Author Topic: Pension plans  (Read 2595 times)

piz

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Pension plans
« on: February 24, 2014, 12:52:58 PM »
I starting working with schools and for the state a while ago and ended up getting into their "teacher" pension plan.  Back about 7-10 years ago in my ignorance I thought this was awesome. I dont have to worry about retirement as much because basic math it sounds great (years of service x 2.5% x top 3 years).   With the collapse of alot of these systems should I be concerned?   I know teachers unions is a strong system but its wouldnt be the first union pension to collapse that people thought couldnt.   I am getting to the point now where my debt and student loans are paid off and thinking of adding more money to different accounts.  The odd thing is I feel traps at times because even I could save more my pension really doesnt kick in until I am much older making early retirement harder.

Am I complaining to complain?
Should I sit back and enjoy the ride?


Cassie

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Re: Pension plans
« Reply #1 on: February 24, 2014, 01:01:21 PM »
Depending on your plan you might be able to retire & collect sooner then you think. In Nevada they penalize you when you retire younger but you can do it. Also you could quit & leave your pension sit until a certain age and then take it then.  I took mine at 58 and the penalty was worth it. I would also save on your own so you have options of going sooner if you want. I am really glad I have my pension. 

dude

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Re: Pension plans
« Reply #2 on: February 25, 2014, 06:29:43 AM »
I starting working with schools and for the state a while ago and ended up getting into their "teacher" pension plan.  Back about 7-10 years ago in my ignorance I thought this was awesome. I dont have to worry about retirement as much because basic math it sounds great (years of service x 2.5% x top 3 years).   With the collapse of alot of these systems should I be concerned?   I know teachers unions is a strong system but its wouldnt be the first union pension to collapse that people thought couldnt.   I am getting to the point now where my debt and student loans are paid off and thinking of adding more money to different accounts.  The odd thing is I feel traps at times because even I could save more my pension really doesnt kick in until I am much older making early retirement harder.

Am I complaining to complain?
Should I sit back and enjoy the ride?

There's definitely some risk there.  You can probably get some sense of the particular risk your state or municipality faces by checking their bond ratings with one of the rating agencies.  That is a pretty good indicator of the state of that entity's fiscal health. Of course, healthy or not, there is a "pension envy" backlash out there among the general public who are pissed off because public sector workers still have pensions while most private pensions have vanished, so the political winds could shift against you at some time in the future, though in most cases -- other than the truly dire situations where the particular government is going broke -- the solution is usually to phase them out or revamp them into less generous plans while grandfathering folks who in the existing system.  Bottom line is, you have pretty much zero control over it, so just have some backup plan in place, which usually means saving aggressively in your 401k/403b/IRA, etc.

Another Reader

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Re: Pension plans
« Reply #3 on: February 25, 2014, 09:09:03 AM »
Are you paying into Social Security?  If so, that's an additional stream of income at or after 62.  Do you have a 457 plan?  That's worth looking into if the investment choices are acceptable.  The assets are in trust and are not subject to creditor claims if the state or the teachers' pension fund goes bankrupt.  You can take the money out without a penalty if you retire early.  Have you funded your IRA?  If not, you can still fund a 2013 IRA until April 15th.

If you have exhausted these choices, then you can open a taxable investment account.  Fidelity, Vanguard and Schwab are all good choices.

Cassie

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Re: Pension plans
« Reply #4 on: February 25, 2014, 05:19:48 PM »
You can also see how secure your pension fund is at the present time. We just got  a report that said an independent study found Nevada to be # 1 out of 126 pension plans in the country.  Some states are having issues like Illinois.