Very small networth when ER ?

[marko]

I don't begrudge people who have pensions but I do have a problem with ridiculously high public service pensions which were negotiated by the same people who would benefit from those same pensions. In cities where I've lived the city officials got the same pension as the workers. So when the union negotiates for a bigger pension than the city can afford where's the checks/balances?
Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.

And in my small town, if you develop something as minor as a small skin cancer on your ear within 6 years of retirement, your Fed taxes on that pension are paid for life. Plus everyone city employee gets a 25% discount on their property taxes.
Nice.

 

[Enuff2Eat]

I'm definitely the odd one out! Find it odd that so many are comfortable about having pensions. DW will have a small one when/if she retires. I'd be petrified with current US situations of pensions if we HAD to depend on one for comfortable retirement. I'm much more comfortable depending on myself.

I am with you.

The new trend for most of us is "you are on your own pension". Only government people, teachers, fireman, cops, state workers and general public folks can have a pension when they retire.

 

[Danmar]

Our stay in Sicily was Taormina and Catania. Great caprese salads and red wine. Apparently the lava soil is good for both!

Agree. Particularly Taormina. Actually stayed there twice in 2014. On the water and up in the town. Spectacular. One of the nicest little tourist towns in Italy.

 

[Danmar]

Waaaay better than flying; approximately two weeks food and accommodation, ports to visit on the way, no jet lag...we love it.

Agree. Have done this in the past and plan to do it next Sept on the QM11. Haven't cruised for a few years as got tired of it. But cross-ocean cruises are different. No crappy tours to mundane, tourist traps with aunt Matilda bringing up the rear. Really like doing long workouts, lectures, cooking classes, reading on the balcony, happy hours, etc. The fact that they are often quite reasonably priced is a bonus.

 

[Danmar]

I don't begrudge people who have pensions but I do have a problem with ridiculously high public service pensions which were negotiated by the same people who would benefit from those same pensions. In cities where I've lived the city officials got the same pension as the workers. So when the union negotiates for a bigger pension than the city can afford where's the checks/balances?
Your pension shouldn't pay you more than you made working. One thing my city got caught doing was giving promotions to people on their last day of work, so they then retired at a higher pension then they earned. They would then collect 30+ years making more money then when they worked.

Agree. It's a travesty how some of these public service pensions have gotten out of control. I have a very generous pension but at least it's paid by a private company.

 

[beowulf]

Agree. It's a travesty how some of these public service pensions have gotten out of control. I have a very generous pension but at least it's paid by a private company.

Let's remember that the term "public service" includes the military, all federal employees, and most state employees, none of whom had or have any say whatsoever in the terms, amounts or taxation of their pensions. You can also, without any stretch of the imagination, count SS as a "public pension* since most people's benefits far exceed the amount they contribute over their working lives.

I fully agree with criticisms of local employee unions or public officials who push through absurd pension benefits. And practices such as spiking. Mismanagement of certain state pension systems is not on the employees - it's the elected officials. And, when taken in total, the number of people who benefit from these situations is far lower than those who don't.

Private pensions (those few that remain) aren't free - someone - the stockholders, consumers, indirectly the taxpayers (as pension and 401K contributions made by companies are expenses that aren't taxed as profits) pays for them.

It's the abuses that create bad publicity and far too many people condemn the whole system rather than those that are flawed.

 

[rothlev]

Wow. Whoever leaves this earth first, the other will be in a world of hurt when their SS stops.

Not as bad as you think. HUD housing 30% of income. nice . well maintained complexes, with activities, food stamps, no medical co pays, and food bank delivers large boxes of other food items, like bricks of cheese. My MIL used to give the extra food to her sons. Certainly not high on the hog, but very comfortable. It is the extras that we take for granted that are hard. Recreation, travel, meals out etc... that make it harder. Family members have to kick in for those things.

 

[NW-Bound]

The city of Phoenix tries to curb pension spiking. The most common form is to accumulate sick leave and vacation days, then take them in the last year of employment. As the pension formula uses only the last few years of pay (instead of 35 years like SS), this boosts up the pension. There was a city manager who accumulated $200K worth of spiking when he retired. Imagine the pension boost from that!

The city was taken to court by some unions. The city argued that there was never any explicit written document spelling that out. The city turned its eyes and allowed this practice starting in 1996, and now wanted to discontinue it. A Superior Court judge said "Too bad, so sad", and ruled for the unions.

PS. The above-mentioned city manager got $220K/year. He retired and moved to Santa Ana, CA, to take a job there. His predecessor at the Phoenix job got a $246K/yr pension.

 

[Music Lover]

I know a few people who retired with little or nothing saved...their only source of income is a federal pension. One person even cashed out a few weeks of vacation time when they retired to pay off their overdraft...

 

[kcowan]

The city of Phoenix tries to curb pension spiking. The most common form is to accumulate sick leave and vacation days, then take them in the last year of employment. As the pension formula uses only the last few years of pay (instead of 35 years like SS), this boosts up the pension. There was a city manager who accumulated $200K worth of spiking when he retired. Imagine the pension boost from that!

Yes I think it is this type of public pension abuse that gives them a bad name. But we can't blame the participants. We have to blame the administrators. More power to that city manager who knew the rules and used them to leverage his retirement. Too bad he was allowed to do it by "the system".

Private pensions have some of the same problems. I was the beneficiary of one of them.

 

[travelover]

.........Private pensions (those few that remain) aren't free - someone - the stockholders, consumers, indirectly the taxpayers (as pension and 401K contributions made by companies are expenses that aren't taxed as profits) pays for them. ...............

I've got a private pension, but I didn't steal it from the stockholders, the consumers or the tax payers. It was part of my deferred compensation, as agreed to by all involved. I pay income tax on the pension as well as any 401(k) or IRA withdrawals, so no money goes untaxed, though it may be at a lower rate due to the deferral.

 

[NW-Bound]

Some more info on the pension spiking in Phoenix. It was not just accrued sick leave and vacation days that they added to the base pay in the last year of employment to compute pension pay.

The city managers even included their personal car and cellular phone allowances! You would think that these were provided for them to perform their work, but they argued successfully that these were part of the compensation. The taxpayers end up not only paying for these amenities while they worked, but also for the rest of their life.

Good lord! Why did they not include their office costs, parking privileges, utility bills and maintenance costs of their office buildings too? The cost of their secretaries? I guess they did not want to be so greedy. Or perhaps they did try but were successfully rebuffed.

 

[NW-Bound]

Yes I think it is this type of public pension abuse that gives them a bad name. But we can't blame the participants. We have to blame the administrators. More power to that city manager who knew the rules and used them to leverage his retirement. Too bad he was allowed to do it by "the system"...

Sure. But what is most irksome is once it was allowed to happen it became grandfathered in and could not be changed, even though there was nothing formally on the book to allow it. See the lawsuit I described earlier. I am going to look up that judge to see if voters have thrown him out.

PS. His term ends in 2019, when he will face a retention vote. I hope the citizenry still remembers by that time.

 

[Walt34]

Find it odd that so many are comfortable about having pensions.

It depends on how well the pension plan is funded. I sleep well at night because mine is over 90% funded. Now, if I was retired from Chicago I'd need a lot of sleep aids....

And, sadly for me, it is not one of those luxury ones either. We're comfortable but I don't see a round-the-world luxury cruise in our future.

No one writes articles about well-run and well-funded pension plans because they're boring.

 

[jollystomper]

IBut as part of the "3 legged stool" retirement concept (SS, a pension, and savings, as I learned it back in the 70's), it can be an important part of the plan.

+1

I am very fortunate to be getting a relatively generous private pension when I retire (even after Megacorp's changes over the years that reduced it by close to 25% of what it would have been had they kept the same rules in place from 20 years ago). However, DW and I never felt comfortable with just that, and we also did not assume SS would be enough for us. So we made sure to save as well.

My company pension is fully funded, but taking no assumptions I've run the numbers with and without it; without it we can cover our expenses with a little wiggle room; with it we will have a comfortable retirement (though I'm not trusting the "high" level of comfort various retirement planning calculations are predicting ).

 

[Just_Steve]

I've got a private pension, but I didn't steal it from the stockholders, the consumers or the tax payers. It was part of my deferred compensation, as agreed to by all involved. I pay income tax on the pension as well as any 401(k) or IRA withdrawals, so no money goes untaxed, though it may be at a lower rate due to the deferral.

Sounds 100% like my public pension.

 

[travelover]

Sounds 100% like my public pension.

In my case, the pension is funded, so it does not depend on future contributions to remain solvent. That is the rub with many pensions, especially SS.

 

[Just_Steve]

In my case, the pension is funded, so it does not depend on future contributions to remain solvent. That is the rub with many pensions, especially SS.

Last time I checked my plan was funded around 90%, I can sleep well at night.

 

[Onward]

A good friend of mine is married to a professor at the U of California. The stories of what the tenured staff does, in the few years preceding retirement, to dramatically jack up their pensions would make you want to vomit.

 

[beowulf]

I've got a private pension, but I didn't steal it from the stockholders, the consumers or the tax payers. It was part of my deferred compensation, as agreed to by all involved. I pay income tax on the pension as well as any 401(k) or IRA withdrawals, so no money goes untaxed, though it may be at a lower rate due to the deferral.

As said by another, that's exactly what a military, federal employee and many public sector employee pension is. Instead of receiving salaries that would be paid to those in the private sector for similar education, experience and responsibilities, we served the public at a lower salary with the implicit promise that we would receive such and such pension. This is all moot now. The military pension system has undergone changes devaluing its worth and more changes are in the offing. Yet there haven't been large increases in pay and benefits to make up for that. The former gold standard federal pension stopped accepting new employees in 1983. Since then any new employees have been under a much reduced system. And, while there have been small changes to that, even larger ones are coming. Yet again, no increases, other than inflation (not much of that) have offset the reductions in pensions. And all pensions are federally taxed in full.

 

[travelover]

Last time I checked my plan was funded around 90%, I can sleep well at night.

Right. The grousing here was about public pensions that are not properly funded, Illinois being a prime example.

 

[FUEGO]

Agree. Have done this in the past and plan to do it next Sept on the QM11. Haven't cruised for a few years as got tired of it. But cross-ocean cruises are different. No crappy tours to mundane, tourist traps with aunt Matilda bringing up the rear. Really like doing long workouts, lectures, cooking classes, reading on the balcony, happy hours, etc. The fact that they are often quite reasonably priced is a bonus.

You know you can stay on the ship while you're docked in the tourist traps, right? Ship's half empty and it's wonderful.

We did this on both the cruises we went on in December when we visited Nassau, Bahamas. We've been there half a dozen times (EVERY cruise from the east coast seems to dock there) and seen and done everything and wanted a lazy day of relaxation. And got exactly that. And Nassau is probably the worst port I've visited in terms of aggressive touts for taxis, guided tours, etc (Cozumel possibly a close second). No thanks to running the gauntlet just to bum about the touristy area around the port.

I'm jealous of your QM2 voyage across the Atlantic. We'll be stuck in economy in a thin metal tube for 7-8 hours next summer (with a 5 year old) instead of traveling in style. Next time perhaps.

 

[Chuckanut]

Right. The grousing here was about public pensions that are not properly funded, Illinois being a prime example.

True.

Then add to that many of the folks in that system are not covered by SS (Like Detroit). I would not want to be in their shoes.

It does make me wonder what happened to all that money the employer and employees did NOT pay into SS. Any ideas?

 

[beowulf]

Presumably the employees paid into their public pensions and the employer funded it. Or not. If it didn't go in, both kept their share.

 

[travelover]

Presumably the employees paid into their public pensions and the employer funded it. Or not. If it didn't go in, both kept their share.

I think it is a combination of inadequate funding from the employer / employee, fictitious assumptions about future growth of the pot, plus really crappy, nearly criminal investments by the retirement fund, in some cases.