Retirement Shock and Needing to Find a Job.

[frayne]

How many times do we have to see this until people learn the safety and wisdom of diversification. I don't know whether to feel pity or just apathy for people who insist one keeping all of their eggs in the same basket.

https://www.wsj.com/articles/retire...ter-a-40-years-at-general-electric-1524418855

 

[braumeister]

A bit from the article:

He left GE with an annual pension of $85,000 and company stock valued at more than $280,000.

Retirement looked pretty good until GE shares collapsed. His shares are now worth about $110,000, prompting a late-life job hunt. “I never planned on retiring and having to go back to work,” said Mr. Zabroski, who has monthly mortgage payments and supports a partially disabled wife. “It’s kind of scary.”

 

[Bigdawg]

did he lose the whole 85K/yr pension?

 

[97guns]

I’m about as undiversified as you can get with only 2 asset classes but I sleep like a baby at night

 

[jazz4cash]

I call BS. Couldn't read the link but was thinking it didn't sound right and then I saw the pension amount. More to the story?

 

[foxfirev5]

What am I missing here? The guy has a great pension and a paper loss of 170k on his company stock is forcing him to go back to work? At 61 he could play the SS card in a year. Even in high COL Mass. it is much better than most have for income. At the very least he would be a retiree with a six figure income. Certainly they could have come up with a better example.

 

[pb4uski]

Do they think that anyone with an $85k pension is going to get a lot of sympathy? I think not, not here nor anywhere else.

Was this guy totally brain-dead for Enron, GM, etc.?

 

[CardsFan]

Do they think that anyone with an $85k pension is going to get a lot of sympathy? I think not, not here nor anywhere else.

Agreed. Could not read the article (pay wall), but an $85k pension, with SS coming, sounds pretty good. This is hardly a "poor, poor pitiful me" example.

I am guessing, but could be wrong, that the stock was partly the company contribution after the pensions were frozen.

I hope they guy does well, but a good example of why you diversify when you leave a company.

 

[pb4uski]

And even while you are there to the degree that you can... it is stupid to have both your job/income and investments tied up in one company.

 

[Red Badger]

How many times do we have to see this until people learn the safety and wisdom of diversification. I don't know whether to feel pity or just apathy for people who insist one keeping all of their eggs in the same basket.

https://www.wsj.com/articles/retire...ter-a-40-years-at-general-electric-1524418855

+1.

Once my 401K crept north of $100K, I knew better than to not understand it. I started doing on line research. At first, mostly with those FA firms and that ilk. But even reading them, I learned about diversification and a few other basic things. But, over time, my browser swerved in to FI-RE sites. I binge-read a lot of them. The FI sites (mostly this one and JLC), taught me to be a DIYer.

I don't his situation on him or anyone. But, if he's looking to blame someone, he needs to look in the mirror.

Amassing a sizable portfolio without learning the basics of investing (or at least hiring a fee only fiduciary FA) is foolhardy behavior (IMHO).

 

[Jerry1]

Not to mention that he still has a mortgage?? I know it can be done, but retiring with a mortgage doesn’t seem prudent and not something I would have done. Even with the pension, that’s too much risk on top of all the eggs being in one basket.

 

[CardsFan]

And even while you are there to the degree that you can... it is stupid to have both your job/income and investments tied up in one company.

That is why I wonder if the 401k(?) was all company contribution. At my past Mega corp, at one time, the match and company portion was all in company stock. My contributions could go to a myriad of investments. I could not change that, I don't think, until my division was separated. Then I dumped the stock (hindsight bad move since it is up about 300% in the past 13 years), but the right move for diversification.

Has anyone read the whole article and give more insight to the issue.

 

[braumeister]

For those who can't read the article (probably most), it seems to indicate that most of the GE retirees interviewed never even considered diversifying away from their GE stock.

Also, I would say that an $85K pension for a punch press operator sounds pretty good.

 

[athena53]

Did he lose the whole 85K/yr pension?

I doubt it- I'm a GE pensioner (I get $900/month from work at a sub they sold after I'd been there only a few years) and just got the required financial info on the pension plan. Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.

I hope that $280,000 wasn't his only savings. That seems pretty skimpy for a guy who made enough to qualify for a pension of $85K/year.

 

[pb4uski]

Not to mention that he still has a mortgage?? I know it can be done, but retiring with a mortgage doesn’t seem prudent and not something I would have done. Even with the pension, that’s too much risk on top of all the eggs being in one basket.

I dunno... I've been retired for 6 years and we have a mortgage... in fact, I refinanced to get a lower rate (3.375%) just before I retired. Depending on the circumstances, retiring with a mortgage is quite prudent. Our investment return on money that we would have used to pay off the mortgage has been many multiples of what we paid in mortgage interest so we are way ahead.

 

[braumeister]

Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.

Yes, but …
From the article cited:

With 71.4% of assets needed to cover its pension liabilities, GE is one of the worst funded large corporate pension plans in the U.S., according to an April report by consulting firm Milliman Inc. GE’s pension obligations, nearly $100 billion at the end of 2017, are underfunded by almost $30 billion.

“Their pension funded ratio is among the 10 lowest in our study, and that’s pretty significant given that they’re the fourth-largest company by asset size,” said Zorast Wadia, a consulting actuary at Milliman.

 

[Olbidness]

At one time I had over 500k in my company stock which was 95 percent of my net worth at the time. It was due to an incentive the company offered which was a 100 percent match up to 6 percent and if you invested in company stock they'd give an extra 1 percent match. I was well aware of the risk seeing World Com, Enron ect. I finally got out the way I got in. Sell a little bit by bit and buy index funds until the allocation was more reasonable.
An 85K pension and SS would be enough for me.

 

[jazz4cash]

I doubt it- I'm a GE pensioner (I get $900/month from work at a sub they sold after I'd been there only a few years) and just got the required financial info on the pension plan. Under the more liberal valuation rules (they can use a 25-year average rate of return) they're about 95% funded. They're 77% funded using a shorter-term interest rate horizon. So, not great but not scary.



I hope that $280,000 wasn't his only savings. That seems pretty skimpy for a guy who made enough to qualify for a pension of $85K/year.

I didn't post the statement quoted in your post. I'm actually having trouble believing the pension amount is accurate. May include healthcare or a supplement. Maybe he converted some savings into an annuity.

 

[CardsFan]

Managed to get through the pay wall by using my phone. It seems the headline story is just a teaser to do a story on the decline of GE stock. Not much there except "most" GE retirees just expected the stock to keep on rising, and really did not watch it.

This is really more of a comment on the problem with people buying stock without understanding their own obligation to follow it, and sell when it makes sense. I feel bad for the guy, but not too bad, his pension is more than I spend in a year, including taxes.

 

[W2R]

His GE pension alone would cover more than many of us spend in retirement - - and plus he has SS yet to come?

Oh, the poor man (NOT!) Unless he lives in a high COL community like Manhattan or SF, his income is not that low even if he doesn't go back to work.

The rest of this (my) post is kind of a stretch... but anyway I wonder if maybe the REAL story is that he and his wife are getting tired of spending all day together every day in retirement. Some couples do better if they spend a reasonable chunk of time apart each day (either alone or with others) as well as spending time together.

If a couple spends too much time together, then sometimes I hear the wives complaining about their husbands being underfoot, and the husbands complaining about too many honey-do's. The solution often is for the husband to go back to work, which he'd rather do anyway. It's sad but for reasons other than income.

 

[CardsFan]

If a couple spends too much time together, then sometimes I hear the wives complaining about their husbands being underfoot, and the husbands complaining about too many honey-do's.

Have you been talking to my wife?

This IS a situation we work on. She goes with friends on her girls week-end (and week), I have a few lunches out and have the buddies over when she is gone.

Sorry for the interruption. Back to your regularly scheduled programming.

 

[foxfirev5]

I dunno... I've been retired for 6 years and we have a mortgage... in fact, I refinanced to get a lower rate (3.375%) just before I retired. Depending on the circumstances, retiring with a mortgage is quite prudent. Our investment return on money that we would have used to pay off the mortgage has been many multiples of what we paid in mortgage interest so we are way ahead.

Good move on the mortgage. Like everything else, fortunately it worked out. However the individual in the article probably didn't make the mortgage choice based on a sound financial decision. I personally favor windfall RE transactions but would not recommend that approach to anyone. In fact I've got a pretty good dry spell going right now. A vulture has to be patient. In any event I certainly wouldn't risk anything that would compromise my lifestyle.

That's part of what separates this group from society as a whole.

 

[JoeWras]

Actually, this article may be good to send to a few of my co-w*rkers. My megacorp has had ups and downs. Being a tech company, it had a very long down from 2000 until 2014 or so.

With megacorp clearing out all the oldsters, the collective memory of this is gone. I see on our internal message boards all kinds of schemes to double down on the company stock since it "always goes up." This is especially intoxicating due to the ESPP price which has a 2 year price set window. It just seems so easy right now for megacorp's stock to be the ticket.

Nevermind. My warnings don't seem to matter. In RTP, NC, Nortel workers got totally hosed by something similar to the article, except it actually happened where the stock went to zero. This lesson was well learned in our community and spread caution to many here. For a while. That's gone now. Short memories.

 

[W2R]

Have you been talking to my wife?

This IS a situation we work on. She goes with friends on her girls week-end (and week), I have a few lunches out and have the buddies over when she is gone.

Sorry for the interruption. Back to your regularly scheduled programming.

Not just YOUR wife, but this seems to be a common situation among the retired couples that we know.

In our case we have found that we love living next door to each other and having our own separate space. We can spend plenty of time alone or with other friends, and only spend time together when both of us want to do that. If he is underfoot (which is seldom), I can suggest that maybe we could continue later and that's not a problem. As for honey-do's, I have a handyman.

I think the amount of time spent together in retirement is something that couples sometimes need to think about and work out as part of adjusting to retirement, unless one of them wants to go back to work.

 

[jazz4cash]

Looks like GE cut the dividend by half in 2017 so his 7800 shares produce $3700/yr instead of $7400. Doesn't seem that terrible.