Pensions - Got one?
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Mulligan
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One legged pension retirement stool here. WEP essentially takes away my SS scraps. They reduced our COLA from CPI to fixed 2% a couple years ago. I might not get the last laugh but the first two years this has increased my COLA, not decreased it. It is significantly above my monthly living expenditures so if it ever gets reduced down the road, I should be fine.
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Actually, the question is framed a little twisted. I'm probably not alone in that my organization does not (currently) offer a pension program. But I have a pension, from when they did offer one. It was modified several times since I was hired (but you always kept what you had 'earned' to date).
Since my pension is not Cola'd, and the $ amount was locked in when I retired, and I can't take that amount until 65 (payments would be cut in half if I took it at 55), I'd estimate that the value to me is significantly less than the value of my SS. DW will get smaller SS and a small pension (but that does have a 3% COLA-Lite).
-ERD50
We have a defined contribution pension and it is non-cola. It is currently in critical status (and has been for a number of years) but is expected to emerge this year.
We took a significant hit on the percentage due to funding. For now at least, we get a check which is about 22% of DH gross earnings when he was working. Chose the 100% survivor benefit in case he goes first, which reduced the monthly amount as well.
But it is nice to get a deposit each month when not working!
We took a significant hit on the percentage due to funding. For now at least, we get a check which is about 22% of DH gross earnings when he was working. Chose the 100% survivor benefit in case he goes first, which reduced the monthly amount as well.
But it is nice to get a deposit each month when not working!
happy2bretired
Thinks s/he gets paid by the post
I have CSRS (Federal pension) and a very small, $65 per month pension, of my late husband's coming when I reach 65.
I have a small one, about 10% of what I was earning when I retired. The cash flow was 8% annual return of the value if I cashed it in, with a 3% COLA. I decided that was a no-brainer. I'm expecting an even smaller one when I turn 65, with little or no COLA. I'm reserving my decision on that one (TIAA).
DH has a bigger one, with a partial COLA. Since he had it when we met, and he is much older than I, my RE strategy was to save enough to replace his pension if and when I survive him. Which we have done.
DH has a bigger one, with a partial COLA. Since he had it when we met, and he is much older than I, my RE strategy was to save enough to replace his pension if and when I survive him. Which we have done.
I have one coming. It goes up almost 8% every year I don't take it - so I'm waiting until 65yo to start collecting. This along with SS should pretty much cover my expenses. I better take care of myself and enjoy this (future) income as long as possible.
Major Tom
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Nope, just a combination of personal savings and SS for me. I could make it without SS but am sure glad it's there.
I am receiving non-COLA'ed pensions from companies who no longer offer DB pensions to their current employees. In combination the pensions provide our basic needs. In due course I will also receive UK SS, and both DW and I have US SS to look forward to.
We both also had 401k's which we rolled over to IRA's after we ER'ed, and DW's Megacorp had a cash balance pension plan that she also rolled over to an IRA. This and some after tax savings is providing our 'fun' money which is currently mostly spent on travel.
tuffshed
Dryer sheet aficionado
Got two, neither of which are COLA. One from a company I worked 13 years till 92 which doesn't pay much because it was based on salary, which at that time was low compared to today's pay. The second from my current company of 10 years, but they stopped doing it in 2006 now they match new employees with .5% more into their 401K contributions.
All in all though not a bad deal and I can't complain, it is after all free money. I expect that when I retire early next year I will be taking out both pensions early at 60 to the tune of 12K a year which should just cover the essentials. Been toying with the idea of lump sum and roll into an IRA but still have to run the numbers.
Of course it all depends on the numbers, but what are the pros/cons of rolling over a lump sum vs. taking the pensions early?
All in all though not a bad deal and I can't complain, it is after all free money. I expect that when I retire early next year I will be taking out both pensions early at 60 to the tune of 12K a year which should just cover the essentials. Been toying with the idea of lump sum and roll into an IRA but still have to run the numbers.
Of course it all depends on the numbers, but what are the pros/cons of rolling over a lump sum vs. taking the pensions early?
I have two old/frozen pensions.
The first was a traditional DB (non cola) pension - but was frozen when the company was acquired by a bigger company in 2000. I plan to draw in it when I can, when I turn 55. It will provide about $140/month. (100% joint survivorship)
The second was from the bigger company - and was frozen in 2008. It's a defined contribution plan with lump sum payout, or annuity. If I take the annuity - it will provide about $360/month, 100% joint survivorship if I start taking it age 55. Also Non-Cola.
So that's $500 month. Not enough to live on. Not cola'd... but provides a tiny third leg of my stool.
Hey - $6000/year is better than nothing.
FWIW - the co-CEO that froze the pension was one of the highest paid CEOs the year they froze it. He retired with a 38M lump sum when they sold us again, in 2011.
I'd prefer the package he got.
The first was a traditional DB (non cola) pension - but was frozen when the company was acquired by a bigger company in 2000. I plan to draw in it when I can, when I turn 55. It will provide about $140/month. (100% joint survivorship)
The second was from the bigger company - and was frozen in 2008. It's a defined contribution plan with lump sum payout, or annuity. If I take the annuity - it will provide about $360/month, 100% joint survivorship if I start taking it age 55. Also Non-Cola.
So that's $500 month. Not enough to live on. Not cola'd... but provides a tiny third leg of my stool.
Hey - $6000/year is better than nothing.
FWIW - the co-CEO that froze the pension was one of the highest paid CEOs the year they froze it. He retired with a 38M lump sum when they sold us again, in 2011.
I'd prefer the package he got.
DH has a state public employees pension from 26 years of employment with a county social service agency. He lost his job in 2010 but had enough years (minimum of 25) and he just squeaked by on the minimum age of 55.
It was calculated on 2.2% x FAS (3 yrs) x years of service and then reduced to 80% for being 26 years instead of 30. Then we took the 100% to survivor option so it was reduced another 12%. The first years benefit was just about 42% of his working gross pay. That may not sound like much but for us it is plenty. There is a fixed COLA of 3% based on the first year, not compounded.
While working he contributed 10% of his pay to the pension plan and his employer contributed 14%.
His retirement also includes a Health Care benefit, not guaranteed. It was very generous when he retired in 2010, benefit level options and hefty subsidies for both DH and I. Starting in 2012 they made changes to the health care benefit which started with loss of choice of lower cost levels and notification of a 3 year transition to lower subsidy amounts for DH and eventual elimination of any subsidy for spouses. The final confirmation of Obamcare has given us the option to leave the pension system health care plan. Originally we wouldn't be allowed back in later but that was changed and now DH may return at Medicare age in 2020 if the pension plan has any health care benefit left for the retiree.
So the Health Care benefit has been a disappointment but the pension itself has been marvelous. Like Walt34 we feel like the pension is a dinosaur plan that will never be seen again. The fixed yearly 3% COLA is lovely and really makes a difference. Our 29 year old son is in the same pension system and they have already changed the years of service and age requirements for retirees beyond 5 years out. The changes include a COLA based on an index with a maximum COLA of 3%.
I worked full time until 1984 and then a very part time job from 2006 to present so I will have a small SS benefit of $535 at age 62 or $740 at FRA of 66 and 2 months.
It was calculated on 2.2% x FAS (3 yrs) x years of service and then reduced to 80% for being 26 years instead of 30. Then we took the 100% to survivor option so it was reduced another 12%. The first years benefit was just about 42% of his working gross pay. That may not sound like much but for us it is plenty. There is a fixed COLA of 3% based on the first year, not compounded.
While working he contributed 10% of his pay to the pension plan and his employer contributed 14%.
His retirement also includes a Health Care benefit, not guaranteed. It was very generous when he retired in 2010, benefit level options and hefty subsidies for both DH and I. Starting in 2012 they made changes to the health care benefit which started with loss of choice of lower cost levels and notification of a 3 year transition to lower subsidy amounts for DH and eventual elimination of any subsidy for spouses. The final confirmation of Obamcare has given us the option to leave the pension system health care plan. Originally we wouldn't be allowed back in later but that was changed and now DH may return at Medicare age in 2020 if the pension plan has any health care benefit left for the retiree.
So the Health Care benefit has been a disappointment but the pension itself has been marvelous. Like Walt34 we feel like the pension is a dinosaur plan that will never be seen again. The fixed yearly 3% COLA is lovely and really makes a difference. Our 29 year old son is in the same pension system and they have already changed the years of service and age requirements for retirees beyond 5 years out. The changes include a COLA based on an index with a maximum COLA of 3%.
I worked full time until 1984 and then a very part time job from 2006 to present so I will have a small SS benefit of $535 at age 62 or $740 at FRA of 66 and 2 months.
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Accidental Retiree
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Which is already $2.49 Chuck!
Rich_by_the_Bay
Moderator Emeritus
Tiny pension from a state university job years ago. We just auto-deposit it to our monthly allowance and adjust accordingly.
While it is not high enough to make a noticeable difference in our lifestyle, I can understand why some folks get that warm secure feeling each month when that pension or annuity check arrives.
While it is not high enough to make a noticeable difference in our lifestyle, I can understand why some folks get that warm secure feeling each month when that pension or annuity check arrives.
Bestwifeever
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I did not work full time any place that offered pensions or other retirement benefits and spent many years as a part time independent contractor at a home office while the kids were little (okay, my dining room, usually at midnight while everyone else slept) or on site. My SS would be on the low side although I paid into it for 30 years, and often at the 13 percent self-employed rate, so I will be piggybacking on DH's SS instead.
We do have DH's pension. He took the 100 percent survivor option so it will continue should I live longer than he does. It is about 20 percent of his final year's gross pay but comes to 50 percent of his net (no deductions for SS, health insurance, 401k contributions, state taxes). The pension plus the Vanguard IRA's dividends and capital gains payouts cover most of our essentials; we pull from the IRA's money market chunk to cover property taxes and big ticket things like travel, home repairs, etc. His pension like many others here was frozen but he was young enough that the replacement benefits, which morphed into a 401k with minimal matching, turned out mighty fine.
We plan to take SS at 70 so that its growth by then may offset the lack of a cola for the pension.
We feel most fortunate that all the parts are working together and to be ER'd for five years plus. Our kids are more astute financially about their future retirements than DH and I were so I hope they will be okay to ER in a few decades themselves.
We do have DH's pension. He took the 100 percent survivor option so it will continue should I live longer than he does. It is about 20 percent of his final year's gross pay but comes to 50 percent of his net (no deductions for SS, health insurance, 401k contributions, state taxes). The pension plus the Vanguard IRA's dividends and capital gains payouts cover most of our essentials; we pull from the IRA's money market chunk to cover property taxes and big ticket things like travel, home repairs, etc. His pension like many others here was frozen but he was young enough that the replacement benefits, which morphed into a 401k with minimal matching, turned out mighty fine.
We plan to take SS at 70 so that its growth by then may offset the lack of a cola for the pension.
We feel most fortunate that all the parts are working together and to be ER'd for five years plus. Our kids are more astute financially about their future retirements than DH and I were so I hope they will be okay to ER in a few decades themselves.
Louis2
Recycles dryer sheets
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yes, I will start receiving megacorp pension at 55. they no longer offer it to new hires, but everyone up to about 2002 is covered. it would have been larger if I worked to "full retirement" (age+service), but the penalty for leaving a few years early wasn't too bad. oh, and no COLA, so certainly not the "foundation" for a longevity plan. but very helpful.
powerplay
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CSRS pension which has a COLA along with health care benefits at the same rate as when working. I also have a ROTH and TSP. The pension covers all my current expenses so the retirement accounts are available for future expenses or wants. No SS security in my future.
powerplay
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Several years ago it was $2.99 at my local TJ's so the current $2.49 reflects a price reduction. It was never 2 buck chuck here.
kcowan
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
3 here. One non-COLA for 28.5k and another COLA for 9k plus another variable for 6.5k (variable based on total income remaining below $75k). So $43k plus investment income. Tax rate of 18% includes medicare.
Accidental Retiree
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Yeah, we learned October 2012 that in Oregon, it was 3 buck chuck. The TJ's clerk told me the difference was sales tax. Not a math major, there. I figured a price increase would work its way down the coast eventually.
Bikerdude
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I have a non-cola Mega-corp DB pension that I began receiving at age 55. It was reduced at age 62 by a percentage of my SS income. The reduction was applied whether I took SS or not. Needless to say, I began SS at age 62. The two combined provide 63.5% of current annual living expenses.
