their pension would be. That's because they voted on a new contract every 2-3 years (depending on economic cycle) and everybody got the same monthly amount in retirement, per the contract.

If there was any misunderstanding, it may have been in the SS offset that was standard in any contract. That is where the pension would be reduced at age 62, with the assumption that the union folks would apply for SS at that time, and the total income would remain the same.

On the white-collar (e.g. "company", not necessarily "management" side) with no pension (eliminated in the early 80's, replaced by a 401(k), with company matching), we were well aware of our situation and the need to provide for ourselves. Of course, we had the few "grasshoppers" who spent all (and more) than they made, but preparation was up to us. Something much different than my parents/grandparents (who were in unions) ever had to worry about.

OTOH, I feel that in my case, I turned out (financially) much better off in retirement since I was forced to plan for my own retirement future. Additionally, I don't have to worry about (like my FIL/BIL) reduction in retirement income after thir respective companies were closed down after many years, and their pensions were taken over by the PBGC.
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Old 08-01-2011, 04:34 PM   #45
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Sure, if you're deciding how much spare cash to invest. But some people don't have spare cash in the run-up to retirement. I didn't. There's no point in discovering that you need to save more for retirement if you don't have anything to save. It would just make you sad.
I understand now.
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Old 08-01-2011, 06:41 PM   #46
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Originally Posted by Alan

Is this true if you include all government workers, military etc?
Alan, in another thread recently a poster had a research article showing a little under 20% of Americans have a pension, with 7% of private workforce having one, down from around 70% about 30 years ago. As far as percent of people who ARE currently retired AND have a pension, I don't know if I have ever seen such a survey.
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Old 08-02-2011, 01:51 AM   #47
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I'm not understanding how those who did (or will get) a pension didn't see the point in calculating the payout until close to retirement.

While my pension will be relatively small at age 55 (about $1300/month + COLA) I calculate it yearly and plug the number into FireCalc. I want to know the full financial picture when determining how large our investments have to be to retire with a 95% success rate.

But then I'm a planner...always have been, always will be.
Waiting until relatively close to retirement to calculate a pension payout really doesn't surprise me much. A person early in their career may not even stay with the same employer until retirement, and even if they do, how good an idea do they have of what their top salary will be (or top two years or five years or whatever), so many years in advance? If you have only a very rough idea of the top salary, you don't really know how much the pension is going to be. Even though I am within two years of my target retirement date and expect to stay in the same pay grade for the rest of my time with the City, both the "official" pension estimates I got from our retirement system just last year, and the ones I did myself using the website calculator at about the same time, are now invalid, because they used assumptions based on the COLA provisions of our old contract, which are no longer in effect. I am thinking about taking one of the "lump sum + reduced benefit" options, and even the official estimates use my accumulated contributions at the time I requested the estimate, not a projection of what they'll be when I retire. In the meantime, the COLA provision has changed, and so has the employee contribution rate, both of which will affect my accumulated contributions at the time I retire—and when the total accumulated contributions change, so does the amount the monthly benefit is reduced by, if I take the lump sum.

Since, as in my case, enough can change even in the last few years before retirement to invalidate estimates made prior to that time, I don't think it's really all that useful for employees who are still a decade or more away from retiring to get them.
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Old 08-02-2011, 03:53 AM   #48
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Alan, in another thread recently a poster had a research article showing a little under 20% of Americans have a pension, with 7% of private workforce having one, down from around 70% about 30 years ago. As far as percent of people who ARE currently retired AND have a pension, I don't know if I have ever seen such a survey.
Thanks for that. Pretty bleak prospects for many.

There was a report recently here in the UK that 2 thirds of working folks in the private sector (aged 16 - 64) were not enrolled in a pension plan. It recommend looking for ways to get this % higher by getting pension schemes to be better understood, and having the default being auto-enrollment so that folks have to opt out rather than opt in to a pension scheme, otherwise the next generation of retired people are going to be much poorer than the current retired population.

Millions face pension poverty as 'golden' era ends - Telegraph

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Last year, only 36 per cent of those aged between 16 and 64 were actively contributing to a private pension, the report states. Over the past 10 years, the proportion of men saving into a pension has fallen from 49 per cent to 38 per cent, while for women it has dropped from 36 per cent to 33 per cent. Lord McFall warned that although millions of workers would be enrolled automatically into workplace pension schemes from next year, up to nine million “may still fall through the cracks” by opting out.
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Old 08-02-2011, 11:04 AM   #49
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Alan, in another thread recently a poster had a research article showing a little under 20% of Americans have a pension, ....
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Pretty bleak prospects for many.
I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

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Old 08-02-2011, 02:04 PM   #50
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I retired from a company that had a union (I was white-collar) and the union folks knew exactly what their pension would be. That's because they voted on a new contract every 2-3 years (depending on economic cycle) and everybody got the same monthly amount in retirement, per the contract.
Yep. I think that one excellent way to get people to understand is to let them vote.
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Old 08-02-2011, 02:27 PM   #51
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Standardization or not, the concepts still work the same way. Even if they didn't, I guarantee if I was spending $5-10k/year on something, you can be damn sure I'd understand every single facet of how it worked.

In regards to pensions, I wouldn't trust anyone to set aside money better than I can. Give me the money now and let me figure out how to spend/save it...there are no guarantees a pension will exist in the future, but money in my pocket today is real and tangible. Same thing applies to SS, but I don't want to derail the thread. Back on topic....

Just started to read this thread... but did not go to the first post...

When it comes to health care insurance I doubt anybody can understand 'every single facet' of how it works....

I am finding out that my insurance covers one kind of diabetes medicine and equipment but not another.... and I can say that I read a LOT on this plan (I am responsible for the purchase decision for out company) and did not know this aspect...
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Old 08-02-2011, 02:34 PM   #52
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Originally Posted by ERD50

I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50
30 years ago people beginning their career with a pension probably weren't thinking in terms of funding ratios and solvency of pensions (if they were even thinking about their pensions at all). In today's world ERD50, you may very well be spot on. Drawing a pension now, the train has left the station for me, I won't know if it was the best choice until I die, or the pension gets reduced or eliminated. Whichever comes first will determine whether it was a success or failure for me!
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Old 08-02-2011, 04:18 PM   #53
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I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50
I would agree with you - non-union employees (white collar especially) need to move around to get ahead these days. It used to be "stay no more than 5 years without movement", but now I hear that it is acceptable to stay no more than 2-3 years w/o movement. I moved around (literally and figuratively) to further my career.

Vesting in pensions used to be +/- 10 years until they started throwing people out around 8-9 years for nothing more than improving bottom lines. Pensions used to be an enticement for employees to stay with a company - now you are hard pressed to find one (where you'd really want to work) offering one anymore. Even the big ones have held back contributions to employees 401ks in recent past...

Although I am retired, I would like to see every employee required to set up a standardized individual retirement account with a regulated financial service when they first start their careers. Just like a Social Security account - it would force people to confront their eventual retirement and plan for it accordingly by supplementing future Social Security. You would control your own retirement destiny. Employers would be required to submit any type of voluntary contributions to each employee's account - not their own stock. Forces them to let go of control of their portion (get rid of unfair vesting scheduling). Financial services would be required to provide you with an annual retirement payment schedule based on your retirement funds, similar to what we used to get from Social Security. Today's financial services companies are only interested in getting your money, and not in any detailed guidance with your personal retirement. I feel the current 401k, IRA, Roth, etc, fall far short of giving those with no real interest in investing or their own retirement plans, a reason to get involved. And no - it would not be a locked-in annuity account from an insurance company - you would be in control and at liberty to switch companies (force competition).

If it were possible - would like to see everyone required to purchase their own health insurance also. If everyone handled their own retirement and health care - they would not be tethered to any employer programs that hobbled their advancements through life (i.e. losing health care coverage at the wrong time, or losing employer retirement money). Just a pipe dream...
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Old 08-02-2011, 04:21 PM   #54
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I'd take a different view of that. Better to NOT have (the promise of) a pension and plan accordingly, then to HAVE (the promise of) a pension, when that promise can be (and has been) broken. How fully funded is the PBGC? How much faith do we have in that over the next 30 years, when we just heard threats that SS checks may not go out?

You're going to pay for that pension one way or another, I'd rather trust that money to myself, than some entity that may be bankrupt 30 years down the road when I need that money.

One in the hand is worth two in the bush.

-ERD50
I absolutely agree with you, that for you and for most on this site, having no company pension scheme or opting out of the one on offer, will work out better.

However, as the report points out, too many folks make no other provisions. Just like the title of this thread, they don't understand their pension scheme, or understand what it means not to have one.
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Old 08-02-2011, 04:26 PM   #55
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Originally Posted by dgoldenz
Standardization or not, the concepts still work the same way. Even if they didn't, I guarantee if I was spending $5-10k/year on something, you can be damn sure I'd understand every single facet of how it worked.

In regards to pensions, I wouldn't trust anyone to set aside money better than I can. Give me the money now and let me figure out how to spend/save it...there are no guarantees a pension will exist in the future, but money in my pocket today is real and tangible. Same thing applies to SS, but I don't want to derail the thread. Back on topic....



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Just started to read this thread... but did not go to the first post...

When it comes to health care insurance I doubt anybody can understand 'every single facet' of how it works....

I am finding out that my insurance covers one kind of diabetes medicine and equipment but not another.... and I can say that I read a LOT on this plan (I am responsible for the purchase decision for out company) and did not know this aspect...
I said the same, but when he said he was damn sure that he would understand what he was buying (health insurance, and he sells it for a living) I let it go. Figured those people he sold, that didn't understand their policies, were taking it out on him for not explaining the unknown when it came back and bit them...
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Old 08-02-2011, 07:52 PM   #56
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Although I am retired, I would like to see every employee required to set up a standardized individual retirement account with a regulated financial service when they first start their careers. Just like a Social Security account - it would force people to confront their eventual retirement and plan for it accordingly by supplementing future Social Security. You would control your own retirement destiny. ....

If it were possible - would like to see everyone required to purchase their own health insurance also. If everyone handled their own retirement and health care - they would not be tethered to any employer programs that hobbled their advancements through life (i.e. losing health care coverage at the wrong time, or losing employer retirement money). Just a pipe dream...
I agree, and unfortunately, I have to agree with your last phrase in that quote.

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I absolutely agree with you, that for you and for most on this site, having no company pension scheme or opting out of the one on offer, will work out better.

However, as the report points out, too many folks make no other provisions. Just like the title of this thread, they don't understand their pension scheme, or understand what it means not to have one.
Agreed. What I'd like to see is far more education for the average Joe/Jane regarding this. It isn't rocket science. If it was presented in bite-size chunks, I'm certain that most people would understand what they need to do to fund their retirement.

Personally, I was probably 'in the dark' over most of my career. I knew there was a formula, and it was what it was. I couldn't do anything about it (other than work to get raises), so I didn't spend much time thinking about it. As I got closer to retiring, I got more involved. It's a non-cola pension, so after 20 years it won't mean much at all. But I do vaguely recall that the line was that at age 65 with 35 years in (or something like that), the company pension plus SS should get you to 80% of your 5 year average income. heh-heh - they never mentioned (nor did I think about it in the early days) that the non-cola effect would be huge 20 years down the road.

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