Poll: Does a Pension factor into your FIRE Plans?

[Amethyst]

It's mostly Congress that comes up with taxation ideas. IRS employees pay taxes, too...they don't want higher taxes any more than the rest of us....

So elect your representatives carefully!

Heaven forbid, the IRS may be looking over their shoulders farming ideas on federal revenue generation.

 

[Amethyst]

Ours are taxed as ordinary income. Certain states, e.g. Pennsylvania, don't tax pension income though.

Discussions of pensions get hairy because there are so many different kinds, with different benefits and restrictions. Ya get what ya get.

What makes you THINK pensions are tax free?

 

[Just_Steve]

Ours are taxed as ordinary income. Certain states, e.g. Pennsylvania, don't tax pension income though.

Discussions of pensions get hairy because there are so many different kinds, with different benefits and restrictions. Ya get what ya get.

Mine is Fed taxed as ordinary income also but I don't pay NY state tax but the state is slick, the only reason I don't pay state tax is because it was taxed as income when earned. Sad part is if I move to another state that has income tax they will tax it again. Hardly seems right.

 

[Walt34]

If I had known then what I know now, I'd have looked for a job with a pension. But I never gave it a thought.

I have a pension but I sure didn't give it a thought at age 22 when I applied. It's the rare person who thinks about retirement at that age, or at least it was at the time when DB pensions were more common. I don't think I thought about it at all until about age 35 or so when I went through a divorce and realized that I was more than halfway through my career if I went out on a normal retirement at age 48. Since I liked what I was doing at the time I didn't retire until age 52.

 

[Chuckanut]

I must have got screwed somewhere...I have no medical benefits, let alone a generous one. One for two isnt bad, so I wont complain. Provided I live long enough to get my moneys worth.

What?!?!?! You don't have a fully paid, Cadillac, solid gold and platinum medical plan? My Aunt Matilda who taught for 35 years in Connecticut and retired 50 years ago had such a plan. So all you folks must have it. Look harder.

 

[Mulligan]

What?!?!?! You don't have a fully paid, Cadillac, solid gold and platinum medical plan? My Aunt Matilda who taught for 35 years in Connecticut and retired 50 years ago had such a plan. So all you folks must have it. Look harder.

Well Chuck, if I consider an ACA exchange plan paid fully by myself with a tiny $6500 deductible, I got a heckuva Cadillac plan, lol.
Maybe I should keep quiet or this "benefit" may get taxed!

 

[JoeWras]

Well Chuck, if I consider an ACA exchange plan paid fully by myself with a tiny $6500 deductible, I got a heckuva Cadillac plan, lol.
Maybe I should keep quiet or this "benefit" may get taxed!

That's a good idea. I'll suggest this to my congressperson. "Please include the high deductible amount as imputed income" -- especially for Mulligan.

 

[Mulligan]

That's a good idea. I'll suggest this to my congressperson. "Please include the high deductible amount as imputed income" -- especially for Mulligan.

If you would please, Joe, in your letter throw me a bone and ask congressman to double HSA contribution limits. That way I can offset the imputed income tax with a bigger tax break for HSA.

 

[JoeWras]

If you would please, Joe, in your letter throw me a bone and ask congressman to double HSA contribution limits. That way I can offset the imputed income tax with a bigger tax break for HSA.

Got it. I'm on it. Working on the letter right now.

 

[Dreamer]

So does that mean you are covered by the CSRS plan and not FERS?

Yes

 

[Fedup]

I have a pension but I sure didn't give it a thought at age 22 when I applied. It's the rare person who thinks about retirement at that age, or at least it was at the time when DB pensions were more common. I don't think I thought about it at all until about age 35 or so when I went through a divorce and realized that I was more than halfway through my career if I went out on a normal retirement at age 48. Since I liked what I was doing at the time I didn't retire until age 52.

I did but I was too young for it. Minimum age was 25. I was 17, 22, 24. Man plans and God laughs kind of thing.

 

[Hexanova]

Little late to this poll. I do not have a pension. My employer had what was called a minimum pension plan. It was a weird program in that the company put in some money completely independent of your 401k and their contribution to it, and when you left the company you could eventually draw on an annuity at a later date or take the lump sum. I took the lump sum when I left doing some spreadsheet magic to determine I could more than likely get better returns over the life of the annuity than they were assuming.

My wife is a state worker and when she retires we estimate her monthly pension will be about $3000/month (with an eventual 30 years in the system).

 

[rdy2go]

Our two pensions cover more than our monthly spending and SS is extra. Will have more when DW starts SS next March. Won't have to touch retirement accounts until RMD's kick in.

 

[Gumby]

Since 2014 100% of our normal living expenses are covered with my DH's non-cola pension. We bought a new vehicle last year which required a dip into savings. I'll collect a small pension when I'm 65. He's itching to start drawing off the 401k and I'm like, why? Until the savings are down there's no financial reason to tap the 401ks.

There could be a tax reason -- to drain off some of your 401k now so that you won't have such high RMDs when the time comes. Of course, it depends on your marginal rate now and expected rate when RMDs start, but you might want to do the calculations.

 

[calico1597]

We are living on two pensions 100%. My SS goes into savings, have not touched any IRA's yet. Retired six years now. Our FA (yes, I know, a bad word here) told us we needed to start spending if we don't want to leave a large inheritance for the kids. Age 65/61.

 

[Ed B]

It's mostly Congress that comes up with taxation ideas. IRS employees pay taxes, too...they don't want higher taxes any more than the rest of us....

So elect your representatives carefully!

Oh I know. My response was tongue in cheek.

 

[traineeinvestor]

No pensions. No equivalent to SS. Just our savings.

No medical benefits either. As long as DW keeps working we are covered under DW's employee plan. Given medical insurance and medical costs are is a lot cheaper outside the US, it's not a major issue for us to cover the costs when she stops working.

 

[Huston55]

Excellent Blanchett Article

The subject article illustrates how 'guaranteed income' affects SWRs.

It's well worth a read & addresses the OP/Poll question pretty directly. The summary is below.

Conclusions
To better serve retirees and those saving for retirement, financial planners need to move beyond heuristic-based initial safe withdrawal rates. Results from this analysis suggest that optimal initial safe withdrawal rates varied significantly when guaranteed income was considered, from approximately 6 percent when 95 percent of wealth was in guaranteed income, versus approximately 2 percent when only 5 percent of wealth was in guaranteed income.

https://www.onefpa.org/journal/Page...drawals-on-Safe-Initial-Withdrawal-Rates.aspx

 

[2017ish]

The subject article illustrates how 'guaranteed income' affects SWRs.

It's well worth a read & addresses the OP/Poll question pretty directly. The summary is below.

Conclusions
To better serve retirees and those saving for retirement, financial planners need to move beyond heuristic-based initial safe withdrawal rates. Results from this analysis suggest that optimal initial safe withdrawal rates varied significantly when guaranteed income was considered, from approximately 6 percent when 95 percent of wealth was in guaranteed income, versus approximately 2 percent when only 5 percent of wealth was in guaranteed income.

https://www.onefpa.org/journal/Page...drawals-on-Safe-Initial-Withdrawal-Rates.aspx

You might want to start a new thread with this article. Based on a quick read/skim, it looks interesting and provides food for thought (albeit subject to the usual limitations inherent in any attempt to model the unknown for everyone). Thanks for posting it.

 

[PawPrint53]

$144 a month. We donate it to our church. It's from DH's first job out of college in 1981. He was laid off in 1988. No idea how they tracked him down (after 8 moves and 3 states) last year.

 

[Red Badger]

I have a modest military pension (that will become significantly larger should I live long enough) and a small (non-COLA) mega-corp pension. Very grateful for both!

Off topic kicker - TriCare at 60 was a key to retiring at 60. Beats the hell out of my current mega-corp plan with $6600 deductible (HSA - big whoop).

 

[Huston55]

I have a modest military pension (that will become significantly larger should I live long enough) and a small (non-COLA) mega-corp pension. Very grateful for both!

Off topic kicker - TriCare at 60 was a key to retiring at 60. Beats the hell out of my current mega-corp plan with $6600 deductible (HSA - big whoop).

Yep!