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Old 04-29-2012, 11:08 AM   #41
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Originally Posted by arebelspy

So the city, then bailed out by the state, then bailed out by the country. So back to my question: do you think they are enough to bankrupt the country?
In the case of an employer that actually properly banked and invested both the employee and employer contributions, in a sound actuarial manner, the risk of bankruptcy is quire low. In agreeing to a pension plan, it is the responsibility of the agreeing parties and their selected pension plan management to properly fund and manage such a plan so as to meet the agreed upon goals of the plan.

If a plan is at risk of bankruptcy, there is almost certainly some irresponsible behavior at the core of the problem.
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Old 04-29-2012, 11:14 AM   #42
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The problem with may state pension plans is that they have not been fully funded for many years. Also the funding sources vary widely form zero employee contributions to the situation in MA where the state pays in 5% and the employee pays a mandatory 9% or 11% depending on salary. To write off all state pensions as unsustainable or outrageously generous completely ignores the differences between plans.
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Old 04-29-2012, 11:26 AM   #43
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What is interesting about the article is the belief that pensions are inherently better. I do not think this is true. Considering how many pensions get clobbered when the firm in question goes belly up. I dont have a pension at all, and Im very glad that I dont. I do not trust corporations to be there when I need them.

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Most pensions pay out as expected. Pensions are really good to have in retirement as they mitigate your longevity risk and allow you to be more aggressive in your AA thus earning higher(hopefully) returns. i am very happy have a pension. Maybe you are making a virtue out of a necessity?
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Old 04-29-2012, 11:45 AM   #44
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Maybe this depends on what you mean by lost. At one time I worked for a megacorp who decided to convert the pension plan to some kind of cash plan. With the right kind of assumptions, the generous future pension we thought we were getting turned into a very small cash balance that had no chance at all of growing into the formerly promised benefit. Our pension wasn't "lost", it was just "different"

And very much less valuable to me and all my coworkers.
The book Retirement Heist gives a good picture of how this was done.
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Old 04-29-2012, 11:47 AM   #45
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What is interesting about the article is the belief that pensions are inherently better. I do not think this is true. Considering how many pensions get clobbered when the firm in question goes belly up. I dont have a pension at all, and Im very glad that I dont. I do not trust corporations to be there when I need them.

Steel
As I have said before, everyone should work for the government. Why limit the bounties of government employment to 20-25% of the population, when we could all enjoy it? Just look out for the traffic jams at 5.
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Old 04-29-2012, 12:01 PM   #46
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I agree ha. Why should the majority of American workers have to toil under the whip of private enterprise when there is room at the gov't table for all?
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Old 04-29-2012, 12:12 PM   #47
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I agree ha. Why should the majority of American workers have to toil under the whip of private enterprise when there is room at the gov't table for all?

I worked in private industry for 1/2 my life. I never saw a whip. One of the reasons I can retire a bit early is that I rolled over my 401K and some vested pension money into an IRA that has doubled at least twice. That is hardly mistreatment by private enterprise.

Oh, government jobs have been going down for years, especially at the local and state levels. This is what many people have wanted to see and it is coming about. So, there won't be room at that table for everybody. In fact, a number of people have had the chair pulled out from under them over the past few years.
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Old 04-29-2012, 12:41 PM   #48
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Most pensions pay out as expected. Pensions are really good to have in retirement as they mitigate your longevity risk and allow you to be more aggressive in your AA thus earning higher(hopefully) returns. i am very happy have a pension. Maybe you are making a virtue out of a necessity?
Not really, I can 'buy' my own pension if/when the time comes. Now, if someone said they were going to provide a pension, and it was not paid for by lowering my income, i would be all for it, but i would not trust it. If you have one, outstanding, but my generation almost never works at the same employer for long enought to make it matter.

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Old 04-29-2012, 12:59 PM   #49
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my generation almost never works at the same employer for long enought to make it matter.

Steel
I agree with this very much. Whatever retirement "help" looks like going forward, it must be portable. Golden handcuffs that tie workers to jobs long after they've discovered they're either burned out, better at doing something else, or whatever, lead to great inefficiencies in our economic system.

Public pensions are notorious for causing folks who would rather cut off their hand than continue at their current job to "retire on the job," just languishing and doing the minimum, because they have so much invested in the seniority-based pension they plan to collect. Private sector pensions used to do that too.......

I vote for 401k's and SS for everyone with no other pension system. Folks should work where they want based on current compensation and their own current career preferences and not because they already have many years invested in "the pension."
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Old 04-29-2012, 08:21 PM   #50
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I am thrilled to have a DB pension, even though it is not indexed. It is one leg of our retirement plan-the other two legs being personal savings and SS.

Best decision I made was to not accept my employers offer to migrate from the DB plan to the new DC plan in 2000. I remained in the now closed DB for another 10 years.
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Old 04-29-2012, 08:36 PM   #51
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I vote for 401k's and SS for everyone with no other pension system. Folks should work where they want based on current compensation and their own current career preferences and not because they already have many years invested in "the pension."
It would be nice if the Government opened up the TSP to everyone. I can't imagine the cost would be that high. As it stands now, many employees are paying such high fees that it is barely worth the tax break. Others have no access to a 401k/457 type plan.
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Old 04-29-2012, 08:40 PM   #52
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I am thrilled to have a DB pension, even though it is not indexed. It is one leg of our retirement plan-the other two legs being personal savings and SS.

Best decision I made was to not accept my employers offer to migrate from the DB plan to the new DC plan in 2000. I remained in the now closed DB for another 10 years.
You gotta love those 3 legged retirement stools as they are getting harder to find. I have a leg (pension) and a stub (savings), so I sure hope that one leg holds up!
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Old 04-29-2012, 11:17 PM   #53
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The average monthly SS retirement check in March, 2012 was $1232.
For a couple that's about 30k and I think that's about what wife and I can expect based on our statements. While it's not a lot of money, one could live quite well on that amount (assuming housing is paid for). We've been tracking our expenses and if you exclude housing and healthcare, we are definitely under 30k / year.

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I HOPE it is not bad.

For several reasons, we are not in as good financial shape as we could be at this age.

In order to avoid disaster, I do have to eliminate all debt before we get there, though.
For us dealing with mortgage debt is the primary obstacle to ER (we live in a very high cost of living area).
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Old 04-30-2012, 06:20 AM   #54
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This is the 800 lb whatever in the room, that nobody wants to admit.
These government COLA pensions.....who agreed to it? Not the tax payer...but the crooked, union bullied, politician...to get re-elected. These pensions are bankrupting the local systems.. What would it cost to purchase this benefit in the open market? Do private firms offer this? Why not? Major issue in the next 10-20 yrs....how to fund these rich pension obligations made by corrked politicians.
In our case that plan had been in place since about the mid '60's and there was no union at the time. The union came much later, after years of either no raises or 2% raises in times of double-digit inflation while private industry types were getting double-digit annual raises.

So what is happening now is that the local government that I worked for back-loaded the expenses and is now paying the piper. Frankly, I think that's fair.

And some private companies did offer DB pensions at the time and again these were changed after the inflation of the '70's-'80's and it became apparent how much they would cost. And government changed too, albeit more slowly.

So this too shall pass.
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Old 04-30-2012, 06:35 AM   #55
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Hey! I like rice and beans! (Of course, yummy sausage makes the dish!)

Actually, I suspect they will be taking the "2 big macs for $3" coupons to the clown house because so many don't have a clue how to cook economically - never mind nutritionally.
Ooooo, burn! But I think you nailed it about using Micky D's.
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Old 04-30-2012, 07:05 AM   #56
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OK, most are unprepared for retirement, yet folks still keep retiring somehow just like they always have. How is that possible? (That's a rhetorical question, but fill free to answer.)
I and my wife have always had respectable incomes which in turn meant we have had a nice lifestyle and could afford to save more.
Lower-paid workers no doubt could not have saved as much, but also probably had a different lifestyle. Their retirement savings lower the average, but they might enjoy their retirement just as much as higher wage-earners, based on their pre-retirement lifestlye.
My father fit this description. He never made a lot of money, had a modest retirement lifestyle, and was 100% happy in his retirement.
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Old 05-01-2012, 06:35 PM   #57
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Growing_older,
I had a similar experience. 15 years in a DB plan were converted into $25K into a 401K account in 2005. I could have kept the DB plan if I was 50 or older at the time, but I was a few years younger than that. I would have 23 years in that plan right now if this didn't happen. I have work buddies retiring early with 25-30 years in this plan. They are getting $2K/month pensions, or $250-300K buyouts.

JP
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Old 05-01-2012, 07:10 PM   #58
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Mom is living the same and w*rks 5-10 hrs to keep busy. She saves her $600/mo SS for a rainy day.
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Old 05-02-2012, 07:58 AM   #59
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Ms G and I paid ourselves first. We used every tax advantage benefit available that made sense. Even if an employer defined benefits plan wasn't right for us, we would take 15% and auto invest in a VG fund. When we paid off our home early, we just auto-invested the same amount into VG.

Worked for us.
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Old 05-02-2012, 09:31 AM   #60
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It's so easy in theory...

From the day you start working, live on only 80% of your take home pay and put the other 20% into retirement (if you start at your first job you'll likely never notice the difference). Don't touch it unless you're terminally ill and even then you'll see examples where this isn't smart.

Then you'll have more money than you know what to do with by age 60

...but, in practice people fail horribly at this.
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