Poll:How many here have a defined benefit pension?

[Mulligan]

RMD money - what a great "problem" to have. But, wow! Living on $3k/month is pretty good. I mentioned somewhere recently that that's about what I consider our "Paradise Tax" or something like that. I feel sure there are places on the mainland we could live for close to $3K less per month.



Heh, heh, if I were the envious type, I would envy your COLA. My modest pension has no COLA so after 16+ years it buys a lot less than it used to. Oh, well. That was the deal so YMMV.

Koolau, Im guessing you have a little extra cabbage hidden in the garden to pay for paradise besides your modest non cola pension. As my pension is cola’d and has basically went from $70k to $100k, and there is no way I could afford living in Hawaii! Or at least in a manner that most would want to live in a modest retirement, ha!

 

[Koolau]

Koolau, Im guessing you have a little extra cabbage hidden in the garden to pay for paradise besides your modest non cola pension. As my pension is cola’d and has basically went from $70k to $100k, and there is no way I could afford living in Hawaii! Or at least in a manner that most would want to live in a modest retirement, ha!

Between the pension and SS for DW and me we could make it with no problem. We spend more as we fund several charities - most of that from the cabbage you mention. But your $70K to $100K is more than many on Oahu. The major trick in paradise is finding a home. If you're not fussy, you can find a decent condo for less than $450K and a house for $800K. But very livable apartments can be found for $2500/mo. Property taxes are low. Food is expensive. Electricity is expensive, but we use very little as our condo is situated to pass the trade winds through. I think the premium to live in Hawaii is something between 35% and 70% vs average.

If you're actually interested, read the book "So You Want To Live In Hawaii." https://www.amazon.com/s?k=so+you+w...9_10603941&tag=mh0b-20&ref=pd_sl_604cvafo7e_e

 

[Mulligan]

Between the pension and SS for DW and me we could make it with no problem. We spend more as we fund several charities - most of that from the cabbage you mention. But your $70K to $100K is more than many on Oahu. The major trick in paradise is finding a home. If you're not fussy, you can find a decent condo for less than $450K and a house for $800K. But very livable apartments can be found for $2500/mo. Property taxes are low. Food is expensive. Electricity is expensive, but we use very little as our condo is situated to pass the trade winds through. I think the premium to live in Hawaii is something between 35% and 70% vs average.



If you're actually interested, read the book "So You Want To Live In Hawaii." https://www.amazon.com/s?k=so+you+w...9_10603941&tag=mh0b-20&ref=pd_sl_604cvafo7e_e

That was what I was thinking…Starting brand new moving with buying a house! Now if I had bought one 30 years ago there, no problem. But I would still like to eat and afford AC after buying a house, ha. But, I am coming from a rural midwest flyover perspective so that has to be factored in also.

 

[Magus]

RMD money - what a great "problem" to have. But, wow! Living on $3k/month is pretty good. I mentioned somewhere recently that that's about what I consider our "Paradise Tax" or something like that. I feel sure there are places on the mainland we could live for close to $3K less per month.

Heh, heh, if I were the envious type, I would envy your COLA. My modest pension has no COLA so after 16+ years it buys a lot less than it used to. Oh, well. That was the deal so YMMV.

My parents live on about $30k/yr just outside of Charlotte (1300 sq ft 2 car garage home), including one international trip a year and a couple of domestic trips a year (usually I contribute some to those as birthdays/christmas gifts to be fair). Paid off home/vehicles really helps and shopping for discounts. And property tax is dirt cheap - about $1000/yr in a very good school district with their senior discount.

I actually am trying to get them to increase their spending. Their SS net of medicare is about $35k/yr and my dad makes another few k a year with side jobs. Plus they make some from dividends and bond interest. I hopefully won't need the money and my brother would just waste it so I'd rather they enjoy their investment/saving money while they can.

 

[Bruno]

I had been promised a Pension then my company was bought out and was given a lum sum that was reduce 70% for the years i could not work.

 

[Koolau]

That was what I was thinking…Starting brand new moving with buying a house! Now if I had bought one 30 years ago there, no problem. But I would still like to eat and afford AC after buying a house, ha. But, I am coming from a rural midwest flyover perspective so that has to be factored in also.

I hear you. I lived in fly-over country. Moving to a HCOL area is a big decision and you do need to be certain you can cover all the expenses. But anyone with $100K coming in each year can live in a HCOL area - maybe not in the finest house/apartment. Keep in mind that most of the housing on the West Coast is as expensive or more expensive than in Hawaii and much housing on the East coast is as expensive as in Hawaii.

Your point about owning for 30 years is well taken. It does help to have started early. But folks in fly-over country already live in houses that are much more valuable than when they were purchased. Applying that chunk of value toward a house in a HCOL area goes a long way toward funding housing. If you've saved nothing, I suppose you would only have the option of renting, but although rentals are expensive vs flyover country, $100K/year should make it easy to afford an apartment.

Not trying to talk you into moving - heaven knows we have enough traffic. Just saying that, Hawaii is not the only HCOL area and folks manage to live in California and Washington State (and Washington DC) as well as Virginia and NY State and Massachusetts and Connecticut. It all depends on what you want to do and how you want to live your life. I joke to DW that we could have much nicer housing in our home state, but housing to us is just a place to eat and sleep. For some, it is the center of their universe. The showplaces we've seen in Hawaii (and Cali for that matter) are truly out of most folks reach. But decent, livable housing is obtainable once you're in that $100k/year income level. As always, YMMV.

 

[ownyourfuture]

Private sector DBP - No Cola

 

[old medic]

The major trick in paradise is finding a home. If you're not fussy, you can find a decent condo for less than $450K and a house for $800K. But very livable apartments can be found for $2500/mo.

It may not be an Island Paradise, But out in the country, community we have lived in 35 years. Paid $6500 for the house, $11000 for the camper we live in, and have spent about $15K so far in remodeling.

 

[target2019]

I think 10% reduction for 55% survivor benefit is reasonable. I know some employers subsidize a survivor benefit. Mine did and they showed a table of relative values for various choices of lump sum and survivor benefits. Due to the subsidy I could not come close to matching the survivor benefit by taking an annuity with a survivor benefit. Thanks Megacorp.

Spouse just received her options. Below I calculate the reduction for each option.

 

[Koolau]

It may not be an Island Paradise, But out in the country, community we have lived in 35 years. Paid $6500 for the house, $11000 for the camper we live in, and have spent about $15K so far in remodeling.

Yeah, I remember those days. 50 years ago, we paid $22K for a 1600sf ranch on an acre in the country. It had a fishing pond, wooded back yard and deer meandering through the yard. It was a little piece of heaven. Of course, it was solidly on the prairie which meant the landscape could be a bit boring. But we loved it for 10 years - only issue was the considerable drive to w*rk. YMMV

 

[oiseux]

I'm sad I missed the poll. We are stuck in OMY. Spouse has not one but THREE private pensions (starting from the teen years -- part time job pays a mini pension). I think no COLAs. The largest one comes with a dizzying array of payout options that we'll need to choose among (plus all three have lump sum option). It also comes with a medical benefit that covers medical only after the first hits medicare age (but covers everything for both). But we do have to bridge the RE years.

But we are probably still considered FIRE as we are not relying on that -- It is a nice supplement of ~15%.

 

[Koolau]

I'm sad I missed the poll. We are stuck in OMY. Spouse has not one but THREE private pensions (starting from the teen years -- part time job pays a mini pension). I think no COLAs. The largest one comes with a dizzying array of payout options that we'll need to choose among (plus all three have lump sum option). It also comes with a medical benefit that covers medical only after the first hits medicare age (but covers everything for both). But we do have to bridge the RE years.

But we are probably still considered FIRE as we are not relying on that -- It is a nice supplement of ~15%.

That medical benefit is likely the best of the lot in your quiver of pensions. Good for you!

 

[Chuckanut]

Here's an interesting story of one pension plan that is well funded. It hold 3X its expected obligations. Apparently, it was (and hopefully still is) possible to manage a pension fund well.

https://humbledollar.com/2022/07/buffetts-pension/

Credit for this is owed primarily to Warren Buffett, who steered the pension fund’s investments in an unorthodox direction while he was a company director in the mid-1970s. In a 19-page memo written to then-CEO Katharine Graham in 1975, he said hiring the usual institutional money management firms would be “doomed to disappointment.”


He predicted that rising inflation rates would eat up the returns of the bond portfolios then favored by pension managers. Buffett instead recommended that the fund selectively buy stocks to meet the plan’s obligations. The Post’s directors agreed and hired two small, specialized investment firms that Buffett recommended in 1978.

The two investment firms have made enormous gains over the past 45 years. Graham Holdings had $3.2 billion in pension assets and roughly $1.1 billion in pension obligations as of last September, according to a company report. The largest holding is—no surprise—Berkshire Hathaway.

 

[braumeister]

Here's an interesting story of one pension plan that is well funded. It hold 3X its expected obligations. Apparently, it was (and hopefully still is) possible to manage a pension fund well.

DW has a small pension and the most recent report shows its net assets as 133% of liabilities. It's not a big one, with fewer than 3,000 participants, but still very comforting.

 

[Jerry1]

Mine is always funded in the high 90% range. I think the last one was 98%. Not exceptional, but funded.

 

[ls99]

I have one from Columbia University, a whopping $29.85, that is twenty nine dollars and eighty five cents, per month for life. Covers my weekly coffee habit. Not at $tarbuc$.

 

[FANOFJESUS]

I worked for the federal government under the FERS retirement system, so I have the infamous FERS "diet cola" pension. It's only partially cola'd, so I voted "defined benefit pension", not "defined benefit pension cola'd". That's OK! It's small, just $822/month, but my portfolio grew enough during my first 12 years of retirement to compensate for the fact that my pension isn't fully cola'd.

Also the federal government encouraged those of us in the FERS system to contribute as much as we could to the TSP (=401K, more or less), and offered a partial match. I contributed the max every year so I have equal monthly payments from the TSP G Fund that are about the same as what I get from my diet cola pension.

Plus, I have SS, so everything is working out. Federal workers under the older CSRS system get a big, fully cola'd pension but IIRC they can't get SS so it's only fair that they should get more from their pension.

You made me guess at the grand total after reading this. I will guess $3600

 

[athena53]

I have two DB pensions, one from a Prudential sub (was downsized after 10 years) and one from a GE sub (sub was sold and buyer was a great company but had closed its pension plan to ne entrants). Each is $900/month, no COLA. It does show the risks of DB plans, though- I never got the benefit of a long tenure with one company that might have resulted in a much higher pension.

 

[youbet]

I have two DB pensions, one from a Prudential sub (was downsized after 10 years) and one from a GE sub (sub was sold and buyer was a great company but had closed its pension plan to ne entrants). Each is $900/month, no COLA. It does show the risks of DB plans, though- I never got the benefit of a long tenure with one company that might have resulted in a much higher pension.

Yep, that's an issue. For whatever reasons, the formulas are written so that typically one 30 year pension is more (might be much more) than three 10 year pensions. In today's world where job tenure is unlikely to last for an entire career, DBP pensions aren't the nirvana that they used to be. (Gov't jobs excluded from this comment, of course.)

 

[W2R]

You made me guess at the grand total after reading this. I will guess $3600

Pretty close. $3382

Plus, any money I decide to take from my taxable portfolio, but I haven't taken any in several years.

 

[f35phixer]

not a religious man but I fell blessed....

Me FERS - take home -1256 COLA'd and BCBS
DW State - take home - 7253 COLA'd and BCBS, ain't it wonderful to have a sugar mama!
we both took SS at 62 - 4300
so every month 12,800 goes into checking

 

[winwonwin]

CSRS Pension

Federal Retiree w/COLA’d CSRS pension (no Social Security) $103K yr ($8,600 mo)

 

[Rocket Man]

Defined benefit pension with a COLA here. I also feel blessed even though it is no where near the previous poster and his wife. At the beginning of this year it was over 98% funded, but I am sure that is down some after this year’s market meltdown.

 

[prudent_one]

Have a defined pension from an employer I worked for. They were sold after I was there for a few years and that ended earning any pension credits. Decades later when I was eligible to collect, I had to find the piece of paper they sent me in the mid-1980's describing how to file for my pension benefits. Mail returned undeliverable, phone number not in service. Thanks to google, tracked them down (they were still in business but under a new name). And starting soon, I will be basking in the glow of that monthly non-COLAd $210 deposit!

 

[Koolau]

Mine is always funded in the high 90% range. I think the last one was 98%. Not exceptional, but funded.

I think the lowest I've seen mine was 87%. Megacorp could write a check to the fund if need be. YMMV