Poll: Does a Pension factor into your FIRE Plans?

[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]

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]

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).

 

[arky]

I am surprised at the high percentage (at least of those responding) of pensions. I am fortunate, my private non-COLA pension has covered 90% of all my expenses for the nine years I've been retired.

 

[LuckyDog]

My pension is currently more than 25% of our budget. It is non-cola so will become less meaningful as times passes. SS will kick in at age 66 and that will also make it a smaller part of our budget.

 

[GalaxyBoy]

I voted "no pension," although DW has a small pension that barely covers her health insurance premiums. Probably equal to ~10% of our budget.

Maybe I should have voted <25% but still meaningful.

 

[Shanky]

With Health Care being $1000 - $2000 a month for Pre Age 65 couples, I am surprised at how many can cover all expenses with a modest pension. I assume some of the respondents also have subsidized health care. Our HC premiums just about exhaust our modest pension.

 

[pacergal]

Yes, DH and I both have COLA pensions with 100% survivor. (have combined >60 year govt service) They cover our expenses fully at this time.

 

[Huston55]

An observation.

I'm glad this pole/thread was done. I have to say that I'm surprised that almost half of the respondents have a significant (>25% of income) defined benefit pension. The sense I've had from reading various threads/posts over the years is that the number would be much smaller.

 

[JohnnyBGoode]

An observation.

I'm glad this pole/thread was done. I have to say that I'm surprised that almost half of the respondents have a significant (>25% of income) defined benefit pension. The sense I've had from reading various threads/posts over the years is that the number would be much smaller.

+1

I have noticed how many times pensions are mentioned here in general discussions and realized that didn't match the prevailing trends about the number of (non-SS) pensions going down. The polling numbers seem to bear this out - we have a disproportionate number with pensions here (and good for them!)

The long-term implications seem kinda grim though - FIRE in this day and age is already pretty rare, even with some (non-SS) pension help. Without pension help it stands to reason that FIRE would be even rarer. Just shows that our kids and grandkids will have to be even more dilligent about LBYM and intense savings.

 

[Nature Lover]

I have two modest COLA'd pensions. In total, they cover living expenses and a little extra for now.

 

[erkevin]

Currently, my pension and wife's salary cover about 140% of expenses. This allows up to be still putting away money. However, when she retires (2-3 years) and we have an additional health insurance premium to pay for, plus normal inflation, my financial projections put us in deficit spending about two years before SS kicks in. At this point, the money we are squirrelling away will be necessary. Very grateful we have a significant emergency fund

 

[Teacher Terry]

Although, I am grateful for our pensions I wish that our healthcare through the state was more affordable. It went up to 11.5k/year for our HMO. We will switch to the PPO in July at half the cost and hope that the larger out of pocket expenses don't take all the savings. We purposely worked for the state for the pensions. I saw how much they helped my parents retirement. We also took smaller amounts to have the 100% survivor benefit. My Mom lived so long that she used up all their savings but was able to live fine on the pension.

 

[Music Lover]

My govt. COLA pension will be my only source of income (begins in May), and will eventually be supplemented by OAS and will easily cover my expenses which will be about 2/3 of my total income. Until then, I'm living on savings.

 

[Meadbh]

My govt. COLA pension will be my only source of income (begins in May), and will eventually be supplemented by OAS and will easily cover my expenses which will be about 2/3 of my total income. Until then, I'm living on savings.

IIRC you were a federal government employee. Just wanted to mention that I had a very positive experience at the passport office this week. In fact I recognized the security guard from my last visit five years ago. Everyone was extremely pleasant and helpful despite a big crowd. Kudos where kudos are due. Enjoy your pension!

 

[Music Lover]

IIRC you were a federal government employee. Just wanted to mention that I had a very positive experience at the passport office this week. In fact I recognized the security guard from my last visit five years ago. Everyone was extremely pleasant and helpful despite a big crowd. Kudos where kudos are due. Enjoy your pension!

I'm glad you had a good experience...not all of us are/were slackers!!

 

[bada bing]

I voted: Yes, less than 25% but still meaningful. My current employer has an active pension plan that would currently be worth ~$1500 a month at age 65.

I work in the "upstream" end of the oil business, in oil and gas production. I am an hourly level technician and have always worked directly for a "major", not as a contractor. The oil majors are some of the last hold outs offering pensions in the private sector. I have actually vested in 4 separate pensions over the years. The oil biz has been rocky, and I've been "sold" twice and severance packaged out twice. I have lump summed two of those pensions - they didn't amount to much, about $100K lump in total. I still have an old micro pension ~$200 a month non-cola at 65 and I am still accruing credits with my current employer.

My current pension is a bit of an odd duck. It is a cash value plan, the company contributes to my account quarterly and the contribution amount is set by tiers. Tiers depend on age and years of service. I currently get ~10% of pay and I am one tier below the top. The account balance grows at a guaranteed floor of 5% or the 30 year treasury rate if greater. Once I leave the company, I can elect to leave the lump growing for as long as desired, then lump sum out at any time after or convert to a non-cola annuity at the prevailing rates. There is a lot of flexibility built into the plan, but a lot of opportunity to screw up as well. The pension plan (called a RAP, or retirement accumulation plan) is managed by Fidelity. Fidelity also manages the company 401K, which is a separate plan.

My intention when I retire in 2020 at age 61 is to leave the pension growing at Fidelity until age ~70 and then annuitize if the annuity rates are favorable. I plan to use the years between age 61-70 for Roth conversions at low tax rates.

I usually consider my pension as a part of my AA as bonds, even though I know that isn't conventional wisdom. The mechanics of my plan seem to make considering it a bond investment more appropriate than a typical pension might be.

 

[tmm99]

I have a non-COLA'd pension coming my way in a few years that will be about 10% of my annual spending (not counting the taxes). I am not considering this to be part of my retirement budget since it is so small. Years ago, I thought I would be lucky to get one meal out of this pension at some cheap restaurant, considering inflation, but so far, it's looking like it might buy more than a meal at a cheap restaurant, which I am pleased about. As W2R said, it sure beats no pension at all.