Poll: Does a Pension factor into your FIRE Plans?

[exnavynuke]

This isn't directly related (as it's total income and not an average), but I thought it fairly relevant to the discussions in this thread.

 

[Mdlerth]

That is a curious chart. I wonder if one or two companion charts might help me understand it a little better. Perhaps the size of the population matching the income categories would be helpful.

For example, it shows the amount of earned income these seniors collect is roughly equal to the amount of SS. If we knew that 75% of the age 65+ population collects SS benefits, which we know average something on the order of $1500/mo, while only 25% of them have any employment earnings, then we might conclude that a bunch of those employed seniors are probably earning triple what their SS benefit would be, which suggests a lot of them are more than part-timers - that would be a very interesting thing to know!

Similarly, 8% of senior income comes from govt pensions. I can't tell from the lone chart whether that means govt pensions are chintzy or that they're very meaningful but only to a small number of recipients.

Anybody else read something in here which escapes me?

 

[Teacher Terry]

I took it to mean that only 8% are getting government pensions but I could be wrong)

 

[ERD50]

I took it to mean that only 8% are getting government pensions but I could be wrong)

I took it to mean that of the total income of the group surveyed, that 8% of that income comes from Gov't pensions. But I could be wrong too , heck, the source could be wrong.

To put it another way - if only 10% in that group had Gov't pensions, then 80% of their income would come from Gov't pensions. But that would only hold if their income was average, and maybe not even then (other factors I didn't consider?).

-ERD50

 

[Whisper66]

Wasn't sure how to answer. I had a mega corp pension which I took as a lump sum. ...

Good point. I also took lump sum. The question appears to be aimed at finding out how many have been helped by having a pension and how much it helped. Therefore I answered that "yes" I had a pension. Took a WAG at what part of my yearly income that lump sum generates and put that into the survey.

 

[exnavynuke]

I believe the chart is saying "of all the income people over 65 have, here is where that income comes from". As such, 8% of "total" income for everyone may come from government pensions but that doesn't mean that it's the "only" source of any given person's income.

 

[24601NoMore]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

Very envious but do think this is a skewed sample. OF COURSE people who can RE have pensions. The rest of us slugs have had to save in our piggy banks to a point we can even 'think' about RE, and it's infinitely harder to do so if you don't have all these wonderful golden benefits to help out..

 

[Travelfreek]

We feel so LUCKY to have pensions! Wow, it makes retiring so much more comfortable (not as scary). I have a CSRS (fed pension w/ COLA) and a CalPERS state pension. My husband will soon have a UC pension from California (worked in hospital system for 20 years). We both have COLAS on our 3 combined pensions and our health care premium is currently covered by my state of CA pension. We also have 401k/403b and 457b plans in addition to a couple of IRAs. I don't believe our 2 grown children will have defined benefit pensions with the way things have changed. But our son is getting 6% match for his 401k and he's getting very focused on building his net worth (he's just 27 now). I'm really impressed with all of you have who do not have defined benefit pensions! Bravo to all of you! I retired @ 60 years old just over a year ago and my husband will retire @ 59 in 2 mos. I'm eligible for only about $350 in Soc Security when I turn 62 since I have a Fed pension that didn't coordinate w/ Soc Security (It gets reduced by nearly $400 a mo. due to a law called the WEP). My husband will receive full Social Security when he applies (at 62 or 66). Since I won't get his SS when he dies (another law called GPO), and he won't get my fed pension when I die, we each have term life insurance to compensate for the shortfall. As far as how much our pensions cover, it will cover most of our yearly expenses (95%). We do plan to pay our house off in the next 5 years so we can enjoy a very easy and simplified financial life. Our house costs here in California are a significant part of our current expenses (33%) including PITI. Once house is paid off, we'll only have $7000 a year in property taxes. My job was HR analyst for the better part of my working years and my husband is a Principal Engineer.

 

[Happyras]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

You are in the generation on the cusp. Being 62, it was common when I started work to have pensions in big corps. My early Boeing pension was cashed out, but my Scott Paper one got capped and I was able to draw it enhanced at 55. As KCC acquired SPC, they enhanced the 401K plan to compensate partly, but did not offer an ongoing pension plan other than the former one from SPC. My Ionics pension I just qualified under the 5 year rule as GE bought them out, but GE continued a new pension plan for those acquired giving me two under GE rules, but not with the same perks as longer term GE pre-merger folks. That plan also had limits, and I believe the trend has been to eliminate pension plans to shorter term employees. OTOH, my wife has only one "pension" from the university under a state PERS2 option, but they also provided for her to pay into SS, and had a TIAA Annuity plan as well, which is like a liquid pension.

So my guess is several of us with pensions were from Mega Corps starting in the 70's or before.

 

[W2R]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

Uh, no, I'm not a mailman?

Since private pensions were being frozen and/or cratering right and left when it came time for me to choose a career path years ago, I turned down a job offer for $160K/year with private industry. Instead I took a less challenging, less prestigious, but more secure job with a compensation package including a five figure income and better benefits, with the federal government. Many techie people have this sort of choice, but it's easy to lose track of one's goals and go for the immediate $$. I guess others do not have any choice.

You need to read this long thread, in which members tell you exactly what they did for a living.

http://www.early-retirement.org/forums/f30/what-do-you-do-for-a-living-74628.html

 

[ocean view]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

Very envious but do think this is a skewed sample. OF COURSE people who can RE have pensions. The rest of us slugs have had to save in our piggy banks to a point we can even 'think' about RE, and it's infinitely harder to do so if you don't have all these wonderful golden benefits to help out..

I had the same conversation this morning with DH. Other than my FIL I don't know anyone who does or will receive a pension. On the other hand, in tech they often give you equity which one COULD save and use for retirement (early or otherwise [emoji57]). Unfortunately, most of the folks in Silicon Valley only see their equity as the shortest path to that new tesla.

So which is better, a pension or stock options to be saved for ER?

Now that I think about, my neighbors who both work at Lockheed will probably get pensions. Tech, but for gov't contractor.

 

[Walt34]

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

I'm a retired police officer who started in March of 1973 and worked 29 years & four months. The pension plan I'm under no longer exists except for retirees and has been modified at least three times since I was hired. Fortunately I'm grandfathered into the old plan. The new hires still have a pension, but it has a cap on the COLA (mine doesn't) and doesn't pay nearly as high a percentage of income. Those folks have doggone better be putting money into their 457 accounts (sort of like an IRA). If they don't they probably won't starve, but may have to move to Mexico.

BTW, in the mid-1980's when the pension plan was first changed and it was offered to current employees. The "bait" was that if you converted, you'd get back 50% of pension plan contributions you'd made up to that time and future contributions would be less. A lot of guys took the bait and bought cars, motorcycles, bigger houses, etc. At retirement most were looking for jobs. A big red flag to me was that the conversion was irreversible. I didn't take the bait and working is forever optional.

I think the pension plan was formed in the economic boom times of the 1950's and '60's and they thought the party would never end, and of course it did. There was also a chief who liked to look after the troops and rumor had it that he pulled a J. Edgar Hoover (FBI director then) and got some dirt on the local politicians to "encourage" them to fund the pensions if they wouldn't fund a pay increase.

 

[jollystomper]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

Very envious but do think this is a skewed sample. OF COURSE people who can RE have pensions. The rest of us slugs have had to save in our piggy banks to a point we can even 'think' about RE, and it's infinitely harder to do so if you don't have all these wonderful golden benefits to help out..

In the early years of tech (70s and 80s), many IT companies offered pensions. However, it was uncommon for folks to stay with one company since demand outstripped supply and hopping from company to company was the way to get raises. I chose to stay with Megacorp, so I had enough years to keep it when Megacorp changed their policy. But I also benefited from stock options/equity rewards, after this change, though not as much as newer Megacorp employees (which is fine with me).

I had opportunities to leave for more risk/reward, but chose not to. I have friends who moved around and are now probably worth hundreds of millions... and others who left and are far worse off. I'm happy being in the middle.

 

[JohnnyBGoode]

Really amazed at the number of people here who have pensions. I'm 53, work in high tech and know virtually no-one with a traditional pension (including DW and me).

What do all you people DO for a living? Seriously!! Are you all .GOV? Teachers? Auto workers? Mail delivery?

Very envious but do think this is a skewed sample. OF COURSE people who can RE have pensions. The rest of us slugs have had to save in our piggy banks to a point we can even 'think' about RE, and it's infinitely harder to do so if you don't have all these wonderful golden benefits to help out..

+1 on that. I started the poll and was amazed at the number of pensions. I am (almost can say "was" in another month!) in high tech and i also don't know anyone in our industry that has a pension. Heck, the kids we hire out of college don't even know what it is, I think.

 

[hesperus]

Uh, no, I'm not a mailman?

Since private pensions were being frozen and/or cratering right and left when it came time for me to choose a career path years ago, I turned down a job offer for $160K/year with private industry. Instead I took a less challenging, less prestigious, but more secure job with a compensation package including a five figure income and better benefits, with the federal government. Many techie people have this sort of choice, but it's easy to lose track of one's goals and go for the immediate $$.

http://www.early-retirement.org/forums/f30/what-do-you-do-for-a-living-74628.html

+1
Great point. There are some excellent careers in the fed work force, with some of the hardest working people I've ever known. I get a bit weary of the fed bashing, done directly or by innuendo. I'm not saying that I see that here in this particular thread, but it seems to be a common attitude out there. Like you say, the choices were there and some went for the shiny nickel, underestimating the value of a secure job during recessions, and a good benefit package down the road. Resentment of those benefits is yet another way it shows itself.

 

[NoiseBoy]

It might have something to do with where you live and who you work for as much as what field you work in. I do tech too, but I live in the Midwest and work in the IT division of a fortune 100 company. I didn't start this career until 1998 and my megacorp was still handing out 50% DB pension plans and retiree healthcare at that time. They woke up to the trends, and have since frozen the DB plan; first to new entrants, and then in 2011 they kicked out anyone who was not yet 40, and will be freezing the plan's benefits in two more years. Perhaps the one time in recent memory that I was happy to be old!

However, there is still a major private sector employer in the area (insurance) that continues to offer a DB plan to all of their employees. In a related note, I don't personally know of any current retiree households (family and friends) that do not have a pension providing some support. Some have very generous incomes, and yes, those do happen to be public sector retirees. Again, I think this has a lot to do with where I live (small city middle America.)

 

[H2ODude]

Have a fairly good pension, but believe if I had been given my contributions and the jurisdictions contributions in a 401k I'd have been better off. This includes a 15 year stint in which when terminated (not for cause, mayor just didn't like me) I got all my contributions back, none of the city's, and NO interest. Was able to recover pension benefits in another jurisdiction because they allowed me to buy at full value years reflective of prior gov service for which I would receive no benefit. Worked out Ok, it's nice to have income not dependent on my market luck. Meanwhile I was putting 20% or more in 457, !RA etc. Overdid it. But that's just fine.

 

[Ed B]

In the early years of tech (70s and 80s), many IT companies offered pensions. However, it was uncommon for folks to stay with one company since demand outstripped supply and hopping from company to company was the way to get raises. I chose to stay with Megacorp, so I had enough years to keep it when Megacorp changed their policy. But I also benefited from stock options/equity rewards, after this change, though not as much as newer Megacorp employees (which is fine with me).

I had opportunities to leave for more risk/reward, but chose not to. I have friends who moved around and are now probably worth hundreds of millions... and others who left and are far worse off. I'm happy being in the middle.

Similarly, I work for a megacorp that offered traditional non-colad pension starting with them in 1985. I had opportunities to job-shop for big $$$ off and on in the first 15 years. Then i got in on the front end with a new software vendor from India that was aboutvto explode. At one time I was THE expert on this tool in the US. The owner of that company invited me to dinner about 9 years ago and me an exciting offer which included a big jump in salary, work from home with some travel and the choice of %ownership with profit sharing or even higher salary.

It was tough but leaving megacorp at that time, 7 years before early retirement age of 55, would have resulted in punitive reduction in my vested pension benefit. I calculated what I would have to save to make up for the pension reduction and i would need to save an additional $1m on top of my current investing glidepath, which was far from a certainty at that time. I told him if i had been 55 at the time i would have jumped on it.

So yeah, I have a pension but it cost me job flexibility, and because of my lower risk tolerance, i passed on a great opportunity so i could keep a pretty good pension. For me it was all about choices.

That job may still be available as part time if pursue it after ER. But I am not going to ask about it unless I am sure I want to do it.

 

[ceciledian]

Since 2014 100% of our normal living expenses are covered with my DH's non-cola pension. We bought a new vehicle last year which required a dip into savings. I'll collect a small pension when I'm 65. He's itching to start drawing off the 401k and I'm like, why? Until the savings are down there's no financial reason to tap the 401ks.

 

[dtbach]

Military pension that covers perhaps 40% of non-discretionary expenses. The healthcare is where the pension really shines as its less than $2000/year for the family.

A 3.5% WR covers the rest easily.

 

[ABQ2015]

I consider myself lucky to have a government pension but there are some disadvantages compared to working for a large corporation or large government contractor:

• No stock options or profit sharing.
• Salaries usually less.
• Raises and bonuses are smaller.
• No company car (e.g., my brother has one).
• No work issued cell phones, tablets, or laptops except for senior management or during travel with prohibited personal use.
• Programs such as HSA, FSA, Dependent Care Reimbursement Account, Roth 401k came about several years later than for our contractors.
• Dental and vision programs were terrible until recently.
• Very limited wellness program (e.g., small gym with bad equipment).
• No free legal or financial services.
• Encouraged to transfer for career advancement but relocation costs are rarely reimbursed.
• Severance pay limited to $25K.
• Golden handcuffs prevent/discourage early retirement.

 

[emerytura]

We have two non-cola private pensions. They cover 65% of our living expenses. The rest is covered with rental income and my husband SS. We do not touch our investments for now. However my husband pension is in critical status, so there is possibility that it will be reduced.

 

[Cobra9777]

I started at a high-tech Megacorp in the late 80s when corporate DB pensions were still fairly common. They transitioned to a DC plan in the mid-to-late 90s for new employees but gave us oldtimers a choice. I stayed with the DB plan and I stayed with Megacorp. Many of my peers opted for the DC plan (higher % match on 401K) and others left chasing base salary increases and fancy titles at less stable enterprises. I stuck it out and benefited not only from the DB pension but also equity comp in quantities that only come when you are "part of the fabric." DW retired from a municipality in Texas with a nice pension as well, and we both have employer-subsidized health insurance.

 

[Marita40]

No pension here, and I don't know anyone with one.
My university contributes 10.5 per cent of our salaries annually to our 403bs,
without any stipulation to match it on our own. From what I've seen, that's pretty generous. For 30 years I've also contributed the maximum allowed. Slowly but surely, it has built into a tidy retirement stash.
If I had known then what I know now, I'd have looked for a job with a pension. But I never gave it a thought.

 

[Mulligan]

When I was 8 years old I planned my future around getting a pension. Actually I barely gave my pension a thought. Certainly didn't before age 35 or so as pensions are for old people and I was never going to be old.
Well retired now...Did it factor into my FIRE plan? Well my pension is my retirement. No pension....no retirement.