Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: The Fat Pension
Old 04-12-2005, 01:18 PM   #21
Recycles dryer sheets
newellcr's Avatar
 
Join Date: Aug 2003
Posts: 187
Re: The Fat Pension

Patrick,

Wow! Using a 30 and out as I did in my example yields 92.5%, or approx 25% of your salary for each year of that working career without health benefits. The 25 years of service and any age is really nice.

The example I used in my original post had a value of about 9% of the salary (including health benefits) for each year of that working career.

Cheers,

Chris
__________________

__________________
newellcr is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: The Fat Pension
Old 04-12-2005, 01:35 PM   #22
Recycles dryer sheets
newellcr's Avatar
 
Join Date: Aug 2003
Posts: 187
Re: The Fat Pension

Hello Folks,

Thanks for the replies. There are a variety of plans out there. I'm a little surprised to see the value vary this much and that there haven't been too many details other than with the government pensions. I suspect that a lot of the industry pensions look like the federal plan I described. Mostly I think that because I'm told that the fed plan was based on what industry was doing in the early 80's.

Cheers,

Chris
__________________

__________________
newellcr is offline   Reply With Quote
Re: The Fat Pension
Old 04-13-2005, 11:05 AM   #23
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Re: The Fat Pension

Quote:
Patrick,

Wow! *Using a 30 and out as I did in my example yields 92.5%, or approx 25% of your salary for each year of that working career without health benefits. *The 25 years of service and any age is really nice. *

The example I used in my original post had a value of about 9% of the salary (including health benefits) for each year of that working career. *

Cheers,

Chris
Chris, I didn't include it in my original post, but if retirees select the State insurance plan when they retire, the former employer is required to pay a subsidy for the premiums that currently maxes out (after 20 years of service) at appx. $425/month. The current premium for just the retiree is about $500/month, so the retiree only has to contribute $75/month.

Patrick
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Re: The Fat Pension
Old 04-13-2005, 02:57 PM   #24
Recycles dryer sheets
 
Join Date: Mar 2005
Posts: 199
Re: The Fat Pension

My husband is retiring in the Fall with a 2.7% at 55 pension. (He will be 60). Medical coverage has an off-set of $12 for each year worked so his medical coverage will be minimal. My coverage will be in the $345 range per month. All our friends who are retired or semi-retired regard medical insurance to be the biggest number one "obstacle."
__________________
Ginger
Ginger is offline   Reply With Quote
Re: The Fat Pension
Old 04-14-2005, 11:00 AM   #25
Recycles dryer sheets
JonnyM's Avatar
 
Join Date: Mar 2004
Location: Modesto
Posts: 334
Send a message via AIM to JonnyM Send a message via Yahoo to JonnyM
Re: The Fat Pension

Quote:
Mountain Mike and JohnnyM,


Someone has posted that type of DBP before. Age and years of service, collecting while you are young costs them for a longer period of time. Are you guys covered by SS? 7% sounds like a lot...
In my Local Government plan (interestingly based on a law called the "Retirement Act of 1937", therefore pretty far-sighted from my perspective:

We are covered by Social Security (no opt out option), and I expect a payout of a somewhat diminished 12k per year based on my DW's current estimate, she having been ER for a year now. My estimate assumes I'll keep working and making the same dollars as present, hers is based on "no income" last year as obviously she's no longer paying into SS.

Yes the 7% plus 7 % more for Fica is significant during my entire career, but keep in mind that unlike individual savings, where literal dollars matter, the 7 percent withholding for the DBP is always proportional to my Salary. Way back when in the years I was working for peanuts (grossing about 12K per year) count just as much in the final calculation as the boom salary years here at the end, but THEY BASE THE DBP on my highest 12 months, which is right now, or acutally next year when I will have maxed for my chosen profession. I'm not dedicated enough to actually do the math, but I would "guesstimate" that my Pension's value is equal to more than 50% of my total gross earnings over my career at this agency.

Our Colas are based on the CPI in general terms, but are usually not more than 3% and this year it was just 2%.

My current thinking is if I wait until 62 to begin drawing SS that extra 12K/yr will boost my buying power to about what I will have started with 11 years earlier in 2006.
__________________
It's about the music
JonnyM is offline   Reply With Quote
Re: The Fat Pension
Old 07-05-2005, 10:49 PM   #26
Dryer sheet aficionado
 
Join Date: Mar 2005
Posts: 26
Re: The Fat Pension

Quote:
But my state retirement is 3% per year of the final 5 year average.
what state is this? That's much better than Kentucky!
__________________
mangodance is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 02:12 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,384
Re: The Fat Pension

Quote:
Originally Posted by bigfoot
what state is this?* That's much better than Kentucky!
As are most places!

haha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 08:07 AM   #28
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Re: The Fat Pension

Thanks for the explanation on fed. pension. I think it helpful for all of us to understand all the different systems.

"We do have a deffered comp program, but no department match. With the limited investment options for the deffered comp I do not see it as a benefit as an IRA has more options and returns as good."

-I would expect that at least has some index funds. 457k plans are nice because you can access that money after you terminate employement (no age requirement).
__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 09:29 AM   #29
 
Posts: n/a
Re: The Fat Pension

Quote:
Originally Posted by maddythebeagle
Thanks for the explanation on fed. pension. I think it helpful for all of us to understand all the different systems.
The CSRS federal pension--grandfathered for those employees who started before 1983--is somewhat simpler than the FERS system described by newellcr.* It is also based upon the "high-3" average salary.* Add 1.5% percent of the high-3 for years 0-5, 1.75% for years 6-10, and 2% for years over 10.

This translates to 16.25% of your high-3 salary for ten years service; 36.35% for 20 years; 56.25% for 30 years; 76.25% for 40 years; maximum 80% for 43 years.

__________________
  Reply With Quote
Re: The Fat Pension Good and Bad
Old 07-06-2005, 02:03 PM   #30
Recycles dryer sheets
JonnyM's Avatar
 
Join Date: Mar 2004
Location: Modesto
Posts: 334
Send a message via AIM to JonnyM Send a message via Yahoo to JonnyM
Re: The Fat Pension Good and Bad

There is major advantage to the Fat Pension. It's a reliable source of a basic "wage" in ER (or sadly just R) forever without having to worry about Markets, Treasury, or CD rates and such. It becomes I fear such a completely uninteresting benefit to most of my co-workers that they pay little or no attention to it. Embracing ER oddly enough is a foreign concept to 90 percent of the people I talk to about the subject.

"BECAUSE" these people's eventual retirement is "in the bank" from day one if they are willing to put in the years, they in essence don't ever plan for its inevitable eventuality. The 457's let you hide money from the Taxman, you literally can save thousands of dollars to spend in retirement and only pay the taxes due later at your reduced income levels. It's a true savings in both the short and long term. Yet most of my co-workers are unaware of the option, or put token amounts in it, some of them the single ones, only donate the remember of their CAFE amount, the amount alloted for health care is enough for a family, so the singles have a bit left over. When I started getting behind the 457 concept you could hide $7k a year, now it's up to double that, with provisions to save even more if you're over 50 or are in "catch up" mode. Again, the vast majority of my co-workers don't bother. I would add here that the plan started out with a reasonable mix of funds to choose, including a fixed percent for the non-gamblers, and as only gotten better in the increased choice of offerings over the last decade.

Occasionally a co-worker will ask me about my impending retirement, "you're really leaving us?", "but you're young!" etc, and I fire back, "When are you going?" They have no idea, never thought about it, aren't planning for it, aren't saving tax-free to make it happen sooner, and get a bit scared even thinking about it. Like its some kind of death or something. They tend to figure they'll just work as long as they can, and take what is offered at the end. Ironically, these folk do pretty well, cause they end up working 30 plus years, and the final benefit ends up being pretty much what they made when the worked.

The sadness for me is that they could have opted to leave years sooner, but never considered it. I ask a couple questions, age, years in, and such, and typically tell them without needing any charts or graphs, how would you like to leave 2 years sooner. Their eyes glass over, they can't believe it, think I'm nuts, and humour the wacko, although a very few come to my office and ask for details. I've had a few successes in getting folk around the ER concept, but truely not as many as I would like.

This board is full of the exceptions to what I encounter in the world at large. People that GET IT and figure out the best way for them to live as free, independent individuals pursuing their varied interests on their own timetable.

Fat Pension Good. People that figure out how to best leverage it are ER winners. The rest just work many more years, and live a comfortable retirement with a decade of freedom missing. Sad. Sad Sad.
__________________
It's about the music
JonnyM is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 04:02 PM   #31
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Re: The Fat Pension

Well JohhyM, I don't know about your music but, if you want, you could always be a writer.
A really great presentation on the traditional pension. Mostly in government jobs these days but previously common in companies as well.

"Like its some kind of death or something. " Great way to say it. The deer caught in the head lights look. Its not just sad that people cannot retire early, its sad that they do not enjoy their life before retirement. Now for some folks work really is good. My father was driven by his sense of responsibility and I think he would have lived longer if he kept working. There are folks like that too.
My wife is that way to some degree. She is a teacher. We go on vacation to places like Fiji and Rarotonga and she manages to visit schools and make friends. I have convinced her to stop working; this will be her last year ending June 06. (Actually what convinced her was getting "the class from hell" two years ago.) She will be retiring "early" at 58 in that there is a penalty in her system for retiring before 60 but its one we are able to absorb from my income. But she will still be presenting, tutoring, volunteering and active in education issues. When it dawned on her that she would not have to teach her first response was, "hey, I will finally have time to get my PhD". Basically I had to pitch retirement as "now you can teach the way YOU want to".
Now I really like my job. But it is not my identity. I like NASA and space issues but I can follow these interests without coming into work each day.

Another great line from JohnnyM (should have quoted the whole piece?):" People that GET IT and figure out the best way for them to live as free, independent individuals pursuing their varied interests on their own timetable. "
I think the issue is freedom, but that doesn't mean not working, its choosing to work. And I think there comes a realization that we are interdependent as well as dependent. Retirement isn't done in a vacuum.

But JohnnyM, your lines are lyrical, they set off reflections like from Bob Marley "Emancipate yourself from mental slavery, none but ourselves can free our mind." (A bumper sticker on my 1985 VW camper) or another one, don't remember the source :"A slave is someone who waits for someone else to free them". Keep your postings coming.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 04:42 PM   #32
Thinks s/he gets paid by the post
Eagle43's Avatar
 
Join Date: Jan 2005
Location: DFW
Posts: 1,882
Re: The Fat Pension

Wasn't corporate retirement called "The golden handcuffs"?
__________________
Resist much. Obey Little. . . . Ed Abbey

Disclaimer: My Posts are for my amusement only.
Eagle43 is offline   Reply With Quote
Re: The Fat Pension
Old 07-06-2005, 09:27 PM   #33
Confused about dryer sheets
 
Join Date: Jun 2005
Posts: 6
Re: The Fat Pension

You know, when I introduced myself I mentioned I had a pension plan at my current place of employment and someone replied saying I should think about whether or not to participate. I didn't understand it at first but reading this post, I see what they meant.

I was not aware some people had to "pay to play" in the pension game. Where I am, I don't get anywhere near the 3% but mines is calculated 1.5% times years of service times average of last three years of salary. The thing different is I vest in 5 years but there is no payment necessary. Everyone is eligible. I also worked at IBM at my first job and think that it was "free" as well.

I'm saving for retirement as if I don't get this pension (I'm only 4 years into this job and about 25 to 30 years from retiring, 30 years old now) but when it comes, it will be a "fat pension" in my calculations.

Is this not normally the case as I see so many people responding to the payment to qualify for pension?
__________________
ctech is offline   Reply With Quote
Re: The Fat Pension
Old 07-26-2005, 08:26 AM   #34
Recycles dryer sheets
newellcr's Avatar
 
Join Date: Aug 2003
Posts: 187
Re: The Fat Pension

ctech,

There are pensions that folks can opt in/out of.* My wife is a teacher and I'm a federal employee.* Both of our plans are mandatory and require contributions.*

I figured I'd mention that the term "Fat" was tongue in cheek at the time, though I do not mock their value.* Racking up 25-30 years at one place, even the government, is no easy task and there are other perils.* When I started the topic, there was some discussion about is it worth staying in the Military for the pension because 'I could leave and make $10k more a year.'* Which sounds like a lot (and I suppose it is), but my intention was to plant the idea that the pension can be worth a whole lot more than $10k/yr especially when someone already has 10 years invested.* It applies to all pensions, not just Military ones.* It's about making an informed decision about benefits vs. cash in the hand.

While I'm mentioning things...* There have been some great replies, but I'm surprised there has been so little talk of Future Value numbers.* I might not have the terminology correct, but I mean - you'd need to invest this much per month for 30 years to equal the annuitized value of Company X's pension plan.* Or, I've already got 15 years in and expect to retire in 10 years.* Now my pension is actually worth an investment of Y...* Anyhow, it's a good thread none-the-less.

Cheers,

Chris
__________________
newellcr is offline   Reply With Quote
Re: The Fat Pension
Old 07-26-2005, 09:23 AM   #35
Thinks s/he gets paid by the post
SteveR's Avatar
 
Join Date: Jul 2005
Posts: 2,803
Re: The Fat Pension

My former employer has a pension plan; not as good as the Gov. plans I see here. WoW. No wonder my taxes are so high. I hope you guys enjoy your nice fat pensions compliments of the tax payers. Just kidding. Everyone deserves all they can get when it comes to work and retirement.

My pension was initially a 2% "donation" to the company plan. After a few years they were so over funded they dropped the "donation" but kept the plan. I have no idea how it was all calculated as the formulas were complicated and I left early and also and a QUADRO on it so basically what I get is less than 20% of my final salary. I was there 24 years and took ER at 50. Had I waited until 55 it would have been another 20% higher. It pays for gas and beer or is that beer and gas? 8)

My late wife had 34 years and retired at 56. Her pension was more like 40% of her final earnings. I get it for a couple more years and then it goes away. (10 year certain and life option.)

The pensions are being saved in a MM account and are used for big ticket stuff like trips and house improvements. My current wife has two more years before she can ER with a pension and health benefits. We would like to pull the plug now but the additional pension 25% of final 3 years, will help us be FIRE at 55. After that, the pensions will make the house and cabin payments and still allow us some spending money while we take a small 72(t) from one of my IRAs. After 62 we will be much better off with the cabin paid off and selling the house. The pensions may be all we will need for most everyday expenses. We will still have a nice IRA to draw on as needed for fun stuff and will have a good time spending it down so the kids don't have to worry about estate taxes.
__________________

__________________
Work? I don't have time to work....I'm retired.
SteveR is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Military pension and pay - how much is it past 20 Average Joe FIRE and Money 13 03-18-2007 11:22 AM
Traditional Pension being frozen by megacorp murg FIRE and Money 16 03-15-2007 11:41 AM
Megacorp pension risk assessment ? Delawaredave FIRE and Money 5 01-22-2007 11:21 AM
Pension Time Bomb Article Mountain_Mike FIRE and Money 11 01-17-2006 07:49 AM

 

 
All times are GMT -6. The time now is 12:36 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.