Which of the two?

[Texas Proud]

Based on your career experience, which of the two paths would you take?

1. Stable company, pension/good benefits, good hours. Most likely stay in one company until retirement.

2. Change jobs every 2-5 yrs. More interesting than #1. No pension. Uncertain hours. Salary 30% higher than #1.

#1 is the traditional stay in blue chip company until you retire and #2 is more of a silicon valley programmer types who change jobs often but gets to do different things. Which route would you take if you can start over again and why?

I have read other posts... but will throw in my 2 cents...

Why do you think that #1 does not have more interesting opportunities... is it a small company?

I worked at a big company for 5 years that failed... got hired on with the company that bought it... and worked another 15... then got laid off...

But, I got promotions during the first 5 years that had me do different things...

Then had a completely different job for 1 year... transferred to another completely different job for 5 more... then after the management screwed things up moved to another different job for another 2 years.... this lead me to be sent to London for a 'short time' that turned into about 14 months (the company picking up the cost of my place)... which lead me to be in NY where I worked for 3 years with the company also paying for my apartment... and finally back to Texas for the remainder of the time... Now, all my jobs were accounting or finance related, but they were all over the board on what I did... and many were very interesting....

Now, I am at a small company with lower pay but it is stable and good hours and a decent commute.... it is boring, but I do not mind that much... I just want a paycheck with good working conditions... I got it...

 

[obgyn65]

Point well taken.

Caution: It's only 'safer' if the company actually fully funds that pension with reasonable, conservative assumptions.

 

[youbet]

Take what seems like the most personally rewarding job (compensation and benefits, opportunities are all part of that equation).

Gee Don, you didn't include doing something you enjoy in your examples of "rewarding."

I think the biggest lesson I've learned from posters on this board is that the most pathetic thing you can do is sacrifice your current life in order to enhance FIRE possibilities. Spending 2 or 3 decades in a career that you don't find rewarding is a waste of the most important asset you have: your one and only life.

If you're fortunate enough to be smart, healthy and energetic and therefore able to call most shots on your career, do something you like! You can always make money but you can't turn the hour glass over for another run at life.........

 

[kumquat]

Based on your career experience, which of the two paths would you take?

1. Stable company, pension/good benefits, good hours. Most likely stay in one company until retirement.

2. Change jobs every 2-5 yrs. More interesting than #1. No pension. Uncertain hours. Salary 30% higher than #1.

#1 is the traditional stay in blue chip company until you retire and #2 is more of a silicon valley programmer types who change jobs often but gets to do different things. Which route would you take if you can start over again and why?

Why isn't there a third or forth option?

I spent my last 20 years with a mega-corp sorta like

#1 but:

• no DB pension, DC
• good hours, yes, good for them
• higher pay (salary & bonus) than anything else within a few hundred miles, don't forget the stock options on a publicly traded company (not one that might have an IPO if all goes well)
• spent most of my career in IT, finished in audit, and had other opportunities, that I did not pursue, along the way

so how will #2 work?

• change jobs every 2-5 years, does that mean different employers, same job?
• what different things do you do? coding is coding
• why more interesting, not planning promotion in #1

Based on my experience, neither option exists. #1 might be a government, #2 is an illusion. You are planning to change jobs every 2-5 years and get a 30% premium. Might work today, but why do you think you'll even be employable 5 years hence (since you're talking silicon valley, why won't you become a [-]COBOL[/-] obsolete guy)?

I'd be looking for options 3 through 7. One of them is probably better.

 

[cb7010]

Everyone has to answer this question for themselves based on their individual goals and desires. Some people thrive on the excitement of the unknown and some are healthier and happier with security.

That said, I've got a great job/career that I've been at for about 15 years with a large, very stable company and regularly yearn to be "out there" doing something more fulfilling..I'll cut the cord at some point, you can never get yesterday back, so do what your heart tells you to..

 

[calmloki]

There are other choices which can result in having adequate funds to retire.

 

[Midpack]

1. Stable company, pension/good benefits, good hours. Most likely stay in one company until retirement.

2. Change jobs every 2-5 yrs. More interesting than #1. No pension. Uncertain hours. Salary 30% higher than #1.

Like others have said, I don't think you can count on #1 long term.

I started in 1977 working for a Fortune 500 company with good pensions and retiree health care. After I worked there for 17 years, they sold the division I was in and our pensions were frozen (at low levels and we could not withdraw the money before retirement age) and retiree health care was taken away (not phased out, just flat taken away, all legal). New company had no pensions or retiree health care. So I had to re-evaluate my plans and fend for myself. I developed a plan (didn't have one before that), saved and invested aggressively and fortunately, 18 years later I was able to retire early! I'm convinced that losing my old school pension/health care was a lucky break in the end, but I was still young enough to save and invest to put myself in control. It woke me up, thankfully.

Short answer, I think you should be financially prepared for reduced Soc Sec, no pension and no retiree health care and choose a job based on the job's merits and current benefits (not retirement). Retiree benefits are a factor, but a secondary consideration at best. If later in life you find you have a pension and/or retiree health care, you can retire earlier or richer. Essentially all upside risk, YMMV.

 

[Redbugdave]

Gee Don, you didn't include doing something you enjoy in your examples of "rewarding."

I think the biggest lesson I've learned from posters on this board is that the most pathetic thing you can do is sacrifice your current life in order to enhance FIRE possibilities. Spending 2 or 3 decades in a career that you don't find rewarding is a waste of the most important asset you have: your one and only life.

If you're fortunate enough to be smart, healthy and energetic and therefore able to call most shots on your career, do something you like! You can always make money but you can't turn the hour glass over for another run at life.........

I think what DonHeff and YouBet said is the way I feel about the subject. I think if you are in a job that is secure with good benefits but do not enjoy what you do...then you are just a bug in a jar. If you enjoy what you do, then the promotions, money, and offers will come naturally. I think I would trade being secure for a more enjoyable, (but less secure), job. The older I get the more aware I am of how important time really is. You don't want to waste your time doing things you don't enjoy...even at work...since it is YOUR life.

Otherwise...all things being equal...if you love what you do...then you are probably better off in a secure job than a higher paid non-secure job. Money is important...but up to a point.

I know this is a little off the subject, and I hope my ramblings make a little sense...

 

[EllisWyatt]

Going to chime in with my two cents worth (and may be overcharging at that....)

I took the #1 route with a Fortune 500 megacorp. I thought. Signed on with the megacorp that bragged that they had never had a layoff since 1958 ("Danger Will Robinson!!") Probably should have set off alarms. When the downturn in the industry came 1 year later, they had a 20% staff reduction. Then another. Then 10%... ad nauseum. Then they did away with the defined benefit system and went to a matching 401K. After twenty years and 18 rounds of layoff, they were acquired by a bigger fortune 500 company, and the retirement health benefits vesting moved from age 50 to age 55 (with significantly increased cost and decreased coverage).

At which point I went to option #2. More $$, essentially the same stress. Still no pension or retirement health coverage, but have been able to "top off" the nest egg.

I was actually fortunate, however. Because the downsizing/lack of security began so early in my career, I was able to realize that I could only depend on myself for my own retirement, and began saving aggressively at a young age.

I was also fortunate that, by working for a megacorp, I got excellent training and was able to work on some awesome projects that smaller companies could not.

So, my experience was to go for #1, save like I decided on #2, LBYM, and enjoy myself as much as possible along the way.

 

[Rustic23]

First, I agree that both are ways to retirement. I disagree with those that say #1 no longer exist. I may not be as prevalent as it once was, but I think it does exist in many industries, sales, office jobs and such. I think it is often up to the employee to continue to reinvent themselves and to stay current in their skills.

The thing you did not say about #1 was 'and the job is the pits' or 'it is boring' or 'you will have to take up heavy drinking to get through 30 years'. As for #2 you assumed that you will be able to get a new job every 2-5 years. A close friend of ours went with #2 (sales) while his wife went with #1 (school teacher). Just about every cent extra he saved was spent at one time or the other during times of unemployment. IMHO, it boils down to there are no guarantees! Your retirement is what you make it.

 

[donheff]

Take what seems like the most personally rewarding job (compensation and benefits, opportunities are all part of that equation).

Gee Don, you didn't include doing something you enjoy in your examples of "rewarding."

I had actually initially written "take the job that sounds like the most fun" with no qualifiers. Then I decided that, in the OPs situation, I would consider all those other things as well so I switched to "personally rewarding." The parenthetical list was meant to affirm that those things should probably go into the equation. I would trade a job I enjoyed for a better paying job I didn't in a heart beat. You spend a lot of decades at work.

 

[convergent]

I am option #1, but not gotten the benefits. I've starting my 30th year, but 10 years ago they converted the traditional pension to a cash based approach, which they've since just moved to a 2% 401K contribution + match to 6%. What a change. With the old approach, I could retire now with 80% of my income. With the new plan, ummm... not exactly. In fact, their "pension" plan wouldn't even produce enough to pay my medical. Medical used to be fully paid by them too, and now its nearly all paid by the employees (in fact, I think they are making a profit on it). So I probably got the worst of all worlds by staying put, and not getting the traditional benefits.

 

[HatePayingTaxes]

Is it legal to change the DB like this? How can they promise something at the time of hire and eventually change it? Isn't there some kind of law against that?

 

[Midpack]

First, I agree that both are ways to retirement. I disagree with those that say #1 no longer exist. I may not be as prevalent as it once was, but I think it does exist in many industries, sales, office jobs and such.

I for one never said #1 no longer exists. You would agree that #1 has become rarer and rarer for decades and that counting on it might end in disappointment (to put it mildly)?

 

[Mulligan]

Interest chart Midpack. I had read that workers with pensions had declined from 75% or so in early 80's to around 17% or so today, but that included government workers. I wonder if any of the 7% today with private sector pensions are actually working under frozen pension plans.

 

[convergent]

Is it legal to change the DB like this? How can they promise something at the time of hire and eventually change it? Isn't there some kind of law against that?

There are apparently only laws to protect people over 40 from this kind of thing. My employer is a Fortune 25 company that is non-union so is well versed in the legalities of changing benefits. When this change was made, they initially made the change for anyone that wasn't within 5 years of retirement. They came back shortly after and amended it for anyone 40 and over (avoidance of age discrimination laws), or anyone with at least 20 years with the company (5 years from the typical 25 year retirement of the past). This amended plan hurt pretty bad... I was 39 3/4 years old and had 19 3/4 years with the company. So I was 3 months shy of the traditional pension on both counts. No law against them doing this, and my only recourse was to quit.... which I didn't want to do. The employees sued the company and won, and the case was appealed a zillion times and finally they won an appeal and it was over. In addition, nearly everyone I know that got the old plan, was laid off before they ever had a chance to collect it. So in the end, I may have been better off to get the cash plan since I still have a job 10 years later.

I respect a company's right to set whatever benefits they want to set. I make decent money and like my job for the most part, so I've stuck it out and avoided the layoff lottery that happens a couple times a year. I'm confident I could find another job if my number comes up. I don't doubt that one of the reasons the company continues to excel is that they were able to change their course with regard to the drain of retirees that many large corporations are being saddled with. But there is a balance and I think they went a bit harsh on their transition.

 

[Keim]

Is it legal to change the DB like this? How can they promise something at the time of hire and eventually change it? Isn't there some kind of law against that?

It probably varies from state to state. I live in a "right to work" state. I can verify this is perfectly legal here. As exec. director of a small nonprofit I oversaw a 50% reduction in benefits for my staff.* (These were vacation benefits/accrual rates, as we didn't offer retirement or any other bennies. If we had, they would've been chopped too.) Subsequently, I had the pleasure of re-staffing the office within 2 months.


*This was a decision by the nonprofit board of directors, not mine. I advocated strongly against it. I proposed grandfathering in current staff, and changing leave accrual rates for new hires. Partially as a result of my distaste for their decision, the board had the pleasure of hiring a new E.D. within four months.

 

[Texas Proud]

There are apparently only laws to protect people over 40 from this kind of thing. My employer is a Fortune 25 company that is non-union so is well versed in the legalities of changing benefits. When this change was made, they initially made the change for anyone that wasn't within 5 years of retirement. They came back shortly after and amended it for anyone 40 and over (avoidance of age discrimination laws), or anyone with at least 20 years with the company (5 years from the typical 25 year retirement of the past). This amended plan hurt pretty bad... I was 39 3/4 years old and had 19 3/4 years with the company. So I was 3 months shy of the traditional pension on both counts. No law against them doing this, and my only recourse was to quit.... which I didn't want to do. The employees sued the company and won, and the case was appealed a zillion times and finally they won an appeal and it was over. In addition, nearly everyone I know that got the old plan, was laid off before they ever had a chance to collect it. So in the end, I may have been better off to get the cash plan since I still have a job 10 years later.

I respect a company's right to set whatever benefits they want to set. I make decent money and like my job for the most part, so I've stuck it out and avoided the layoff lottery that happens a couple times a year. I'm confident I could find another job if my number comes up. I don't doubt that one of the reasons the company continues to excel is that they were able to change their course with regard to the drain of retirees that many large corporations are being saddled with. But there is a balance and I think they went a bit harsh on their transition.

It probably varies from state to state. I live in a "right to work" state. I can verify this is perfectly legal here. As exec. director of a small nonprofit I oversaw a 50% reduction in benefits for my staff.* (These were vacation benefits/accrual rates, as we didn't offer retirement or any other bennies. If we had, they would've been chopped too.) Subsequently, I had the pleasure of re-staffing the office within 2 months.


*This was a decision by the nonprofit board of directors, not mine. I advocated strongly against it. I proposed grandfathering in current staff, and changing leave accrual rates for new hires. Partially as a result of my distaste for their decision, the board had the pleasure of hiring a new E.D. within four months.

Actually it is federal law... states do not have any say in this area... and it only protects what you have earned to date... IOW, they can change the plans anytime they want for everybody (no special case for over 40)....

All they have to do is pay the higher of the old plan or the new plan when you retire... I was at a mega that also changed a defined benefit to a cash balance... and there were some people who sued saying that their cash balance was 'low' and wanted more put in (and we are talking high paid people which meant millions of dollars).... the mega won as they said they would pay the people what they earned on the old plan if and when they retired... it did not matter that in reality they were now working without any kind of pension....


PS... thinking about it... I have been through 3 of these... twice when a plan was closed down in order to get excess cash out and then the DB to cash balance... also, this was in another thread and in reality the cash balance of my mega is really a DB for legal purposes.... they just changed the rules of what your benefit will be.... it will be an annuity based on the 'cash' that your account has accrued over the years based on what we have put in.... nothing to do with years worked or salary to determine your benefits, so no trying to get that extra benefit by working more in your last few years....

 

[MasterBlaster]

Actually it is federal law... states do not have any say in this area... and it only protects what you have earned to date... IOW, they can change the plans anytime they want for everybody (no special case for over 40)....

Those DB plans are back-end loaded.

Since people accrue most of the benefit towards the end of their career in a DB plan, switching midstream is particularly cruel. Sure they get what they have accrued, but it really doesn't amount to much.

 

[HatePayingTaxes]

Wow, amazing what these companies can get away with. I'm all for staying competitive but don't promise something and backtrack later. People on this board are smart enough to save but imagine the people who planned their lives based on the company's promise... it must be really devastating.

 

[Keim]

Wow, amazing what these companies can get away with. I'm all for staying competitive but don't promise something and backtrack later. People on this board are smart enough to save but imagine the people who planned their lives based on the company's promise... it must be really devastating.

I agree. Big difference between what is legal and what is moral, huh?