Author Topic: If your job offered a pension  (Read 16385 times)

blackjack

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If your job offered a pension
« on: November 22, 2013, 06:53:16 AM »
If your job offered a impressive pension would you save differently and or work longer to grow that pension?
If i retire early which I plan too i'll be losing out on lots of money

matchewed

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Re: If your job offered a pension
« Reply #1 on: November 22, 2013, 07:04:14 AM »
I would chalk it up as working for an employer whose retirement package does not coincide with my goals. And would start looking for another employer so I can make it more compatible.

jba302

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Re: If your job offered a pension
« Reply #2 on: November 22, 2013, 07:06:14 AM »
Depends on the financial strength of the company, how the funds are paid out at retirement, how much I would be getting, etc.

Above all that, it would depend on my level of disdain/satisfaction day to day for the job. If I had no interest in retiring early because I loved the hell out of it, that would be a different calculation.

Rural

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Re: If your job offered a pension
« Reply #3 on: November 22, 2013, 07:22:18 AM »
If you're asking whether you should stay because of a pension with a long-term payout, the answer is probably no. If you're asking if your investment strategy changes if you are planning on the pension, I think the answer is yes. We both have pensions, and the pension funds seem to be in very good shape in conservative investments, so the investments that we do otherwise are much more aggressive than we would be comfortable with without the pensions.

For us, it's 10 years to vesting in the pensions, so we pretty much need that much time to save, anyway. We can't collect the pensions until we reach 55, but that just means that our other investment strategies have to accommodate that.

rubybeth

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Re: If your job offered a pension
« Reply #4 on: November 22, 2013, 07:40:42 AM »
My job does offer a pension, and it's a Public Employees Retirement Association (PERA) pension so it's secure, but I want to retire much sooner than the minimum age, which is 55. I want to be done by 45 or even sooner (I'm 32). I will likely just take the portion I've contributed to the pension and roll it into an IRA, though the option does exist to leave it with PERA and just start taking monthly payments starting at age 55, even if I leave the organization at age 45. I'll do the math when the time comes to see what might be the better option. Right now, it's only projecting about $300/mo. if I work until 45, retire, then take payments starting at age 55. I kind of see this money taken from my checks as forced savings with a guaranteed rate of return.

Mississippi Mudstache

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Re: If your job offered a pension
« Reply #5 on: November 22, 2013, 07:45:47 AM »
I would chalk it up as working for an employer whose retirement package does not coincide with my goals. And would start looking for another employer so I can make it more compatible.

^This

TheDude

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Re: If your job offered a pension
« Reply #6 on: November 22, 2013, 10:48:48 AM »
My wife is a teacher and covered by PERA. We save pretty aggressively (max both IRAs, my simple IRA her 401k, family HSA). We have talked about it a little. She loves being a teacher so I am not sure she will want to retire early. I am considering buying some years. If we do that she will be able to retire at 54 with 87.5% of her average highest three years of salary. Even if she doesn't end up working that long she can roll all the money into an IRA. Its really a pretty sweet deal since she doesn't pay any SS tax.

davisgang90

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Re: If your job offered a pension
« Reply #7 on: November 22, 2013, 11:07:00 AM »
I am covered by the military pension and am planning to serve for 3-4 more years.  This will put me at 27/28 years of active duty time, which translates to a very comfortable pension.  I get a 25% bump in pension by working 3 more years.

RootofGood

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Re: If your job offered a pension
« Reply #8 on: November 22, 2013, 11:12:41 AM »
My last job offered a pension, but you really had to work 10-15 years to get much of a benefit.  I knew going into the job that I didn't want to work more than 5 years before I retired.  Unfortunately the pension was mandatory, so I had 6% taken out of each paycheck that sat in an account not earning interest.  I get the contributions back, but it takes at least 5 months after you quit working to get your refund rolled into an IRA. 

So I chose not to work much longer or save differently to take advantage of the pension.  I just viewed the pension as an employee benefit I was not interested in. 

smalllife

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Re: If your job offered a pension
« Reply #9 on: November 22, 2013, 11:48:11 AM »
I don't trust pensions - consider it a side effect of coming of age during the crash, recession, and Wall Street fiascos.  It might make me want to switch jobs to something that offered a personal retirement account, but I don't know how much that would factor in. 

Khan

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Re: If your job offered a pension
« Reply #10 on: November 22, 2013, 12:04:47 PM »
I also don't trust pensions. The idea is great, but too many companies/cities have been attempting to reduce past drawn liabilities for me to be comfortable in any pensioned system.

Spork

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Re: If your job offered a pension
« Reply #11 on: November 22, 2013, 12:11:18 PM »
Came here to say just what the two before me said.

It is extremely common now for companies that do offer pensions to decide that they don't offer pensions any more.  As a result, you'll probably get a 'partial pension' for the years of service from hire date to end-of-pension date.  But if you plan on "I'll work there 40 years and then retire like a king" ... it may or may not happen.

A previous employer shut down their pension plan for everyone under the age of 40.  It was a good one too: included health insurance, nice pension salary, etc.   I was 39.5 when they did it.

SnackDog

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Re: If your job offered a pension
« Reply #12 on: November 22, 2013, 01:43:32 PM »
I'm fortunate to work for an old-fashioned employer that offers a generous pension (as well as 401k). The pension lump sum payout grows dramatically in later years, exceeding annual salary in some years, so I am looking forward to it. If I continue enjoying work long enough, it will be a couple million bucks.

This has no effect on our savings as we are just naturally very frugal and value-oriented. And we hate "stuff" which clutters our home.

mustachianteacher

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Re: If your job offered a pension
« Reply #13 on: November 22, 2013, 04:18:29 PM »
My husband and I are both teachers, so we both have pensions. It has changed my retirement savings strategy only a little. We automatically have 8% of our pretax salary sent to the pension, and our employer sends another 8%, but we also still max out our Roth IRAs. However, the investments we hold in our IRAs are more aggressive than they would be if we didn't have our pensions. They're not ridiculously aggressive, but I do take some calculated risks I might not take if we didn't have the pension.

jpap

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Re: If your job offered a pension
« Reply #14 on: November 22, 2013, 07:03:40 PM »
I'm a teacher (wife is too)- we each contribute 14.5% of salary to PSRS (state teacher retirement system).  This is mandatory, and it's fine with me.  It reduces taxable income, we don't pay into social security, and we can always cash out if we change professions.  This definitely changes the way we save.  I feel I can have my other retirement savings in more aggressive holdings.
It does change my thinking about my job, though, too.  At this point (16 years in) it would be financially unwise to move to another state or change professions.  Luckily I love this job (although maybe not the area).
Retirement at age 50 is early enough for me.

chasesfish

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Re: If your job offered a pension
« Reply #15 on: November 22, 2013, 08:13:52 PM »
I would chalk it up as working for an employer whose retirement package does not coincide with my goals. And would start looking for another employer so I can make it more compatible.

^This

Yeah, this is a challenge.  I have a nice little benefit at work but just view it as an extra safety net when I hit 55.  I'd prefer to make more in cash comp, but I'm not that underpaid relative to the pain of switching.

Exprezchef

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Re: If your job offered a pension
« Reply #16 on: November 22, 2013, 08:55:08 PM »
My job is a State job and therefore I am in a pension system (PERS). I think they are a great option. I can retire at 50 with 60% of my current salary or stay until 55 and go out with 75%. With the exemption of my house, I have no debt and live comfortably on my current pay. In addition I heavily invest and not counting my pension, I should be well into the low to mid 1 million mark in net worth by 50 years old (I am currently 45). I really enjoy my job and as of now, I plan on staying to @ 55. My State pension will cover my medical in retirement so that expense will be taken care of.  I also completed 21 years of combined active duty and reserve military service so I will get that pension as well at age 60. At 60 years old, I will be drawing two pensions, no medical expenses and with taking 4% withdrawals from my investments, Ill be making more money in retirement than when working. Does not sound too bad to me. 

LRS

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Re: If your job offered a pension
« Reply #17 on: November 23, 2013, 01:31:34 AM »
There was a front page article that dealt with this flavor of question a while ago, but a few minutes of paging back and skimming doesn't seem to have turned it up, so I can't link it.

Remember that the whole idea of early retirement is to focus on enjoying life on your own terms instead of chasing dollars from The Man. If you're worrying about how much money you're "leaving on the table," so to speak, consider this: by retiring at all, you're leaving the entire rest of your potential lifetime earnings on the table. The same type of analysis that governs your behavior with respect to your salary should govern your behavior with respect to your pension. It seems like you've already decided it's worth forgoing the rest of your life's salary to be free from your job. The question now is whether it's worth forgoing the rest of your life's salary AND the additional pension. This comes down to how much you enjoy your job, how much you value the things you would be doing if not working, how happy you would be with the lifestyle you could have with the added pension bump, and how happy you would be with the lifestyle your accumulated wealth could support without the added pension.

Ishmael

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Re: If your job offered a pension
« Reply #18 on: November 23, 2013, 04:16:41 AM »
That's a dilemma I have myself. If I had a typical job in my industry, I'd probably be FI within 6 years. At the job I do have:
  • The pay isn't that great.
  • At 50 (11 years), I am eligible for a pension - severe clawbacks due to age/service though.
  • At 53, the clawbacks diminish somewhat and pension gets respectable and enough to live quite comfortably
  • At 55, the pension is quite adequate.
  • I have other investments that are projected to grow at a rate that would provide an income at approximately the same rate as my pension. Meaning, with my investments alone I'd be looking at FI in a similar time frame.
  • I contribute a lot to this pension, meaning I don't have much ability to invest outside the pension. I can contribute some, but not enough to make a significant difference in the time frame, as the gains from my investments are quite a bit larger than I can save.
  • The pension "Transfer Amount" (lump sum in lieu of pension, if I wanted to retire early) is a complete mystery. Despite my (and my employer) contributions, this value has dropped 20% this year. So, my savings is put into something that I can only count on having value at some point in the future, and will have an indeterminate value at any point until then - hardly something that can be planned around. When I ask my pension people, or search online, I get the same answer - "it's complicated".
  • This pension is indexed, with benefits, and as secure and guaranteed as they get.

With these facts, it seems simple - find another job, as this one doesn't fit the goal of ER - those 5-10 years are not worth any kind of money! However, once I add these facts:
  • I have a family, and this job gives me significant time off benefits (sick leave, family leave, etc, no overtime) that I definitely wouldn't have elsewhere.
  • I currently get all holidays off, and 20+ days vacation.
  • As years of service increase, I get more vacation time.
  • My kids are of the age that time off in the next few years is way more valuable to me than after I'd be eligible for FI.
  • I'm allowed to take 2 sabbaticals  (unpaid time off - 3 months for one, and 1 year for the other), and after 10 years I get to take them again. I can also buy this leave and count it towards my pension accrual time. Interestingly, my second 3mo. off leave will happen between 50 and 53, and my second year off will likely happen at age 53, meaning getting from 53 to 55 should be pretty light.

I've personally gone back and forth over the last year - getting a new job/chasing the money means I'd probably be able to retire earlier, but it would be more intense until then. Staying at my current job is more the Tim Ferriss "frequent mini retirements" approach, followed by a still nice and early retirement, by other standards.

The dilemma affects my savings rate as well - If I go for the pension, that means money shouldn't be an issue and my family can live more comfortably (although still quite frugally); if I focus on early retirement, I need to save as much as possible, so it means less fancy meals and vacations and such - putting off some happiness today for tomorrow.

I don't particularly like the work I'm doing (it's kinda boring, and lonely), but the people I work for are quite respectful and the stress level is low.

I'm currently of the mind that I'm going to stick it out to 55 (16 more years). My current financial picture affords me the ability to take the sabbaticals, making it a series of sprints to retirement, rather than a marathon. Factoring in the time I'll regularly gain with my kids along the way, and I think it's a decent trade off.

I do plan on continuing to live pretty frugally, because one never knows what the future will bring. By keeping our expenses low (but not painfully so), I'll get to take advantage of time off opportunities and  I might get laid off, but all that really will mean is that I'll have to switch to my other plan.

I know this isn't directly advice for you, but I thought it might be helpful explaining my thought process.

Spork

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Re: If your job offered a pension
« Reply #19 on: November 23, 2013, 09:15:43 AM »
My spouse will hit 25 years with pension at 59. At 43 he's already got enough in for a small pension.  The company  has been going strong for  over 100 years but one never knows. We hope it is there just like we hope we will get some of the SS paid in but can't count on either. We are trying to prepare as best we can like it doesn't exist.

for what it's worth: the pension that disappeared where I worked was at a very strong company (and it is still very strong) with over 100k employees that has been around for > 125 years. 

SnackDog

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Re: If your job offered a pension
« Reply #20 on: November 23, 2013, 10:14:10 AM »

for what it's worth: the pension that disappeared where I worked was at a very strong company (and it is still very strong) with over 100k employees that has been around for > 125 years.

There must have been a reason the pension disappeared.

imustachemystash

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Re: If your job offered a pension
« Reply #21 on: November 23, 2013, 11:57:16 AM »
My job offers a pension as I work for a school district.  I plan on becoming FI long before I can start receiving the pension.  Also, I only work part time, so I don't anticipate my pension will be that much.  I am not going to be held back by the golden handcuffs.  On the other hand, my FIL already has enough money to be FI but he plans on working until 60 in order to receive a large pension.  He doesn't need the money, but he can't pass up the large sum of money that he will get.  Different people have different priorities I guess.

Spork

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Re: If your job offered a pension
« Reply #22 on: November 23, 2013, 04:39:57 PM »

for what it's worth: the pension that disappeared where I worked was at a very strong company (and it is still very strong) with over 100k employees that has been around for > 125 years.

There must have been a reason the pension disappeared.

Certainly.  They are expensive. 

sunshine

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Re: If your job offered a pension
« Reply #23 on: November 23, 2013, 06:03:43 PM »
My spouse will hit 25 years with pension at 59. At 43 he's already got enough in for a small pension.  The company  has been going strong for  over 100 years but one never knows. We hope it is there just like we hope we will get some of the SS paid in but can't count on either. We are trying to prepare as best we can like it doesn't exist.

for what it's worth: the pension that disappeared where I worked was at a very strong company (and it is still very strong) with over 100k employees that has been around for > 125 years.

That kind of stuff is why we don't dare count on it. The site says it has 399,000 employees. I guess if it does go poof then  it does. Nothing we can do about it. We do see the financials for the plan at least yearly and it looks good too me.
« Last Edit: November 25, 2013, 01:21:52 PM by sunshine »

chasesfish

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Re: If your job offered a pension
« Reply #24 on: November 24, 2013, 06:39:59 AM »
Spork - did it dissapear as in no new accrued years of service, of did people who were counting on it loose their accrued years?

Spork

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Re: If your job offered a pension
« Reply #25 on: November 24, 2013, 07:08:46 AM »
Spork - did it dissapear as in no new accrued years of service, of did people who were counting on it loose their accrued years?

Over 40: continued accrual, full benefits.
Under 40: no more accrual, no medical benefits on retirement.  Amount invested does still exist and there will be some small monthly stipend.

chasesfish

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Re: If your job offered a pension
« Reply #26 on: November 24, 2013, 07:33:40 AM »
Thanks for the info, most of the large companies are going that route, but not even allowing contained accrual for employees over 40.


Honest Abe

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Re: If your job offered a pension
« Reply #27 on: November 24, 2013, 10:10:45 AM »
My wife and I are both teachers and plan on wearing the "golden handcuffs" till 55. I don't want to complain because we're pretty lucky to have a pension like this, and everyone hired after us has a much crappier deal than we do. (but that's also why it's well managed and likely to stay solvent.)

Having said that, we're both maxing our 457s and plan to take a look at the 403b plan as well next year. We could both live off of our pensions as we are pretty frugal, but we feel compelled to save as efficiently as possible for several reasons.

Rural

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Re: If your job offered a pension
« Reply #28 on: November 24, 2013, 10:25:06 AM »
My wife and I are both teachers and plan on wearing the "golden handcuffs" till 55. I don't want to complain because we're pretty lucky to have a pension like this, and everyone hired after us has a much crappier deal than we do. (but that's also why it's well managed and likely to stay solvent.)

Having said that, we're both maxing our 457s and plan to take a look at the 403b plan as well next year. We could both live off of our pensions as we are pretty frugal, but we feel compelled to save as efficiently as possible for several reasons.

Once our teacher pensions vest (university professors are covered under the teacher's pension program here if they choose to be on employment), we qualify for a pension based on years of service at 55 even if we retire or leave service earlier. Ten years to vest. He has three and a half.years to go, and I have six and a half.

No Name Guy

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Re: If your job offered a pension
« Reply #29 on: November 25, 2013, 01:12:34 PM »
My job does have a pension.  I count it as exactly zero for retirement planning purposes. 

Why?  Ask all those Detroit government retirees who only counted on their pensions, how wise it was to do so.  Yup.....last I heard, they're just like any other unsecured creditor and are likely to get 16 cents on the dollar.  Ask all those pension dependent folks who worked for once strong companies that either were mismanaged, or merely had the misfortune to be in an industry that had shifting circumstances (steel, big 3 auto, Kodak / Film versus digital, etc). 

For those in your 30's, do you REALLY want to count on that company being strong 50 years from now?  Take Kodak as a classic example.  Top of the heap in its business in the 60's - today, gone, poof, bankrupt - wiped out by changes in technology.

Nope...only a fool (IMO) would count on a pension as anything other than "hey, I'm now 65, what do you know that former employer isn't bankrupt - time to turn on that pension from long ago and enjoy the extra little bump to the monthly income" situation.

Oh - all you teachers and government employees, thinking you have fat, guaranteed pensions in PERS or any other system....look at Detroit....16 cents on the dollar.  They're what's going to happen to cities, school districts and yes, even states, all across the land.  Politicians have learned it's easy to promise the moon, knowing the bills won't come due until they're long out of office.  One deep look at many state based pension plans (check assumed rates of return amongst other details) will indicate a huge disconnect between reality and promises.

Oh and as others mentioned - pensions are designed to keep you chained to your desk or assembly line until you're 60 or 65.  I'm FI decade(s) before I hit that age band - the "benefit" isn't aligned with my need.

Honest Abe

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Re: If your job offered a pension
« Reply #30 on: November 25, 2013, 01:52:19 PM »
If you don't want your pension I'll gladly take it off your hands. :)

My job does have a pension.  I count it as exactly zero for retirement planning purposes. 

Why?  Ask all those Detroit government retirees who only counted on their pensions, how wise it was to do so.  Yup.....last I heard, they're just like any other unsecured creditor and are likely to get 16 cents on the dollar.  Ask all those pension dependent folks who worked for once strong companies that either were mismanaged, or merely had the misfortune to be in an industry that had shifting circumstances (steel, big 3 auto, Kodak / Film versus digital, etc). 

For those in your 30's, do you REALLY want to count on that company being strong 50 years from now?  Take Kodak as a classic example.  Top of the heap in its business in the 60's - today, gone, poof, bankrupt - wiped out by changes in technology.

Nope...only a fool (IMO) would count on a pension as anything other than "hey, I'm now 65, what do you know that former employer isn't bankrupt - time to turn on that pension from long ago and enjoy the extra little bump to the monthly income" situation.

Oh - all you teachers and government employees, thinking you have fat, guaranteed pensions in PERS or any other system....look at Detroit....16 cents on the dollar.  They're what's going to happen to cities, school districts and yes, even states, all across the land.  Politicians have learned it's easy to promise the moon, knowing the bills won't come due until they're long out of office.  One deep look at many state based pension plans (check assumed rates of return amongst other details) will indicate a huge disconnect between reality and promises.

Oh and as others mentioned - pensions are designed to keep you chained to your desk or assembly line until you're 60 or 65.  I'm FI decade(s) before I hit that age band - the "benefit" isn't aligned with my need.

TheDude

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Re: If your job offered a pension
« Reply #31 on: November 25, 2013, 02:03:17 PM »
Hey No Name, I agree I wouldn't trust a corporate pensions fund however I think City/State pensions are different. CO PERA (the pension that affects me) is pretty damn transparent imho. You can see all the data you want. Its underfunded sure but they have taken steps to bring it back to full funding.

Also I cant think of a worse example than Detroit. Sure those retirees are going to get fucked. No doubt about it. But they also got a 13th check for a long time. Detroit is truly amazing in its incompetence and straight up fraud.

Honest Abe

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Re: If your job offered a pension
« Reply #32 on: November 25, 2013, 02:15:54 PM »
My pension is well-funded, mostly because they made some very unpopular decisions a couple years ago. As an older member, I contributed 3% of my salary for 10 years and can retire at 55. Anyone hired in the last 5 years must contribute 6% of their salary for their entire career and aren't able to retire until 62... sucks to be them, but I'm glad I got in earlier. I would prefer a 403(b) match to what they're getting.

No Name Guy

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Re: If your job offered a pension
« Reply #33 on: November 26, 2013, 10:31:12 AM »
Hey No Name, I agree I wouldn't trust a corporate pensions fund however I think City/State pensions are different. CO PERA (the pension that affects me) is pretty damn transparent imho. You can see all the data you want. Its underfunded sure but they have taken steps to bring it back to full funding.

Also I cant think of a worse example than Detroit. Sure those retirees are going to get fucked. No doubt about it. But they also got a 13th check for a long time. Detroit is truly amazing in its incompetence and straight up fraud.
Yes, city / state pensions ARE different - they're worse in that they mask their problems far better than a company can.  GM couldn't mask its issues (nor Delphi, nor United, nor Pan Am, nor.....) - California can, for example.  I think Detroit is a perfect example of a Government pension.  They show exactly the mismanagement one can expect from political bodies that are captured by the supposed servants of the people.  Consider them the canary in the coal mine.  Oh sure, Detroit is a special case as to the scale of corruption....but that just means the others (like California) out there are merely just behind them a bit, not on a different path.

Look up pension spiking as one issue that public pensions have that (at least in my case) private pensions don't.  Mine is based solely on base salary & time - no chance to spike it with OT, shift differential pay, field assignment allowances, etc.  Also - WHO exactly is going to hold the feet of Legislatures (or school boards, etc) to to the fire to insure their pensions are fully funded.  Is it realistic to expect politicians to raid school funding, for example, to fully fund the pension fund of the prison guards or highway workers?  More realistic is that the trustees will be pressured to adopt unrealistic assumptions to give the appearance that all is well (who appoints those trustees again? oh yeah, the same politicians that would be in doo doo should they have to raid welfare for widows and orphans to make the pension fund for the highway workers whole).

Want another issue with public pensions vis-a-vis private?  Just Google "Detroit Pension PBGC" and read the first article.  Public pensions have NO back stop, other than the taxpayer.  At least the saps at United Airlines or Delphi got something when their companies imploded.  Detroit pensioners, last report I saw will get something as well, 16 cents on the dollar, however as unsecured creditors, they could get nothing as well, depending on circumstances.

Again, I'd suggest - find out the assumptions in your pension.  A quick Google search shows CO PERA for example assume 2.8% inflation and 7.5% rate of return (4.7% net of inflation).   Most of us here are using 3 to 4% which is a lot more realistic.  So, are they really that good?  Doubt it.  Do you REALLY believe state bureaucrats are better than average investors, and can be so indefinitely?

Abe - I never said I didn't want it or wouldn't take it, just that I'm not a fool that will COUNT on it.  Gravy is gravy and I won't say no if it's there at the time. 

Again - all I'm saying to those of you with pensions (like I have) - be wary of counting on it to the detriment of saving outside of the pension.  It may not be there for you when you really need it, especially if you haven't made other provisions.  Counting on a pension would be like blindly counting on Social Security to deliver on those ridiculous promises they're making in those annual "statements" they send - only a complete innumerate would believe SS will be there as indicated.

blackjack

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Re: If your job offered a pension
« Reply #34 on: November 28, 2013, 06:33:05 AM »
I work for ups teamsters... It has to be one of the strongest and safest pensions in the country....
35 years of service is 3500 a month... Roughly you get $100 a month for every year of service (5 years must be vested)
Based on my current years there if I plan on to retire in 10 years i'll  get roughly 1600 a month at age 65... If I somehow make it there till im 50 years old i'll be able to collect my pension at a reduced rate.

« Last Edit: November 28, 2013, 06:34:56 AM by blackjack »

MrsPete

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Re: If your job offered a pension
« Reply #35 on: November 30, 2013, 06:58:33 AM »
I would chalk it up as working for an employer whose retirement package does not coincide with my goals. And would start looking for another employer so I can make it more compatible.
Agreed.  You have to look at your options, your goals, and make a decision in line with your plans.  No one answer will fit everyone in regard to this question. 

I do have a pension, and it is in line with my retirement goals.  My goal has never been to retire super-early, and with my genes I could easily live to be 100+.  Since you "can't outlive your money" and medical benefits are included, a pension is a good option for me. 

I definitely agree with those who express concerns over whether the pension will be there at retirement.  After all, many things can happen over the course of a 20-30 year career -- both inside and outside the company -- and even if you don't personally know someone who's been hurt by a pension promise broken, you've heard stories.  I've kept a watch on mine, and although I won't say I'm not concerned, we're stable (in fact, we're the second most stable teacher pension plan in the country). 

One thing that hasn't been mentioned is that a pension does tie you down to the job.  I'm a STATE employee.  Twice my husband has had an unsolicited job offer in the another state, and each time we've weighed the pros and cons.  Both times we've stayed, and my pension was a part of that decision.  If you're married and your spouse has a career too, being tied to a specific job makes your life slightly more complicated. 

Another difficulty, if you're married, is that we plan retirement funding as a couple . . . but a pension belongs to an individual alone.  So, if you're the spouse with the pension and you die first, your spouse could suddenly find himself or herself with a reduced income.  Typically, when you begin drawing your pension benefits, you must make a one-time choice whether to accept the pension completely in your name (which would leave the spouse out entirely), or to take a reduced benefit but know that the spouse would still have a reduced benefit after your death . . . but that, of course, is a gamble.  If the spouse dies first, you've still accepted a reduced benefit for life.  It's a question every pension-earner should consider.

And a pension is a risk in yet another way:  I could retire and draw benefits for two years . . . and then die early.  If that happens, the state "wins" because I've deposited for years, and my children cannot inherit my pension.  On the other hand, if I live to be 100, I'll "win" because I'll end up receiving more than I deposited over the years.  Of course, most people fall somewhere in the middle, and it's impossible to say who'll "win" and who'll "lose".  In that regard, a 401K and other retirement savings are more "sure" because you KNOW how much you have, and you can at least leave it to your heirs.

I'm one of the youngest people still in on the "old" good pension plans.  People who started only a year or two after me are on a lesser plan, and people who've started in the last five years or so are on a lesser-still plan.  As such, I have to avoid a break in service -- if I were to leave (I'm not having another baby, but any of us could become ill or could need to provide care for an elderly parent), I'd come back in under the newer, lesser plan.     

If  you're looking for a job with a pension, it's important to know exactly what the pension will pay and what you must do to qualify for it.  I can only talk about what I know: Teachers.  The majority of teachers do not end up staying long enough to get full pension benefits, and many are ill-informed on the benefits.  For example, I was talking to a teacher friend about this not long ago.  She's looking at retiring in another 1-3 years, so she went to a retirement seminar . . . and was surprised to learn that the pension isn't equal to her current paycheck.  Of course, it was also news to her that she may spend less in retirement than she does now.  This information is available just for googling; she hasn't informed herself. 

Overall, people today are bewailing the fact that pensions are going the way of the dinosaurs, but I think most people would not end up collecting big benefits.  People today change jobs more often, which has never been the way to earn a pension benefit.  And for those looking to work a few years at a  high salary then retire, a pension isn't likely to be a possibility at all. 

Finally, even if you're expecting to draw a pension, it should never, never be your only source of retirement income. 

Is a pension a good choice for you?  I don't know.  That question involves too many variables for any blanket answer to be correct.

MrsPete

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Re: If your job offered a pension
« Reply #36 on: November 30, 2013, 07:00:26 AM »
My wife is a teacher and covered by PERA. We save pretty aggressively (max both IRAs, my simple IRA her 401k, family HSA). We have talked about it a little. She loves being a teacher so I am not sure she will want to retire early. I am considering buying some years. If we do that she will be able to retire at 54 with 87.5% of her average highest three years of salary. Even if she doesn't end up working that long she can roll all the money into an IRA. Its really a pretty sweet deal since she doesn't pay any SS tax.
Just mentioning:  Teachers in some states do not pay Social Security, and they do not draw Social Security in retirement. 
In most states, however, teachers pay into BOTH their pension plans AND the Social Security system and then can draw from both. 

Left

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Re: If your job offered a pension
« Reply #37 on: November 30, 2013, 07:01:58 AM »
I don't know... I've had chances to take jobs with pensions... I didn't like the work environment...
but with my goal of retiring before 60, the pension wouldn't even kick in or I wouldn't be there long enough for it to mean much.

I know parents say that having a pension is the best thing for retirement, maybe it is, maybe not but I don't view it as something that I plan on needing. I also plan no not needing social security either :S but lets see how that turns out in 40 years

Honest Abe

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Re: If your job offered a pension
« Reply #38 on: November 30, 2013, 07:12:05 AM »
@MrsPete - I'm in a 2 teacher household. Even though we save aggressively the idea of retiring before our pensions isn't even discussed since they're so valuable.... I definitely know what it's like to be tied down. However, we both have an understanding that we won't stay a single day longer than we have to. We need to work until 55 to receive 60% of our Final Average Salary. We do pay into SS so we'll be eligible for that as well.

blackjack

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Re: If your job offered a pension
« Reply #39 on: November 30, 2013, 07:39:15 AM »
I get my ups teamsters pension and my wife will get a teacher pension.... Plus were saving aggressively...

Nords

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Re: If your job offered a pension
« Reply #40 on: December 01, 2013, 02:24:52 PM »
If your job offered a impressive pension would you save differently and or work longer to grow that pension?
If i retire early which I plan too i'll be losing out on lots of money
In the U.S. military, staying longer than 20 years will boost a pension by (at least) 2.5% per year (plus pay raises, longevity raises, and the occasional promotion). 

Once a military servicemember is past 20 years of service, it's possible for the service to say "Hey, it's time for you to retire now."  But even when that does not happen, the problem is that the nature of the job keeps changing past 20-- and before long the extant pension is far more attractive than more BS.

Joining the military explicitly for the pension is a really bad idea.  Staying in the military after the fun stops (just to get to the pension) is also a really bad idea.  (I resemble that statement.)  It's far better to save for financial independence as though you wouldn't stick around for the pension, and then to modify your savings only after the pension is assured.

Luck better Skill

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Re: If your job offered a pension
« Reply #41 on: December 02, 2013, 02:02:56 PM »
  I have a state pension I never expect to collect.  In the last few years the state not only stopped paying into the plan it has borrowed money out.  When Detroit defaults on it bonds, I wonder what percentage are held by pension plans?
  Compound interest is powerful but so are market crashes.  The dot-com and housing bubbles destroyed lots of principle in pension plans.  And if Greece, Detroit, or other trouble governments default on bonds more pension plans will go into the red.
  Pension plans were an experiment that is failing due to human nature.  More was promised then what even optimistic and rosy projections could hope for in returns.
  Hard to believe I am an optimist but I am also good at math.

No Name Guy

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Re: If your job offered a pension
« Reply #42 on: December 03, 2013, 12:43:00 PM »
http://www.seattlepi.com/news/us/article/Judge-Detroit-eligible-for-Chapter-9-bankruptcy-5029623.php

Quote
A judge ruled Tuesday that Detroit is eligible to shed billions of dollars of its long-running debt, including the pensions of thousands of workers and retirees, in a much-anticipated decision that shifts the city's epic bankruptcy case into a new and delicate phase.

Quote
Judge Steven Rhodes, who wondered aloud why the bankruptcy had not happened years ago, said pensions can be cut just like any contract because the Michigan Constitution does not offer bulletproof protection for employee benefits. But he signaled a desire for a measured approach and warned city officials that they must be prepared to defend any deep reductions.

"This once proud and prosperous city can't pay its debts. It's insolvent," Rhodes said in announcing that Detroit was formally eligible for the largest public bankruptcy in U.S. history.

Bold added.

As a general rule, don't have all your eggs in one basket....especially one run by politicians. 
« Last Edit: December 04, 2013, 02:31:45 PM by No Name Guy »

giggles

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Re: If your job offered a pension
« Reply #43 on: December 03, 2013, 02:28:22 PM »
I am vested after only 5 years, which will come for me next year.  I starting to want to move on, but I am holding off on looking until that date passes.  That way I at least get something for my 5 years of trouble!