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Retirement Shock and Needing to Find a Job.
Old 04-22-2018, 01:03 PM   #1
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Retirement Shock and Needing to Find a Job.

How many times do we have to see this until people learn the safety and wisdom of diversification. I don't know whether to feel pity or just apathy for people who insist one keeping all of their eggs in the same basket.

https://www.wsj.com/articles/retirem...ric-1524418855
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Old 04-22-2018, 01:56 PM   #2
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A bit from the article:

Quote:
He left GE with an annual pension of $85,000 and company stock valued at more than $280,000.

Retirement looked pretty good until GE shares collapsed. His shares are now worth about $110,000, prompting a late-life job hunt. “I never planned on retiring and having to go back to work,” said Mr. Zabroski, who has monthly mortgage payments and supports a partially disabled wife. “It’s kind of scary.”
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Old 04-22-2018, 02:11 PM   #3
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did he lose the whole 85K/yr pension?
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Old 04-22-2018, 02:13 PM   #4
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I’m about as undiversified as you can get with only 2 asset classes but I sleep like a baby at night
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Old 04-22-2018, 02:14 PM   #5
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I call BS. Couldn't read the link but was thinking it didn't sound right and then I saw the pension amount. More to the story?
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Old 04-22-2018, 02:16 PM   #6
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What am I missing here? The guy has a great pension and a paper loss of 170k on his company stock is forcing him to go back to work? At 61 he could play the SS card in a year. Even in high COL Mass. it is much better than most have for income. At the very least he would be a retiree with a six figure income. Certainly they could have come up with a better example.
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Old 04-22-2018, 02:30 PM   #7
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Do they think that anyone with an $85k pension is going to get a lot of sympathy? I think not, not here nor anywhere else.

Was this guy totally brain-dead for Enron, GM, etc.?
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Old 04-22-2018, 02:38 PM   #8
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Do they think that anyone with an $85k pension is going to get a lot of sympathy? I think not, not here nor anywhere else.
Agreed. Could not read the article (pay wall), but an $85k pension, with SS coming, sounds pretty good. This is hardly a "poor, poor pitiful me" example.

I am guessing, but could be wrong, that the stock was partly the company contribution after the pensions were frozen.

I hope they guy does well, but a good example of why you diversify when you leave a company.
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Old 04-22-2018, 02:39 PM   #9
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And even while you are there to the degree that you can... it is stupid to have both your job/income and investments tied up in one company.
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Old 04-22-2018, 02:41 PM   #10
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Originally Posted by frayne View Post
How many times do we have to see this until people learn the safety and wisdom of diversification. I don't know whether to feel pity or just apathy for people who insist one keeping all of their eggs in the same basket.

https://www.wsj.com/articles/retirem...ric-1524418855
+1.

Once my 401K crept north of $100K, I knew better than to not understand it. I started doing on line research. At first, mostly with those FA firms and that ilk. But even reading them, I learned about diversification and a few other basic things. But, over time, my browser swerved in to FI-RE sites. I binge-read a lot of them. The FI sites (mostly this one and JLC), taught me to be a DIYer.

I don't his situation on him or anyone. But, if he's looking to blame someone, he needs to look in the mirror.

Amassing a sizable portfolio without learning the basics of investing (or at least hiring a fee only fiduciary FA) is foolhardy behavior (IMHO).
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Old 04-22-2018, 02:46 PM   #11
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Not to mention that he still has a mortgage?? I know it can be done, but retiring with a mortgage doesn’t seem prudent and not something I would have done. Even with the pension, that’s too much risk on top of all the eggs being in one basket.
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Old 04-22-2018, 02:48 PM   #12
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And even while you are there to the degree that you can... it is stupid to have both your job/income and investments tied up in one company.
That is why I wonder if the 401k(?) was all company contribution. At my past Mega corp, at one time, the match and company portion was all in company stock. My contributions could go to a myriad of investments. I could not change that, I don't think, until my division was separated. Then I dumped the stock (hindsight bad move since it is up about 300% in the past 13 years), but the right move for diversification.

Has anyone read the whole article and give more insight to the issue.
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Old 04-22-2018, 02:48 PM   #13
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For those who can't read the article (probably most), it seems to indicate that most of the GE retirees interviewed never even considered diversifying away from their GE stock.

Also, I would say that an $85K pension for a punch press operator sounds pretty good.
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Old 04-22-2018, 02:49 PM   #14
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Did he lose the whole 85K/yr pension?
I doubt it- I'm a GE pensioner (I get $900/month from work at a sub they sold after I'd been there only a few years) and just got the required financial info on the pension plan. Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.

I hope that $280,000 wasn't his only savings. That seems pretty skimpy for a guy who made enough to qualify for a pension of $85K/year.
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Old 04-22-2018, 02:49 PM   #15
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Not to mention that he still has a mortgage?? I know it can be done, but retiring with a mortgage doesn’t seem prudent and not something I would have done. Even with the pension, that’s too much risk on top of all the eggs being in one basket.
I dunno... I've been retired for 6 years and we have a mortgage... in fact, I refinanced to get a lower rate (3.375%) just before I retired. Depending on the circumstances, retiring with a mortgage is quite prudent. Our investment return on money that we would have used to pay off the mortgage has been many multiples of what we paid in mortgage interest so we are way ahead.
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Old 04-22-2018, 02:54 PM   #16
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Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.
Yes, but …
From the article cited:
Quote:
With 71.4% of assets needed to cover its pension liabilities, GE is one of the worst funded large corporate pension plans in the U.S., according to an April report by consulting firm Milliman Inc. GE’s pension obligations, nearly $100 billion at the end of 2017, are underfunded by almost $30 billion.

“Their pension funded ratio is among the 10 lowest in our study, and that’s pretty significant given that they’re the fourth-largest company by asset size,” said Zorast Wadia, a consulting actuary at Milliman.
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Old 04-22-2018, 02:58 PM   #17
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At one time I had over 500k in my company stock which was 95 percent of my net worth at the time. It was due to an incentive the company offered which was a 100 percent match up to 6 percent and if you invested in company stock they'd give an extra 1 percent match. I was well aware of the risk seeing World Com, Enron ect. I finally got out the way I got in. Sell a little bit by bit and buy index funds until the allocation was more reasonable.
An 85K pension and SS would be enough for me.
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Old 04-22-2018, 03:10 PM   #18
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I doubt it- I'm a GE pensioner (I get $900/month from work at a sub they sold after I'd been there only a few years) and just got the required financial info on the pension plan. Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.



I hope that $280,000 wasn't his only savings. That seems pretty skimpy for a guy who made enough to qualify for a pension of $85K/year.


I didn't post the statement quoted in your post. I'm actually having trouble believing the pension amount is accurate. May include healthcare or a supplement. Maybe he converted some savings into an annuity.
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Old 04-22-2018, 03:12 PM   #19
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Managed to get through the pay wall by using my phone. It seems the headline story is just a teaser to do a story on the decline of GE stock. Not much there except "most" GE retirees just expected the stock to keep on rising, and really did not watch it.

This is really more of a comment on the problem with people buying stock without understanding their own obligation to follow it, and sell when it makes sense. I feel bad for the guy, but not too bad, his pension is more than I spend in a year, including taxes.
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Old 04-22-2018, 03:13 PM   #20
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His GE pension alone would cover more than many of us spend in retirement - - and plus he has SS yet to come?

Oh, the poor man (NOT!) Unless he lives in a high COL community like Manhattan or SF, his income is not that low even if he doesn't go back to work.

The rest of this (my) post is kind of a stretch... but anyway I wonder if maybe the REAL story is that he and his wife are getting tired of spending all day together every day in retirement. Some couples do better if they spend a reasonable chunk of time apart each day (either alone or with others) as well as spending time together.

If a couple spends too much time together, then sometimes I hear the wives complaining about their husbands being underfoot, and the husbands complaining about too many honey-do's. The solution often is for the husband to go back to work, which he'd rather do anyway. It's sad but for reasons other than income.
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