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Old 12-24-2014, 09:48 AM   #21
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I agree that for most people who get a pension, this will not be a problem.

I also agree with those who advise the above people to be very watchful. There is to much crony capitalism and money in politics to relax and assume that the right things will be done.
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Old 12-24-2014, 11:29 AM   #22
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Glad to see more discussion of what I consider a serious ER topic.

...
Me, too, and I do consider it serious and took to heart Singletary's comment about this law opening the door to further cuts.

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...

Beyond that, I'm out of tin foil so I guess we'll just agree to disagree.
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Besides, other than chained CPI, I don't recall hearing of any reductions to current or near term SS retirement beneficiaries.
Me either. In fact, of the smattering of recent SS reforms that have been proposed, most have included grandfathering in those over 55, or even 60. This is what shocked me about this new pension law, in that no one under 75 is grandfathered in. Talk about means tested -- the calculator link I posted up thread shows a 60% benefits reduction to any pensioner under 75 with a $3K/mo benefit w/ 35 years of service (as an example). And this law has passed. If Congress would pass a law such as this for pensioners it has implications for what they would do for SS reform.

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...

Worrying about any cuts is like worrying about an asteroid hitting you. You have no control over it anyway. And even if it happens, you likely won't feel it.
If you've got a pension, you may very well feel it and should be at least reviewing your plans, IMO. Another thought regarding SS reform is that according to the trustees latest report the SS fund is going to broke somewhere around 2030. In that case, only 75% of benefits could be paid out for something like the next 75 years. This means those planning for SS could get hit with a 25% cut at worst. This assumes no other measures (of which there are plenty) are taken to mitigate the cuts, so it's an absolute worst case scenario (at least at this point).

Still, I feel for those with a pension...
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Old 12-24-2014, 11:45 AM   #23
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Still, I feel for those with a pension...
Why? It's almost impossible to retire in comfort without one.
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Old 12-24-2014, 11:54 AM   #24
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Why? It's almost impossible to retire in comfort without one.
Sorry, but this is simply not true. Many of us here have no pension and not only retired in comfort, we did it significantly before the traditional retirement age.

Had you said it required planning, discipline and self-restraint to retire in comfort without a pension, I might agree with you.
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Old 12-24-2014, 11:57 AM   #25
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I didn't say impossible, I said almost impossible. The vast majority of early retirees have a defined benefit pension.
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Old 12-24-2014, 12:08 PM   #26
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The vast majority of early retirees have a defined benefit pension.
Once again I'm going to say your statement isn't accurate. Polls on the forum (like this one and this one) show a fairly even split between pension/no pension.
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Old 12-24-2014, 12:11 PM   #27
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http://www.google.com/url?sa=t&rct=j...QICG_N0SDUmaYg


this is somewhat dated but there is no point arguing facts; I'm sure there is more recent data out there - let me restate that the majority of those that retired early in comfort have DB income (either immediate or deferred)
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Old 12-24-2014, 02:23 PM   #28
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... If you've got a pension, you may very well feel it and should be at least reviewing your plans, IMO. Another thought regarding SS reform is that according to the trustees latest report the SS fund is going to broke somewhere around 2030. In that case, only 75% of benefits could be paid out for something like the next 75 years. This means those planning for SS could get hit with a 25% cut at worst. This assumes no other measures (of which there are plenty) are taken to mitigate the cuts, so it's an absolute worst case scenario (at least at this point).
I assume a 1/3 (ie 33%) haricut to SS when I enter numbers into planning/modeling tools. This is based on a somewhat conservative assumption that you mentioned about being able to pay 75% of current benefits for the long term (ie 75 year horizon).

I do not see this as a worst case scenario however. Congress could easily means test (either income based, or perhaps even asset based) and give some of us a much more severe haircut in an attempt to protect the many individuals in the lower income/asset category. A review of the Simpson-Bowles study shows many ways that the pain could be delivered.

I thought that the private pensions would be more secure than Social Security up until a few weeks ago. Now I am not so sure.

-gauss
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Old 12-24-2014, 02:42 PM   #29
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Ah... I see... the sky is falling.
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Old 12-24-2014, 02:44 PM   #30
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This is a early-retirement.org Christmas miracle!!!!!

A political thread about pension reform and the middle-class getting screwed again is still open.

Amazing.
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Old 12-24-2014, 03:04 PM   #31
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The thread is not intended to be political in nature but rather to discuss in an intelligent manner the risks, real or perceived, of Private PBGC insured pensions in light of the recent changes to multi-employer PBGC pensions enacted in the budget bill.
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Old 12-24-2014, 03:16 PM   #32
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The thread is not intended to be political in nature but rather to discuss in an intelligent manner the risks, real or perceived, of Private PBGC insured pensions in light of the recent changes to multi-employer PBGC pensions enacted in the budget bill.
Certain topics like Obamacare,SS, and pension reform are going to include some political discussion if you want to have a complete and honest discussion.

Its unfortunate this forum falls short in this area. Head in sand.
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Old 12-24-2014, 04:25 PM   #33
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The pension plans that are affected by this legislature are multi-employer pension plans such as the United Mine Workers and United Steel Workers. Most of the contributors for one reason or another are no longer in business because of bankruptcy or the way of the buggy whip, so therefore there are no more "pockets to pick". My father had his pension cut by 2/5ths when United Airlines went bankrupt right after 9/11. PBGC picked up the tab for the other 3/5ths. However, the political move to rescue the Big Three Automakers during the "Great Recession", resulted in moving the UAW pensioners up the food chain ahead of creditors and created in a different result. Politics will rule in the end.
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Old 12-24-2014, 05:11 PM   #34
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The pension plans that are affected by this legislature are multi-employer pension plans such as the United Mine Workers and United Steel Workers. Most of the contributors for one reason or another are no longer in business because of bankruptcy or the way of the buggy whip, so therefore there are no more "pockets to pick". My father had his pension cut by 2/5ths when United Airlines went bankrupt right after 9/11. PBGC picked up the tab for the other 3/5ths. However, the political move to rescue the Big Three Automakers during the "Great Recession", resulted in moving the UAW pensioners up the food chain ahead of creditors and created in a different result. Politics will rule in the end.
Yes the Wall-street bankers got a sweet $$$ deal after 9/11 also.
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Old 12-24-2014, 05:16 PM   #35
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This is an interesting thread, let's help Gauss keep it on topic
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Old 12-24-2014, 05:19 PM   #36
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I assume a 1/3 (ie 33%) haricut to SS when I enter numbers into planning/modeling tools. This is based on a somewhat conservative assumption that you mentioned about being able to pay 75% of current benefits for the long term (ie 75 year horizon).

I do not see this as a worst case scenario however. Congress could easily means test (either income based, or perhaps even asset based) and give some of us a much more severe haircut in an attempt to protect the many individuals in the lower income/asset category. A review of the Simpson-Bowles study shows many ways that the pain could be delivered.

I thought that the private pensions would be more secure than Social Security up until a few weeks ago. Now I am not so sure.

-gauss
Yea, I was referring to Simpson-Bowles, along with another analysis but can't remember where I read it. Bottom line is there are many alternatives to an across-the-board cut. I agree with your thinking that pensions and SS are fair game now, not that they always haven't been. Many have been waiting for some smoke signals on future SS cuts, and I believe this may be one important one. And yes, means testing or even income based testing would be the worst case scenario. If you run scenarios in the calculator I posted up thread, this appears to be exactly what they'e done with this new law.

At the least, we should be prudent and do as you've done (me as well) and calculate a benefits reduction into our plans.

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Ah... I see... the sky is falling.
Not the sky. Just benefits. A possible 60% benefits reduction for those under 75 and too old to change course signals great opportunities in cat food and cardboard box stocks.

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Certain topics like Obamacare,SS, and pension reform are going to include some political discussion if you want to have a complete and honest discussion.

Its unfortunate this forum falls short in this area. Head in sand.
I see the two as overlapping. Unfortunately, benefits reductions (or additions, in the case of the ACA) are influenced by the political process, and as such it's important to discuss from a financial planning standpoint. OTOH, IMHO, a "democrats vs. repulicans" discussion for example is meaningless to the discussion (i.e., how is that actionable?).
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Old 12-24-2014, 05:57 PM   #37
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Yea, I was referring to Simpson-Bowles, along with another analysis but can't remember where I read it. Bottom line is there are many alternatives to an across-the-board cut. I agree with your thinking that pensions and SS are fair game now, not that they always haven't been. Many have been waiting for some smoke signals on future SS cuts, and I believe this may be one important one. And yes, means testing or even income based testing would be the worst case scenario. If you run scenarios in the calculator I posted up thread, this appears to be exactly what they'e done with this new law.

At the least, we should be prudent and do as you've done (me as well) and calculate a benefits reduction into our plans.



Not the sky. Just benefits. A possible 60% benefits reduction for those under 75 and too old to change course signals great opportunities in cat food and cardboard box stocks.



I see the two as overlapping. Unfortunately, benefits reductions (or additions, in the case of the ACA) are influenced by the political process, and as such it's important to discuss from a financial planning standpoint. OTOH, IMHO, a "democrats vs. repulicans" discussion for example is meaningless to the discussion (i.e., how is that actionable?).
I am not going to be the one that closes this thread.

In my financial planning my pension(if it survives) will be the icing on the cake.
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Old 12-24-2014, 06:36 PM   #38
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This is one reason why I mentally discounted the stated value of any pension I might receive from my former state employer. Rules change. Or inputs to formulas to calculate a benefit can change. When the $hit hits the fan, and things must change to remain solvent to some degree, the beneficiaries can't always expect to remain whole.

I pulled the full cash value out of my pension and popped it into the market in January of this year. So far I'm down 6.5%, but long term I expect it to outperform what I would have received from the pension (even if I got 100% of what is promised under today's rules).
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Old 12-24-2014, 10:09 PM   #39
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Pardon my asking, but how can someone be down 6.5% when the market is hitting all time highs?
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Old 12-24-2014, 10:29 PM   #40
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