Retirement Shock and Needing to Find a Job.

[brett]

It can be a dangerous situation to have your job, pension, and equity tied up with your employer.

One of the first recommendations of our new adviser, about three two years prior to retirement, was to exercise my stock options. In his view not doing so would risk my early retirement. There was simply too much of potential net worth tied up.

We followed that advice. Sold at various prices from 55 to 41. Stock went down to 15 not long after.

 

[frayne]

I wonder how much his salary when still working was. Was it more than $85K? I did not know GE pays factory workers that well, but then anything is possible.

I would think a tool and die man with that much seniority working in a GE engine plant would easily make $85K.

 

[Gumby]

Well, if you're not smart enough live comfortably on an $85,000 pension, then maybe you deserve to be working.

No need to be rude. We are among friends here.

 

[samcat]

Isn't there a law since Enron that says employers cannot require you to buy or keep company stock?

 

[CardsFan]

Isn't there a law since Enron that says employers cannot require you to buy or keep company stock?

Could be true. But that does not prevent them from "gifting" you stock as part of your compensation. Now, you need to do the responsible thing and diversify.

There is clearly a lot more to this story than the article explains. Maybe that part would be good click bait?

 

[harley]

No need to be rude. We are among friends here.

I think he was talking about the guy in the article. And I tend to agree with him.

 

[skipro33]

If GE is that generous with pensions, or that inept at negotiating labor wages, perhaps it was inevitable that they were going to fail. It certainly brings to question their other management decisions and negotiation skills.

 

[Gumby]

I think he was talking about the guy in the article. And I tend to agree with him.

Good point. Carry on, then.

 

[Aerides]

Isn't there a law since Enron that says employers cannot require you to buy or keep company stock?

Yes. And this was well publicized at the time. So as MC employee at the time I looked at my 401k and adjusted my "eggs". This was maybe 2003/4? And then after 2008 and Madoff, the whole "one basket=bad" thing was similarly drummed into popular consciousness. So despite both of these, the sample case kept on plugging away and never changed course?

I can't see the article due to paywall, but does it even touch on these points?

If not, it's very weak for WSJ.

 

[Music Lover]

I think he was talking about the guy in the article. And I tend to agree with him.

I was. Thanks.

If they're gonna write an article about someone having difficulties living on their pension, then perhaps instead of writing about someone pulling in $85k, a better candidate might be someone who was getting by on $35k who just faced a cutback to $25k.

 

[Luvdogs]

With our 401K, the company match was only in company stock. At the time DH and I both worked for the same company so it was a significant amount. I'm not sure if that was a "company" rule or someone else's but it was changed shortly after Enron went belly-up.

Within a week I changed it into index funds.

Turned out to be a good move.

We also had stock options, sold at about $75 fifteen+ years ago, stock went up to $100 for a short time, crashed with the rest of the market (financial company), stock went down to $3.00 at one time and is now around $50.

 

[Fleur58]

I have a teensy weensy GE pension coming to me from a company that was bought by GE in the 90s. I worked at the company for only 6 years. So I'll get $465 a month in 5 year when I am 65. Since its equals $5580 a year, I wonder if I should accept a lump sum if offered if the company is on shaky ground with its pension funding?

 

[Andre1969]

I have a teensy weensy GE pension coming to me from a company that was bought by GE in the 90s. I worked at the company for only 6 years. So I'll get $465 a month in 5 year when I am 65. Since its equals $5580 a year, I wonder if I should accept a lump sum if offered if the company is on shaky ground with its pension funding?

I had something similar, and took the buyout offer. In my case, I had worked for McDonnell-Douglas, and then Boeing, once they took us over. I had something like 5 1/2 years in...I remember it wasn't quite 6. That got me a pension of $349.21 per month, when I turn 65. So, in 2035, I'd start getting it. It wasn't indexed to inflation though...it would just be that amount.

Back in 2014, they offered a buyout, and I took it. I got a little over $14,000. It might not have been the best decision in the world, but I figured I'd rather get the money now, and be responsible for it, rather than have their pension plan go through some kind of turmoil.

FWIW, I ran the numbers, and I'd have to generate a return of around 10.5% each year, to get $14K on 1/1/15 up to $103,127 by 1/1/2035. That's about what I'd need for a 4% SWR to generate roughly $349.21/mo. Realistically, that probably won't happen. But, who knows what would happen to the terms of that pension over time, either?

 

[ChiliPepr]

I wonder how much his salary when still working was. Was it more than $85K? I did not know GE pays factory workers that well, but then anything is possible.

A GE worker could easily make $85k a year. I worked in a precision sheet metal company that was a subcontractor to GE when I was a teen and there were several people making over $40/hour on the floor and this was in the early '80s.

If GE is that generous with pensions, or that inept at negotiating labor wages, perhaps it was inevitable that they were going to fail. It certainly brings to question their other management decisions and negotiation skills.

Same reason a lot of city's have issues now, they were to generous with pensions and inept a negotiating wages. Difference is a municipality can always just raise taxes to pay.