Poll: Does a Pension factor into your FIRE Plans?

[Happyras]

My two small pension checks are <25% of our retirement income, but still significant, since it allows us to not touch any of our retirement accounts until RMD's kick in.

 

[MichaelB]

A what? What's a pension?

If Social Security is considered a pension (I think it is) then yes, we have a small pension. I only paid in a bit more than the minimum quarters so the $$ won't buy much, but it includes Medicare, and that's very important to us.

If we are excluding Social Security, then no, no pension. No complaints either.

 

[Sue J]

DHs COLAed pension more than covers our monthly expenses. It's not huge, we just don't need much in a low cost of living area with no debt.

 

[JohnnyBGoode]

If Social Security is considered a pension (I think it is) then yes, we have a small pension. I only paid in a bit more than the minimum quarters so the $$ won't buy much, but it includes Medicare, and that's very important to us.

If we are excluding Social Security, then no, no pension. No complaints either.

Thanks MichaelB. For the purposes of this poll, I was excluding SS since it comes to most of us in the US. A real defined-benefit pension provided by an employer seems much less prevalent overall - but does seem to be a pretty good indicator if you can FIRE, based on results of the poll so far.

 

[bbbamI]

When DH retired, he chose a smaller monthly pension check (with survivor benefits) and a partial lump sum. We like the bird in the hand theory.

His monthly pension and social security payments pay all of our essential expenses. I will apply for social security in about three years.

 

[Backdraft57]

Fire and Police pension fund. Retired June last year. It covers expenses on a tight budget. Anything extra has to come from savings

Sent from my SM-G935V using Early Retirement Forum mobile app

 

[devans0]

We have a combined non-cola pension of $2250. It covers 100% of our essentials and a little extra spending. Our withdrawal could be as low as 0%, but we spend 2% or less, to still keep room for a Roth ladder conversion. SS is deferred.

Since 100% essentials are covered, more than 25%. If we counted conversion amounts, or started SS, our poll number would be between less than 25% or not significant.

 

[dixonge]

2/3 of our income after we're both taking SS

 

[euro]

no pension here

well, other than SS..... I hope....

 

[Ed B]

I will have a defined benefit pension that will make up about 50% of our revenue in retirement depending on which survivor option we choose. My company is in the process of freezing the defined benefit pension and moving everyone to defined contribution funds. Anyone hired after 2008 (I believe) was enrolled in defined contribution and will not receive a pension. In 2016 mega-corp froze the income factor when figuring future pension benefits. In 2020 they will freeze the remaining years' of service factor, so my pension benefit will be frozen in 2020.

To make up the pension freeze any future retirement benefit we will receive is in the form of defined contribution. I currently receive 2% of my pay in addition to 401K matching funds to make up with the freeze in average pay. In 2020 they will increase that to 6% of pay in addition to matching funds. So in 2020 I can receive 10% of my salary from the company dropped into my 401K account as long as I contribute 8% or more. They will contribute 6% even if we don't participate in the 401K at all. A "free" 6% is nice and all, but at this stage of my life, I like the pension better.

 

[pablo]

Yes. I'm retired now and eligible to collect COLA'd pension in ~ 11 years. Present value of pension is < expected yearly expenses. Social security will add on to cash flow.

 

[Walt34]

I have a COLA'd DB pension that covers all essential expenses plus some discretionary. SS is all gravy. Heavily subsidized health insurance helps too. They discontinued this pension plan about 1984 or so but I was grandfathered in. We haven't touched the IRA (now at an all-time high) and I'd better start on that before RMD's kick in about the same time DW hits age 66 and begins SS and we get to take the tax torpedo directly amidship.

 

[Tom52]

What's a pension?

 

[ABQ2015]

My FERS pension with Diet COLA, which will start later this year, will provide about 60% of my retirement income or my non-discretionary expenses. SS (at age 62) and my 401k will each provide about 20% - one will pay my taxes and the other my discretionary expenses. All my retirement income except for a small Roth IRA is taxable and I'm single so taxes will be high and I'm a candidate for increased Medicare Part B premiums and any future means testing. If I delayed SS to age 70 and inflation was high, the SS might eventually catch up with the pension in my old age.

My pension is my favorite and I worked hard for it - 32 years service and almost at top of my pay scale. But I missed CSRS by 1 1/2 years and would have come out much better with a CSRS pension and no SS.

 

[Just_Steve]

DB not COLA'd until I'm 62, pays about 75% of expenses.
Retiree employer paid medical, dental and vision. Life is good.

 

[Viking]

DW has a nice federal pension of $4,500/mo, with COLA that she started collecting in Nov. When we're 65, we'll have another $2,000/mo in CPP and OAS (2017 dollars, both with COLA).

Once we're settled in to our retirement home and son is finished university, DW's pension will more than cover base spending.

 

[Shanky]

A small pension plus any form of subsidized health care is like having another million saved.

 

[SteveNU]

Non Cola DB pension here that covers ~60% of our expenses. This year we also get a nice subsidy for health care expenses of ~$1100 per month that almost covers our premiums. In the past the company provided subsidized health care insurance for retirees but they stopped this year. Now we buy it on the open market with a subsidy and it actually saved us some money this year!

So between the pension and health care subsidy we cover about 75% of our expenses. When our SS kicks in it will more than cover that last 25%.

 

[Dwhit]

Another non-pensioner here. Counting on my 60/40 asset allocation.

 

[Hermit]

Non-COLA pension covers about 80% of what my expenses would be if I wasn't in the middle of building my house and also paying for DS education and living expenses. The late DW's SS covers the rest of what would be normal expenses. At 70, my SS will kick in and keep me about even with spending including taxes. At that time, I will be paying more in taxes than some here spend in a year!

 

[Cobra9777]

DW and I each have DB pension annuities that cover roughly 60% of current spending. Also, we each have employer-subsidized retiree health insurance, which certainly helps as well. One pension is non-COLA, the other has partial COLA. Rental real estate and dividends from the taxable account cover most of the gap. Investment withdrawals are very infrequent and mainly just cover large discretionary items. When SS starts, we'll need to step up our game, spending-wise.

 

[DrRoy]

My pension will be 40% of my first year RE budget, but it is non-COLA, so after 30 years of expected inflation it would only be 10%.

 

[athena53]

To make up the pension freeze any future retirement benefit we will receive is in the form of defined contribution. I currently receive 2% of my pay in addition to 401K matching funds to make up with the freeze in average pay. In 2020 they will increase that to 6% of pay in addition to matching funds. So in 2020 I can receive 10% of my salary from the company dropped into my 401K account as long as I contribute 8% or more. They will contribute 6% even if we don't participate in the 401K at all. A "free" 6% is nice and all, but at this stage of my life, I like the pension better.

Still, that company is a class act. Many freeze the DB plan and pocket most of the savings. My employer was acquired by a company that had done that (not the same company- years were different) and when we were acquired we weren't eligible for DB so got 6% on top of the company match, regardless of whether or not we contributed anything at all.

I have one pension for $933/month that started at age 60 (4 years ago, no choice as to start date) and one for $900 that I started late last year. I filed for the latter when DH was terminally ill so it was a no-brainer to have him waive Survivor benefits but he was 15 years older anyway so the reduction to the earlier pension for Survivor benefits wasn't much. No COLA on either.

Life wouldn't be much fun if I had only those to live on (especially as inflation eroded their value) but I'm grateful for them both.

 

[moneyviking]

FERS will augment

wife's FERS pension should contribute 30k a year as an extra cushion.

 

[Ed B]

Still, that company is a class act. Many freeze the DB plan and pocket most of the savings.....

Athena, I agree. Everyone in our industry did this or something worse to help bring down cost. And once the DB is locked in for all of us stale folks they can reasonably expect an exodus of higher salaried employees who are able to retire. That will bring more costs savi gs since easily 75% of new hires are coming in at much lower salaries with the intent of making current middling salary grades a normal terminal salary grade for the melinials. I expect that if enough people do not voluntarily retire in 2020 that we will see Voluntary Layoffs with 26 weeks severance offered as incentive.