Are you "lucky"if you have a secure retirement?

[Capricious]

Excellent point.

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

 

[riptides]

... They have stated that the salaried employee's pensions will be frozen. As of right now, I (an hourly employee), am "protected" as my pension benefits are part of our union contract. I am speculating ....

I think it is a trend that will require due dilligence and scrutiny on your part.

Seems these days with contracts, nothing is set in stone. Best you can do is hedge your bets and stick monies everywhere. Distribute best you can with perhaps different risks associated with each. The 401k they are offering would get more monies if I were you. Seems that is under "your" control more or less.

 

[riptides]

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

Longevity, I'd rather have quality!

 

[ovrszd]

Also, if you do not die, then the pension does not die, either. Longevity is a major "unknown" in the calculation.

As to taking the lump sum and investing, and ending up with more money, I continually run across those who are of the opinion that their investment returns will be superior; I run across fewer who's returns actually are.

I have 100K in a plan that my job offered. I could choose to pull it all out and invest it myself with no tax penalty. It's divided into 3 accounts. The lowest account gain (safest) was 3% this past year. The highest account gain (most risk) was 24% this past year. I don't think I could have individually invested that money and gotten that return.

 

[Capricious]

"...It goes up about a dollar per year..."


Is that increase a dollar amount, or a percentage? If it is a percentage, then (assuming no changes) it could amount to quite a sum after 40 years or so.




"..As some of you said they will probably offer an alternative that they will try to make sound like a better deal for the employees, and my fellow "brothers" will fall to their knees and accept it..."


Usually what is offered is the "signing bonus". A lump sum paid up-front. And, yes, a lot of people will look at the lump sum and sign a deal that they would not have otherwise. They see a new ATV, or a new tractor or a new pick-up truck.


Same deal with a lump-sum pension pay-out.

Some people can't pass up a few dollars up-front even if it costs them many dollars in the future:
Hyperbolic discounting - Wikipedia, the free encyclopedia



Again, the only way I would take a lump-sum pension pay-out is if I saw some likely impairment of those future payments.

 

[mikehaugen]

"...It goes up about a dollar per year..."

Is that increase a dollar amount, or a percentage? If it is a percentage, then (assuming no changes) it could amount to quite a sum after 40 years or so.

It's a dollar amount. It is spelled out in each new contract "currently $30, next year $31, next year $32...."

The way I understand it, that dollar amount is determined by the year you leave the company, then when you get to retirement age that number is multiplied by the number of years you were with the company and you receive that much each month.

 

[Capricious]

It's a dollar amount. It is spelled out in each new contract "currently $30, next year $31, next year $32...."

The way I understand it, that dollar amount is determined by the year you leave the company, then when you get to retirement age that number is multiplied by the number of years you were with the company and you receive that much each month.

If it's a figure subject to negotiation that frequently, then it would difficult to predict that far into the future what the returns will be.

What I do is this: I have a pension that is supposed to replace about 30% (+,-) of my pay, if it is set up for the surviving spouse to receive 50% of that figure after I am killed by someone I pissed-off on an internet forum. In addition, she has a (smaller) pension, and it will be set-up so that I get none if she dies first (unlikely, since men usually die first, plus she is several years younger and a lot better looking than me). We will also have some social security. All of this is our "guaranteed" (such as it is) income.

We also have the 401K IRA's etc. that we invest on our own. If we do good, then we haven't given-up much by not betting the "whole farm" on investing. If we do bad on the investments, then we still have income to live on. If one of the pensions goes bad, we can survive. If social security is reduced, we can survive. If the stock market/bond market tanks, we can survive.

The old adage, "not having all of the eggs in one basket."

 

[ultrarunner]

Just about the only people I know with great retirements are public safety and some with other government retirements...

The newspapers here consistently have stories of pension spiking and rank and file police officers/fire that retire at 51 with 100k to 180k retirements... the high number is 15k per month plus lifetime benefits.

Knowing 12 from my High School in local law enforcement... each one will say they simply got lucky... they were not thinking about it at age 21... not a single one.

It is interesting in that the retirements through manipulation can be as much or slightly more than highest pay... the most common way is when all unused vacation and sick leave is added to the final year and the officer takes all overtime... even a case or two of promotions awarded the last 12 months... so a 23 to 27% spike in the last year pay or more will carry through in retirement...

Some of the older officers have even better plans... their retirement with 30 years is tied to what the person in that position is now paid... so officers that retired as a sergeant 30 years ago are paid on what a sergeant earns nows...

Last year there was a lawsuit because the city said it was no longer going to count overtime of those holding the position now in calculating the pension of those retired.

Again... all have told me they simply were lucky in the pension lottery.... one of my best friends did prisoner transport for nearly 30 years... jail to courthouse... he is the first to say he earned his 104k pension driving a taxi...

For lack of a better word... luck is always a factor, no matter how small... living long enough to benefit, being at the right time/right place, being of the right age... etc.

 

[newbury]

I'm with ya. I don't get it either. It is my belief that if I need a prenup, I'm marrying the wrong person.

A prenup might prevent many marriages.

In some ways a prenup is similar to picking a company or organization that you will work for until retirement.

In this day and age of frequent job switching I basically had one employer from 1975 thru 2011. I picked it because of stability, travel, and challenges. PLUS a locked in guaranteed pension plan which allows me to sit on my butt and type on TBN. My retirement funds my lifestyle, but not much more. But thanksto the Army I traveled most of the world so I don't desire to travel.

That guaranteed pension has all gone away. Now it is a combination of SS, TSP, and a "Basic Benefit plan". SS may go away, TSP is heavily dependent on the stock market and the Basic is darn small.

 

[JDgreen227]

I think it's on topic because it's been discussed as a measure of success/failure by several posters including yourself. And I think marriage should be one of the most critical decisions when young and trying to establish a retirement plan. In today's world prenups seem to be a part of marriage for second or third timers. So it is a reflection of a person's perspective about what it takes to ultimately be successful financially. It's extremely important to you, for example, in your determination to remain financially successful in regards to your retirement.

Good argument on your part so I withdraw my objection....who wants to change this thread to "Are you lucky if don't need a prenupital agreement.....?"