Poll: Does a Pension factor into your FIRE Plans?

[Viking]

DW has a nice federal pension of $4,500/mo, with COLA that she started collecting in Nov. When we're 65, we'll have another $2,000/mo in CPP and OAS (2017 dollars, both with COLA).

Once we're settled in to our retirement home and son is finished university, DW's pension will more than cover base spending.

[Shanky]

A small pension plus any form of subsidized health care is like having another million saved.

[SteveNU]

Non Cola DB pension here that covers ~60% of our expenses. This year we also get a nice subsidy for health care expenses of ~$1100 per month that almost covers our premiums. In the past the company provided subsidized health care insurance for retirees but they stopped this year. Now we buy it on the open market with a subsidy and it actually saved us some money this year!

So between the pension and health care subsidy we cover about 75% of our expenses. When our SS kicks in it will more than cover that last 25%.

[Dwhit]

Another non-pensioner here. Counting on my 60/40 asset allocation.

[Hermit]

Non-COLA pension covers about 80% of what my expenses would be if I wasn't in the middle of building my house and also paying for DS education and living expenses. The late DW's SS covers the rest of what would be normal expenses. At 70, my SS will kick in and keep me about even with spending including taxes. At that time, I will be paying more in taxes than some here spend in a year!

[Cobra9777]

DW and I each have DB pension annuities that cover roughly 60% of current spending. Also, we each have employer-subsidized retiree health insurance, which certainly helps as well. One pension is non-COLA, the other has partial COLA. Rental real estate and dividends from the taxable account cover most of the gap. Investment withdrawals are very infrequent and mainly just cover large discretionary items. When SS starts, we'll need to step up our game, spending-wise.

[DrRoy]

My pension will be 40% of my first year RE budget, but it is non-COLA, so after 30 years of expected inflation it would only be 10%.

[athena53]

Quote:

Originally Posted by Ed B To make up the pension freeze any future retirement benefit we will receive is in the form of defined contribution. I currently receive 2% of my pay in addition to 401K matching funds to make up with the freeze in average pay. In 2020 they will increase that to 6% of pay in addition to matching funds. So in 2020 I can receive 10% of my salary from the company dropped into my 401K account as long as I contribute 8% or more. They will contribute 6% even if we don't participate in the 401K at all. A "free" 6% is nice and all, but at this stage of my life, I like the pension better.

Still, that company is a class act. Many freeze the DB plan and pocket most of the savings. My employer was acquired by a company that had done that (not the same company- years were different) and when we were acquired we weren't eligible for DB so got 6% on top of the company match, regardless of whether or not we contributed anything at all.

I have one pension for $933/month that started at age 60 (4 years ago, no choice as to start date) and one for $900 that I started late last year. I filed for the latter when DH was terminally ill so it was a no-brainer to have him waive Survivor benefits but he was 15 years older anyway so the reduction to the earlier pension for Survivor benefits wasn't much. No COLA on either.

Life wouldn't be much fun if I had only those to live on (especially as inflation eroded their value) but I'm grateful for them both.

[moneyviking]

wife's FERS pension should contribute 30k a year as an extra cushion.

[Ed B]

Quote:

Originally Posted by athena53 Still, that company is a class act. Many freeze the DB plan and pocket most of the savings.....

Athena, I agree. Everyone in our industry did this or something worse to help bring down cost. And once the DB is locked in for all of us stale folks they can reasonably expect an exodus of higher salaried employees who are able to retire. That will bring more costs savi gs since easily 75% of new hires are coming in at much lower salaries with the intent of making current middling salary grades a normal terminal salary grade for the melinials. I expect that if enough people do not voluntarily retire in 2020 that we will see Voluntary Layoffs with 26 weeks severance offered as incentive.

[chilkoot]

My expenses are extremely low. I receive a fairly modest pension but, so far, it's covered all my needs such that I haven't yet had to touch my 401(k).

[nun]

I get a $1600/month COLAed state pension. $120 is taken off for health and dental insurance. It covers just over 50% of my spending and the rest is covered by rental income.

[PandaBear]

Quote:

Originally Posted by Ed B I will have a defined benefit pension that will make up about 50% of our revenue in retirement depending on which survivor option we choose. My company is in the process of freezing the defined benefit pension and moving everyone to defined contribution funds. Anyone hired after 2008 (I believe) was enrolled in defined contribution and will not receive a pension. In 2016 mega-corp froze the income factor when figuring future pension benefits. In 2020 they will freeze the remaining years' of service factor, so my pension benefit will be frozen in 2020. To make up the pension freeze any future retirement benefit we will receive is in the form of defined contribution. I currently receive 2% of my pay in addition to 401K matching funds to make up with the freeze in average pay. In 2020 they will increase that to 6% of pay in addition to matching funds. So in 2020 I can receive 10% of my salary from the company dropped into my 401K account as long as I contribute 8% or more. They will contribute 6% even if we don't participate in the 401K at all. A "free" 6% is nice and all, but at this stage of my life, I like the pension better.

My dh has a similar pension freeze. His salary freeze was last year and I believe years of service will be frozen in 2020. Luckily it shouldn't affect us as dh plans to retire just before that date.

I also will have a pension. Ironically, despite dh currently making about 2-2.5 times my salary, the dollar amount of our pensions will be almost the same.

We are very dependent on these pensions for retirement!

[Danmar]

A bit surprising that over half the respondents have a significant pension. I presume there will be a lot fewer of us as time goes on? Still, nothing beats a good pension if you can get one.

[racy]

Wasn't sure how to answer. I had a mega corp pension which I took as a lump sum. I did not want to depend on the promises of a corporation over 30 years.
It is significant: about a 1/3 of investable assets when I retired.

[Taxman59]

I also had a pension, but it was terminated about 6 years before I retired. I took the lump sum payout and put it into an annuity that guaranteed a 7% growth and plan to take it out as an annuitized payment starting about age 67. I consider it my pension, but it is an annuity.

[FIREmenow]

Yes, but not in a way that I imagined.

We are fortunate to have two non-COLA megacorp pensions available that total about $23K/yr. I was initially planning to wait until the traditional 62/65 ages to start taking them for maximum payments, but after running firecalc and a couple of my own spreadsheets, we will instead be starting them right away at retirement (58).

The reason is that the payment amount for both of them only goes up by a few percent per year past age 55 (for whatever reason) and preserving higher-returning investments by using them in the early years makes more sense cents.

[Choices]

DH retires April 1 and pension starts. His pension should cover 67% of our expenses, with my miniscule pension and SS covering most of the rest. He will start SS spousal toward the end of the year and that should do it! We will look at Roth conversions later this year, after things settle out.
Lotsa spinning plates in the air.

[athena53]

Quote:

Originally Posted by Danmar A bit surprising that over half the respondents have a significant pension. I presume there will be a lot fewer of us as time goes on? Still, nothing beats a good pension if you can get one.

DS still has one (he's 32 and works for a sub of Nationwide) but the insurance industry tends to take better care of its employees than most (I spent my career as an actuary). I'd be very surprised if they kept the plan intact over the next few decades but we can always hope. He started FT with them around late 2008 (worked PT about 6 months before that) so he may already be vested in something.

[fritz]

We retired at 58/57 - in 8th year now. No pensions (did have a a very small non-contributory pension with a shaky company that was taken at 55 as a lump sum and rolled over into IRA).