Early retirement - the golden era of benefits...

[JoeWras]

I was just discussing this with DW a few days ago, how lucky we are. The elder law attorney we dealt with on FIL's issues said I was a "financial dinosaur". Have a government DB COLA'd pension, SS benefits coming, decent savings. Not wealthy by any stretch but comfortable. The pension plan is near fully funded so (almost) no worries.

Even where I used to work they don't offer that plan any more and haven't since the mid 1980's (I started in 1973). They offered half of your previous retirement contributions back if you switched to the new plan. I didn't take the bait but a lot of guys did, buying boats, motorcycles, cars, etc. and they are sorry now. But the new plan is still lots better than what private industry offers.

For sure, Walt34! You are a dinosaur! Even my dad who started working in 1946 with an AFL-CIO union didn't have a COLA pension in 1997. Thank God he had a DB pension in his later years, despite the non-COLA. It was a godsend to us kids when he entered long term care. (Aside: the fact that the standard will be no pensions <COLA or otherwise> is going to really BITE HARD on kids in the next few decades when they look at parent care. MARK MY WORDS.)

A DB COLA is "wealthy" in many respects.

That said, I'm not jealous. In many senses, I'm free knowing that I'd never have that. Megacorp #1 made that clear in 1993. Megacorp #2 said "What is a pension? We don't know that word." With that in mind, I've saved, saved, saved. Once I get out of OMY hell, I'm free.

OK, all that said, now whtat I've written it down, maybe I am a bit jealous about a COLA DB.

 

[Cut-Throat]

You just have to look at Labor History of the US over the last 100 years to understand what is going on. The only reason that Corporations gave out Pensions and other Benefits to Workers was to Compete with Unions for Labor. Otherwise all workers would gravitate towards Union Jobs. Corporations did not give out Pensions, Vacations, Sick Pay, 40 hour weeks and all the other Benefits out of the 'Goodness of their hearts' but did so so that they could attract talent from the Union Labor roles.

Now that Unions have been mostly Busted in the U.S., Corporations are free to eliminate Pensions and Benefits under the guise that "We cannot compete with Cheap Labor of other Countries". When in reality U.S. Corps have never made more money than today and are actively off-shoring jobs at record numbers.

This will eventually change when U.S. workers are exploited to the point that they will have to re-fight the Labor Wars of the 1930s and 1940s all over again.

Until then the U.S. workers are at the Mercy of Corporations that are free to remove benefits and wages until workers finally end up protesting.

I am glad I am retired and do not have to participate in this. I thank my ancestors of the 1930s that fought hard for the meager benefits that I did have. No Pension, but at least I had good working conditions, 40 hour week, vacations, sick days, health insurance, overtime and 8 hour days.

 

[JoeWras]

Cut-Throat: maybe that's heading to politics. But I think you have a good point. On the surface, my politics disagree with you. (I'm not a union guy.) However, seeing how well my dad's Union treated him in his dying years, I'm grateful for that Union. I think you have very valid points. Many of us non-union people actually benefited from Unions. It kind of pains me to say it, but I think it has merit.

Meanwhile, I just wish my Dad had a COLA pension. But that's another matter. Not all Union pensions are the same.

Second meanwhlie: I'm OMY and glad I'm 1, 2 or 3 years from being done with this. There will be future labor wars in my business. The wages are dropping so fast it is scary.

 

[pb4uski]

Cut-Throat, are you having difficulties with your "shift" key?

 

[Cut-Throat]

Cut-Throat: maybe that's heading to politics. But I think you have a good point. On the surface, my politics disagree with you. (I'm not a union guy.) However, seeing how well my dad's Union treated him in his dying years, I'm grateful for that Union. I think you have very valid points. Many of us non-union people actually benefited from Unions. It kind of pains me to say it, but I think it has merit.

I was never in a Union myself either, but I know I reaped benefits hard won by Unions. I look at the Labor Situation in the U.S. in the 1910s and 1920s when Children were working and there were no safety laws what-so-ever. These things were not overcome without a severe struggle. Things are definitely getting worse for Labor again in the U.S. and those Struggles will have to be re fought.

 

[JoeWras]

Cut-Throat, are you having difficulties with your "shift" key?

I didn't See a problem At All.

 

[JoeWras]

I was never in a Union myself either, but I know I reaped benefits hard won by Unions. I look at the Labor Situation in the U.S. in the 1910s and 1920s when Children were working and there were no safety laws what-so-ever. These things were not overcome without a severe struggle. Things are definitely getting worse for Labor again in the U.S. and those Struggles will have to be re fought.

My grandmother quit school in 6th grade in 1910 to work in the garment factory. She was making less than $0.10 per hour. I hear the stories!

These things come and go in waves. I suspect there will be another labor wave coming. But maybe not. As long as the youngsters I know can wear a visible tattoo, they don't care. Seems that looks and presence (and freedom of such) are more important that wages at this period of time.

 

[PhrugalPhan]

My grandmother quit school in 6th grade in 1910 to work in the garment factory. She was making less than $0.10 per hour. I hear the stories!

You're hearing the stories? Don't mind me asking, but just how old is she now?

 

[Calico]

You're hearing the stories? Don't mind me asking, but just how old is she now?

In my family stories are passed down through the generations. I imagine it's the same for most families.

 

[LitGal]

This. Save at least 15% of gross (hopefully more). And start early.

+1 My mantra to DS and his wife.

 

[2HOTinPHX]

You just have to look at Labor History of the US over the last 100 years to understand what is going on. The only reason that Corporations gave out Pensions and other Benefits to Workers was to Compete with Unions for Labor. Otherwise all workers would gravitate towards Union Jobs. Corporations did not give out Pensions, Vacations, Sick Pay, 40 hour weeks and all the other Benefits out of the 'Goodness of their hearts' but did so so that they could attract talent from the Union Labor roles.

Now that Unions have been mostly Busted in the U.S., Corporations are free to eliminate Pensions and Benefits under the guise that "We cannot compete with Cheap Labor of other Countries". When in reality U.S. Corps have never made more money than today and are actively off-shoring jobs at record numbers.

I think you nailed it with above.....I would like to add US Corps are crying we need to tighten our belts to remain competitive all the while their salaries and perks are going through the FRIGGEN roof.... I have seen my CEO's compensation triple over the last three years..... Have they no shame??

 

[travelover]

............ Have they no shame??

With a few exceptions, like Warren Buffett, I'd say the answer is no.

 

[68bucks]

The company I have been with for 30+ years still offers a generous plan. This is a DC plan, no pension. It is a combo of profit sharing and an ESOP. We are heavily weighted toward the company stock plan though, we're employee owned not public. Our company has contributed the maximum allowable almost every year since I got here and with the two plans that is up to 25% or your gross. They even contributed money for a couple years when we had little or no profit. We contribute nothing out of pocket. Our founders (one still alive) have a strong belief that company profits should be used to grow the business and benefit the employees. They are uncommonly benevolent. It would have been very easy to pocket a ton of money and do some lousy 6% match. I find it funny though that we are quite a conservative company including the political leanings of the upper management. They detest the government being involved in business and are vehemently anti-union. Yet their actions are far more liberally leaning regarding actual treatment of employees. We work people like dogs (me included) but treat people like human beings. If every company took the pains to treat employees like we do a great deal of the social benefit problems would disappear.

 

[Big_Hitter]

^ wow you should have a bundle in there by now - that's awesome

 

[Which Roger]

The "good old days" of lifetime employment with MegaCorp, followed by a gold watch, pension, and retiree health insurance, or a steady-job-for-life in a union, were indeed good, for those who were able to attain either of those.

For those who were stuck on the outside looking in, things were much different. Someone very close to me was in such a situation, and it wasn't pretty. The worst thing was the lack of empowerment he felt without the support structure provided by MegaCorp or a union.

These days, empowerment comes not from being part of an organization, but rather from one's specialized knowledge and skill set, initiative, and ideas. Those who do not possess these characteristics are the ones left on the outside looking in.

So things have changed, and whether it's for the better or for the worse overall is arguable, and the answer is different for each individual.

 

[Walt34]

For sure, Walt34! You are a dinosaur! Even my dad who started working in 1946 with an AFL-CIO union didn't have a COLA pension in 1997. Thank God he had a DB pension in his later years, despite the non-COLA. It was a godsend to us kids when he entered long term care. (Aside: the fact that the standard will be no pensions <COLA or otherwise> is going to really BITE HARD on kids in the next few decades when they look at parent care. MARK MY WORDS.)

I strongly suspect that the pension plans like I have will prove to be a historical aberration unlikely to be repeated, born of the post-WWII economic expansion and the elation that the Depression and the war were over, and an overall labor shortage for the expansion. Bearing in mind that I started that job in 1973, the pension plan came into existence in the 1960's.

They thought the economic party would never end, and of course eventually it did. I doubt that mistake will be repeated.

So basically I think I'm just lucky to have been born into the time and place that I was. Yes, I did work lots of strange hours, missed a lot of family holidays, very high stress at times, and all that. Lots of other people did and do that too.

I look at DW's nephew and his wife, and some of my family nephews and nieces, they are going to have a hard time trying to retire. None that I know of are saving anywhere near what they should be, if anything. DW's nephew, who we are closest to, is only saving up to the 6% company match and of course that's not near enough. I suspect he may end up living in his daughter's basement (she is doing very, very, well in school although at the age of nine a lot can happen). He and his wife are boresighted on getting the kids into better schools and is sacrificing all, including his and his wife's future, to get there. Admittedly that one is a tough call.

It is an entirely different financial world than the one I came into.

 

[bclover]

LOL a couple of things to point out.


1) there have always been cries of financial doom. Remember the concept of retirement as we know it is pretty much a new concept. pre wwII folks simply worked until they could no longer. early retirement? what was that. My sister and I are pretty much the first folks in our family who would even consider such a thing.
2) the good old days of pensions where pretty much a very short period of time. maybe 20-30 years. so this idea we have that back in the glory days everyone had pensions and then kicked up their feet and started living la vida loca isn't really accurate.
3) most retirees will cut back on their expenses and standard of living but that's always been the case.


this is an old article but it's pretty interesting.
The Biggest Retirement Myth Ever Told


Now that's not to say, our youngins don't have to be smart, but I think the basic financial lessons we teach:
1) live below your means
2) save for a raining day
3) start early and save consistently
will make the biggest difference.

 

[bclover]

I work for megacorp usa. a big chemical company based in Delaware. I've seen changes also, some good some bad.
We have the third best 401K plan in the country. company matches dollar for dollar up to 6%, give an automatic extra 3% for anyone who contributes at the 6% level and every year the company makes a profit, they throw in another 2%.


I'm an oldie there, anyone who started before 2008 has a pension but the pension was never the greatest. I think at full payout it was only 1/3 of your salary, so no matter what you always had some responsibility to save.

 

[Teacher Terry]

My hubby & I both have cola pensions which I am very happy for. The article about the retirement myth was interesting.

 

[Sue J]

I tell my kids to get government jobs .......

One of our sons works in IT for a county social service. He is 30 and has 8+ years of service already. The pension system is the same one that DH is retired from, with a fixed 3% COLAed pension. Since DH retired in 2010 they have already changed the pension system, adding 2 years for full retirement and changing the COLA to indexed up to 3%.

When DH retired there were generous health benefits for the retiree and the spouse after 10 years of service which also changed. You now need 20 years and after 2019 there will be no coverage offerings for spouses.

So far our son plans on staying with his job until retirement (27 yrs for early - 32 years for full) but who knows.

DHs pension is modest but our expenses are low so it's plenty for us and we can even save 12% every month. In June he will get his 5th COLA. It really adds up to a significant amount by now.

Yes, we feel like dinosaurs, but very happy to be dinosaurs at this point

 

[Cut-Throat]

These days, empowerment comes not from being part of an organization, but rather from one's specialized knowledge and skill set, initiative, and ideas. Those who do not possess these characteristics are the ones left on the outside looking in.

So things have changed, and whether it's for the better or for the worse overall is arguable, and the answer is different for each individual.

The problem is in the numbers. Most of us posting here had parents that benefited from the Large Middle Class of the 1940s-1980s.... You had a large head start into economic prosperity. This provided education, housing, health care and nurturing that individuals may not get today.

Everyone here that is posting has been helped by the economic conditions of the last 50 years. Those in the future do not have 'This leg up' and to imply that their fortune lies upon their own resources may be true, but it is certainly not equal to the Large head start that we all had. The ones that do not 'Succeed', will be part of society also. And society will bear the burden of their 'failure'.

 

[NanoSour]

And society will bear the burden of their 'failure'.

And this is the scary part with over 9 billion persons on the planet by 2050.

 

[papadad111]

But look at the flipside:


We are moving to a "gig" labor market. To some extent more and more of the labor force are effectively contract workers for their employers. That means that you cannot expect to find a cushy job, tune out, and wait 30 years for the pension. But it also means there is no reason to stick around in a boring, abusive, or poorly paid position because you are stuck in the "pension trap." Keep that resume polished and shop yourself around regularly. It usually comes with a raise when you leap and you learn a lot more that way.

+1. Lots of data showing that the younger generations will hold 7-8 different "jobs" in their career versus those retiring today who typically held 1 or 2 ..

 

[athena53]

I just retired last year and held 7 over 39 years. (Eight if you count an employer which was acquired although I stayed on for 6 years after the acquisition.) I can honestly say that only one was voluntary. Most of the rest were having the job go sour (a couple of consulting firms that fell on hard times, one relocation I couldn't make because my husband's job wasn't portable) and once I was downsized. So, it's been happening already.


As for advice to get civil service jobs for their stability and pensions: nothing is forever. Many municipalities are trying to figure out how to cut back on their generous pension plans because they can't afford them anymore. Retiree health care is also being cut, especially for recent hires. They're promising less. And some civil service jobs have problems of their own- boredom, inflexible bureaucracy, understaffing, etc. Sure, that can happen in the private sector but it would be harder to hang on if you had a nice civil service pension waiting for you if you just kept at it another 20 years. It's sort of a trap.

 

[Big_Hitter]

I'm on my 3rd employer after about 30 years in the biz.


All of them had/have good retirement benefits, including my current employer. Retirement/health benefits played a key part in each hire/resignation decision I made, all voluntary.


I worked for one employer for 20 years (had a 4 year service break at another firm but went back) and have a non-colad pension of 30% of FAP payable at 65. I keep waiting for them to offer me a lump sum....