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Old 12-30-2016, 02:33 AM   #121
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I'm definitely the odd one out! Find it odd that so many are comfortable about having pensions. DW will have a small one when/if she retires. I'd be petrified with current US situations of pensions if we HAD to depend on one for comfortable retirement. I'm much more comfortable depending on myself.
I was paranoid about the continued existence of SS for retirement when I was in my 30's. However, I am now confident that it will be around for our continued use (boomers).

Of course, if we had ONLY SS, retirement would be quite bleak. But as part of the "3 legged stool" retirement concept (SS, a pension, and savings, as I learned it back in the 70's), it can be an important part of the plan. Now, non-pension people should be plugging in 401-k/IRA's in place of the pension. Those who do, retire. Those who don't......
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Old 12-30-2016, 02:49 AM   #122
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IMHO, part of the problem is the non-education of retirement planning. I seriously doubt that most people eligible for pensions (old days) gave them much of a thought when they began careers. They just trusted mega-corp would take care of them at retirement. Now, without pensions for most workers, the people need to be better educated in high school, college and on the job about the critical need to save for themselves.

Personally, I think rules should be put in place to NEVER allow loans from 401-k's, or WD for hardships, new homes, etc. Also, govt. should make 401-k transfers (at job separation) mandatory and not allow "cashing out", regardless of the penalty. Make rules similar to SS-no one takes an early lump sum there. (Imagine the chaos if that was allowed!)

There are too many people without a financial clue, who lose a job, then drain their 401-k before they seriously look for work, or downsize or do whatever else to survive. Some of whom, I suspect, wind up on news stories later about how folks can't retire on SS these days.
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Old 12-30-2016, 04:00 AM   #123
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Well, I will be holding up the low end of retirement income when I FIRE, somewhere between 62 and 64. (61 now). (If FIRE is applicable to that age group). I will have somewhere a bit over $1 million in funds; a decent social security income which will provide approx. 50% of my income needs when I take it at full retirement age. It will be close, but two different financial advisers are confident I can make it (retirement with slightly higher living-wage than I have now) happen. What will enable this is that I have been exceedingly careful with spending all my life. I have been willing to spend on eco-travel. I also donate to charity 5% of my living-wage income. Everything else is carefully considered. Possible because I am single, with no kids, and healthy, with health expenses paid if necessary. I chose the route of a secure, if somewhat stressful and unmeaningful, job. Maybe I'm among the last with such a choice. I never felt that I had many options, but, fingers crossed, my third act will bring those. I have so many plans and dreams! I want to make a more meaningful contribution to the world. My route to FIRE was discipline, frugality, and caution. Not the most glorious of paths, but, just wait!
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Old 12-30-2016, 05:02 AM   #124
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I don't begrudge people who have pensions but I do have a problem with ridiculously high public service pensions which were negotiated by the same people who would benefit from those same pensions. In cities where I've lived the city officials got the same pension as the workers. So when the union negotiates for a bigger pension than the city can afford where's the checks/balances?
Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.
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Old 12-30-2016, 05:06 AM   #125
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Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.
This was a common topic of contention here after the financial crisis and near-meltdown of the global markets in 2008 turned a lot of 401Ks into 201Ks. It seems like every other thread was a debate over public pensions.

As I recall it, even most of those who have relatively generous DB pension plans tended to agree that the practice of "spiking" and other games (which does what you describe) is morally questionable even if it's legal -- it not only harms taxpayers but also damages pensioners who didn't do it, because the overgenerous payouts to "spikers" weakens the financial solvency of the pension fund for everyone else. That is a matter for state and local governing entities to tackle, though. I don't begrudge anyone for doing anything *legal* to maximize their position; it's no different in some ways than people with millions in the bank who "engineer" low incomes to get large ACA subsidies. The proper place to register indignance is with the folks who wrote the rules, IMO, not the people properly applying the law to their advantage (he says, not inviting a political discussion here).
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Old 12-30-2016, 05:12 AM   #126
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I don't begrudge people who have pensions but I do have a problem with ridiculously high public service pensions which were negotiated by the same people who would benefit from those same pensions. In cities where I've lived the city officials got the same pension as the workers. So when the union negotiates for a bigger pension than the city can afford where's the checks/balances?
Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.
And in my small town, if you develop something as minor as a small skin cancer on your ear within 6 years of retirement, your Fed taxes on that pension are paid for life. Plus everyone city employee gets a 25% discount on their property taxes.
Nice.
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Old 12-30-2016, 06:35 AM   #127
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I'm definitely the odd one out! Find it odd that so many are comfortable about having pensions. DW will have a small one when/if she retires. I'd be petrified with current US situations of pensions if we HAD to depend on one for comfortable retirement. I'm much more comfortable depending on myself.
I am with you.

The new trend for most of us is "you are on your own pension". Only government people, teachers, fireman, cops, state workers and general public folks can have a pension when they retire.
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Old 12-30-2016, 07:41 AM   #128
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Our stay in Sicily was Taormina and Catania. Great caprese salads and red wine. Apparently the lava soil is good for both!
Agree. Particularly Taormina. Actually stayed there twice in 2014. On the water and up in the town. Spectacular. One of the nicest little tourist towns in Italy.
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Old 12-30-2016, 07:50 AM   #129
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Waaaay better than flying; approximately two weeks food and accommodation, ports to visit on the way, no jet lag...we love it.
Agree. Have done this in the past and plan to do it next Sept on the QM11. Haven't cruised for a few years as got tired of it. But cross-ocean cruises are different. No crappy tours to mundane, tourist traps with aunt Matilda bringing up the rear. Really like doing long workouts, lectures, cooking classes, reading on the balcony, happy hours, etc. The fact that they are often quite reasonably priced is a bonus.
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Old 12-30-2016, 07:53 AM   #130
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I don't begrudge people who have pensions but I do have a problem with ridiculously high public service pensions which were negotiated by the same people who would benefit from those same pensions. In cities where I've lived the city officials got the same pension as the workers. So when the union negotiates for a bigger pension than the city can afford where's the checks/balances?
Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.
Agree. It's a travesty how some of these public service pensions have gotten out of control. I have a very generous pension but at least it's paid by a private company.
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Old 12-30-2016, 09:11 AM   #131
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Agree. It's a travesty how some of these public service pensions have gotten out of control. I have a very generous pension but at least it's paid by a private company.
Let's remember that the term "public service" includes the military, all federal employees, and most state employees, none of whom had or have any say whatsoever in the terms, amounts or taxation of their pensions. You can also, without any stretch of the imagination, count SS as a "public pension* since most people's benefits far exceed the amount they contribute over their working lives.

I fully agree with criticisms of local employee unions or public officials who push through absurd pension benefits. And practices such as spiking. Mismanagement of certain state pension systems is not on the employees - it's the elected officials. And, when taken in total, the number of people who benefit from these situations is far lower than those who don't.

Private pensions (those few that remain) aren't free - someone - the stockholders, consumers, indirectly the taxpayers (as pension and 401K contributions made by companies are expenses that aren't taxed as profits) pays for them.

It's the abuses that create bad publicity and far too many people condemn the whole system rather than those that are flawed.
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Old 12-30-2016, 09:23 AM   #132
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Wow. Whoever leaves this earth first, the other will be in a world of hurt when their SS stops.

Not as bad as you think. HUD housing 30% of income. nice . well maintained complexes, with activities, food stamps, no medical co pays, and food bank delivers large boxes of other food items, like bricks of cheese. My MIL used to give the extra food to her sons. Certainly not high on the hog, but very comfortable. It is the extras that we take for granted that are hard. Recreation, travel, meals out etc... that make it harder. Family members have to kick in for those things.
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Old 12-30-2016, 09:58 AM   #133
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The city of Phoenix tries to curb pension spiking. The most common form is to accumulate sick leave and vacation days, then take them in the last year of employment. As the pension formula uses only the last few years of pay (instead of 35 years like SS), this boosts up the pension. There was a city manager who accumulated $200K worth of spiking when he retired. Imagine the pension boost from that!

The city was taken to court by some unions. The city argued that there was never any explicit written document spelling that out. The city turned its eyes and allowed this practice starting in 1996, and now wanted to discontinue it. A Superior Court judge said "Too bad, so sad", and ruled for the unions.

PS. The above-mentioned city manager got $220K/year. He retired and moved to Santa Ana, CA, to take a job there. His predecessor at the Phoenix job got a $246K/yr pension.
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Old 12-30-2016, 11:01 AM   #134
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I know a few people who retired with little or nothing saved...their only source of income is a federal pension. One person even cashed out a few weeks of vacation time when they retired to pay off their overdraft...
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Old 12-30-2016, 11:39 AM   #135
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The city of Phoenix tries to curb pension spiking. The most common form is to accumulate sick leave and vacation days, then take them in the last year of employment. As the pension formula uses only the last few years of pay (instead of 35 years like SS), this boosts up the pension. There was a city manager who accumulated $200K worth of spiking when he retired. Imagine the pension boost from that!
Yes I think it is this type of public pension abuse that gives them a bad name. But we can't blame the participants. We have to blame the administrators. More power to that city manager who knew the rules and used them to leverage his retirement. Too bad he was allowed to do it by "the system".

Private pensions have some of the same problems. I was the beneficiary of one of them.
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Old 12-30-2016, 01:49 PM   #136
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.........Private pensions (those few that remain) aren't free - someone - the stockholders, consumers, indirectly the taxpayers (as pension and 401K contributions made by companies are expenses that aren't taxed as profits) pays for them. ...............
I've got a private pension, but I didn't steal it from the stockholders, the consumers or the tax payers. It was part of my deferred compensation, as agreed to by all involved. I pay income tax on the pension as well as any 401(k) or IRA withdrawals, so no money goes untaxed, though it may be at a lower rate due to the deferral.
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Old 12-30-2016, 02:00 PM   #137
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Some more info on the pension spiking in Phoenix. It was not just accrued sick leave and vacation days that they added to the base pay in the last year of employment to compute pension pay.

The city managers even included their personal car and cellular phone allowances! You would think that these were provided for them to perform their work, but they argued successfully that these were part of the compensation. The taxpayers end up not only paying for these amenities while they worked, but also for the rest of their life.

Good lord! Why did they not include their office costs, parking privileges, utility bills and maintenance costs of their office buildings too? The cost of their secretaries? I guess they did not want to be so greedy. Or perhaps they did try but were successfully rebuffed.
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Old 12-30-2016, 02:10 PM   #138
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Yes I think it is this type of public pension abuse that gives them a bad name. But we can't blame the participants. We have to blame the administrators. More power to that city manager who knew the rules and used them to leverage his retirement. Too bad he was allowed to do it by "the system"...
Sure. But what is most irksome is once it was allowed to happen it became grandfathered in and could not be changed, even though there was nothing formally on the book to allow it. See the lawsuit I described earlier. I am going to look up that judge to see if voters have thrown him out.

PS. His term ends in 2019, when he will face a retention vote. I hope the citizenry still remembers by that time.
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Old 12-30-2016, 02:42 PM   #139
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Find it odd that so many are comfortable about having pensions.
It depends on how well the pension plan is funded. I sleep well at night because mine is over 90% funded. Now, if I was retired from Chicago I'd need a lot of sleep aids....

And, sadly for me, it is not one of those luxury ones either. We're comfortable but I don't see a round-the-world luxury cruise in our future.

No one writes articles about well-run and well-funded pension plans because they're boring.
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Old 12-30-2016, 03:19 PM   #140
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IBut as part of the "3 legged stool" retirement concept (SS, a pension, and savings, as I learned it back in the 70's), it can be an important part of the plan.
+1

I am very fortunate to be getting a relatively generous private pension when I retire (even after Megacorp's changes over the years that reduced it by close to 25% of what it would have been had they kept the same rules in place from 20 years ago). However, DW and I never felt comfortable with just that, and we also did not assume SS would be enough for us. So we made sure to save as well.

My company pension is fully funded, but taking no assumptions I've run the numbers with and without it; without it we can cover our expenses with a little wiggle room; with it we will have a comfortable retirement (though I'm not trusting the "high" level of comfort various retirement planning calculations are predicting ).
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