Defined Benefit Plan impact on RE

[mickeyd]

We all know that DB plans are surely a vanishing part of the retirement scene.  However, many employees and retirees are still part of a DB plan, either as a current beneficiary or a future beneficiary.

Fewer and fewer employees these days have a vested interest in a DB plan, however those who do have such a vested interest in a DB plan have a valuable asset indeed!

Forgetting about SS for the moment, what percent (%) of your retirement expenses (or projected expenses)  are covered by a DB plan (or, for non-retirees, how much will be covered by a DB plan) in which you have a vested interest ?

401(k) plans were initially structured to be retirement suppliments to pension plans (DB plans), but their nature has changed drastically over the last 10 years.  They now are the main retirement vehicle, often the only retirement vehicle, of many/most workers.

What percent will your 401(k) or 403b retirement investment plan play in your total retirement income?

 

[SteveR]

My stats depend on what part of retirement we are talking about. Early, middle or late. The answer changes for each phase but to greatly simplify my numbers would be more or less:

Pension: 25%
401(k); 50%
After Tax: 25%

 

[Robert the Red]

I'm figuring about 25% from DB pensions (self's and wife's), about 15% from SS when it kicks in, and the rest via SWR.

I'm conservatively planning to make do on the SWR if we have to.

 

[justin]

I have an ESOP that the employer contributes to each year. No guaranteed payout, just whatever the account is worth when I retire.

ESOP-10%
401k (for me+wife) - 50%
IRA's/Taxable accounts - 40%

approximately. We max out 401k contributions and get a match of 4% (me) and $3000 (DW).

 

[REWahoo]

My stats depend on what part of retirement we are talking about. Early, middle or late.

Same here. Right now it's 100% after tax savings, but over the long run I project it to be:

After tax savings:10%
Pension: 5%
SS: 30%
SWR: 55%

 

[astromeria]

For both of us together:

~ 45% taxable accounts (we had little or no 401k matching, plus a large emergency fund, plus some stock options panned out)
~ 30% Social Security
~ 20% IRAs
~ 5% DBP

 

[grumpy]

My DB plan plus my DW's cover about 95% of our regular living expenses. Only things not covered are extras like vacations.

Grumpy

 

[obryanjf]

I agree with SteveR, it will change over the course of retirement. I'm 40 now and cannot draw until 65. I have listed the % of present value at 65 anticipated at that time, assuming I am able to ER at 45.

80% 401K/IRA's/Taxable
10%Taxable Money
DB

 

[obryanjf]

Sticky fingers

I agree with SteveR, it will change over the course of retirement. I'm 40 now and cannot draw until 65. My DB has been suspended and grows with inflation while I work. After ER, inflation may ravage it. I have listed the % of present value at 65 anticipated at that time, assuming I am able to ER at 45.

80% 401K/IRA's/Taxable
10% SS
10% DB

If I need either SS or Db to survive in retirement then I count as a failure.

job

 

[Intuit]

Great topic, I was just looking at the numbers today and had thought of posting a similar question. I guess I was lucky to get in on two DB's for me and one for the wife. Combined total will cover about 80% of our expenses. The trick will be funding the gap between age 55 and drawing on the DB's and SS. When the SS for wife and I kick in, we are at 300% of estimated expenses.

 

[dlhanson]

I had both a DB pension and a 401K from a major oil company  DW only worked the first two years we were married so she doesn't even have SS on her own.

DB (rolled over into 401K as a lump sum)  - 25% (small since I left at 50)

401K - 61% (first 7% was matched 1 to 1)

Personal IRA - 4%

Aftertax - 11%

 

[unclemick]

age 49-62, 1993 -2005:

roughly 40% Norwegian widow dividend stocks
60% defined non cola pension

expected age 62-84.6. 2006 till
22% non cola defined pension and declining.
30% early SS
12% Norwegian widow stocks
36% IRA @ 2% SWR and rising.

Trying to lighten up on cheap bastard and throttle up a tad. Also a small amount of Roth - in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.

Dat's da plan - wonder how life will deal out the cards.

heh heh heh

 

[SteveR]

...Trying to lighten up on cheap bastard and throttle up a tad. Also a small amount of Roth - in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.

Dat's da plan - wonder how life will deal out the cards.

heh heh heh

That is the crux of the matter. No one, well almost no one, knows when your number is up. All we can do is plan for the longest reasonable life and hope our money runs out the same time we do. The "sleep at night factor" is the buffer between eating cat food because you guessed wrong or leaving some money on the table.

I think the worst thing would be to deny yourself so much to have a very fat buffer and then die with a ton on the table. You sure as @ell can't take it with you so at some point one has to say.... "Ok lets spend some more on what makes me happy."

 

[yakers]

My wife & I have DB plans which should equal 100% of basic expenses, not counting younger son's (who is in high school now) college costs. Our TSP(401k)/403B, IRA, Roth, dividend stocks and credit union savings are to play with.

 

[Ginger]

My DH DBP covers all our living expenses, plus medical. Our savings, IRAs, etc. will be the safety net.

 

[cute fuzzy bunny]

in case the IRS is wrong on the 84.6 - which BTY was I believe 84.3 in 1993.

You stick around long enough, you'll live forever. Or is it "4ever" with the 15 year old girls in missoula?

 

[Martha]

No DB plans at all. About 15% of our current retirement assets are in 401k and about 1% in IRAs. All the rest in post tax accounts.

 

[Eagle43]

100% from age 60-62.  After 62, ss kicked in and percentage dropped to (estimate) 75%. Tricare covers medical.  All investment gains are re-invested.

 

[HFWR]

My DBP was frozen at $21k when I was downsized in '98...

Estimate 401k will provide 2/3, SS will provide 1/3. Health insurance costs will be shared by myself and megacorp, assuming that doesn't disappear...

 

[Gone4Good]

DB 0%
401(k) 14%
After tax Savings 86%
SS 0% (will be ~20 years from collecting at time of retirement with any luck)

 

[mickeyd]

We have 3 DBs.

Mine with the military/reserves (COLA) started last year and I use it to fund the Roth IRA for me and DW. The rest goes into a MMF to pay for this and that. It is probably enough to live off of if we needed to and really scrimped. 

My 2nd DB is not COLA and I will phase it in in a few years when DW decides that she is fed up with the local school system, until then it continues to grow if I don't touch it.

DW has a BD plan with the school system.

When all 3 DB plans are cranking along, along with our two SS checks, we will have an income stream that is well over 100% of our expenses.

What the heck are we going to do with the IRA, 401k, 403b, Roth and taxable money 

Oh damn...more decisions.

 

[CyclingInvestor]

I am 47 and will be retiring in a few years.

Expected income :

85% IRA (rollover of job 401ks), all in income producing stocks,
using 72t withdrawals
15% Regular Stock account dividends

 

[sgeeeee]

DW and I each have two DBPs we are vested in. We also have some social security benefits we've earned. We've planned our retirement so that we can do fine without any of them.

But if they are actually available, then I've looked at them under two conditions:

1) we take benefits from all of them as soon as possible. This means I can start collecting my pensions in 4 years at age 55. DW is one year younger and can start collecting the following year. Combined, the pensions could cover about 1/3 of our total spending requirements when they first kick in. That would diminish (no COLA) till I reached age 62 when I could collect social security with DW collecting the following year. With all pensions and ss, we would get almost 50% of our spending requirements from these annuities. That percentage would drop gradually since the pension portion is not COLAed.

2) we wait till all pensions reach full benefit levels and take social security at age 67. Since two of our pensions reach full benefit levels at age 62 and two at age 66, this staggers the ramp-up and DW's first payment of one pension overlaps with my first ss payment. At the end of the total ramp-up period, the annuities would be paying for almost 75% or our total spending.

I've assumed 3.5% annual inflation for all these calculations.

 

[BUM]

No DB's here.

25% 401(k)
65% Invested Savings
10% Buried in the back yard under the dog house