Deleted
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Post by Deleted on Jan 14, 2020 9:49:26 GMT -5
I hope this isn't behind a pay wall- I get free e-mails from Morningstar, which I usually ignore, but this was interesting. www.morningstar.com/articles/961553/401ks-have-reached-their-expiration-dateThe author has gone against the grain of other financial writers, who claimed for years that 401(ks) were just a way for employers to the investment and longevity risks onto employees as they eliminated pension plans, and that it required too much expertise in investing for the average employee to navigate. The writer was encouraged by new laws requiring that 401(k) enrollment be automatic (employees have to actively opt out), with regular increases in the contribution % up to a certain level and the default investment option being target-retirement-fund dates. He's changed his mind because of a recent study that shows that many people who contribute little in early years make it up with higher contributions as they get closer to retirement (meaning that the automatic provisions don't make much of an improvement over the long run). More importantly, people may accumulate $$ in their 401(k) but for households under the age of 55, outflows from 401(k)s are about 40% of the inflows. So, much of the savings isn't available at retirement. He promises details on a "fix" in a subsequent article and hints at stonger consequences for early withdrawal and it will cover EVERY worker. He mentioned that it would be "fully portable" to the plans of subsequent employers. I'd hope rollovers would also be available- some employer plans are pretty crappy. How would you fix the 401(k) system?
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Deleted
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Post by Deleted on Jan 14, 2020 9:54:45 GMT -5
I’ve said it before but I would get rid of 401k’s and allow everyone the same contribution limits in an IRA. People could then bring their IRA routing information to their employer for direct deposit just like they do their checking accounts for their paycheck.
I don’t think the big finance lobby would allow it because now they can bid by employer to win huge batches of customers, in my idea they would have to win over each individual customer.
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Deleted
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Post by Deleted on Jan 14, 2020 10:04:31 GMT -5
I don’t think the big finance lobby would allow it because now they can bid by employer to win huge batches of customers, in my idea they would have to win over each individual customer. I like your idea; one of the reasons I said I'd want rollovers to be available (rather than portability to the new employer's plan) is that I made the terrible mistake of rolling over about $200K in my 401(k) to a new employer. It turned out to be a crappy plan- small employer so the fees and investment options were lousy. It didn't help that it was just before the dot-com crash. I hadn't realized that once you rolled it over to a new employer you couldn't take it out or move it elsewhere without tax penalties unless you could claim hardship. As soon as I left that company I started the paperwork to roll it over to a discount brokerage account.
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justme
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Post by justme on Jan 14, 2020 10:10:54 GMT -5
I think automatic opt-in with a decent percent defaulting into target date is a great start (BTW not everyone does this so harder to see the full effect). My company also automatically enrolls you in the automatic 1% yearly increase until you get to I believe 15% - which I think should be a rule too. I personally also think there should be a mandated percent that employers have to put in, and while I'd prefer all vesting schedules to disappear I'd be ok with one that had you fully vested within 1 year. Also something that makes it darn near impossible for people to access it before say 55 or something. While I haven't personally run into it, I think there also should be regs that state something like 25% of the plan's offerings have to have an expense ratio under 2% or maybe that the default target date funds have to be under 2%.
While it's not something I'm dealing with now, I also think they need to fix the whole Roth IRA max out, traditional conversion but messy as hell if you have any money in a traditional IRA. Either let everyone put money into a Roth to a certain amount or take away the stupid portion of all your traditional money. People are moving companies too much and this rule sorta forces them to keep money in crappy 401k plans.
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haapai
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Post by haapai on Jan 14, 2020 10:13:01 GMT -5
It's paywalled. I'm disappointed. I was really hoping to read the article. I have a suspicion that I may have one of the crappier 401(k) plans out there. I also have a suspicion that the talk of using targeted retirement date funds as defaults is a bit of a straw man. I seem to recall my company experimenting with that for a year of so and then quickly realizing that such funds got too bond-heavy too quickly and were inappropriate for almost all of the on-the-fence investors that got defaulted into them.
But mostly I want more information on why a study that shows that many people who contribute little in early years start contributing more when they get older means doodly-squat. I''m one of those late-to-the-game investors and I fairly certain that I would have benefited from automatic opt-in, had it been a thing when I first started this job. I've now got my target set at 25% of salary and am contributing 21%. It hurts, I would not be doing this if I wasn't terrified.
My biggest recommendation for changing the 401(k) system would be to encourage automatic opt-in at a level that is probably lower than currently used -- 1% with automatic escalations of 1% a year. It's important to get folks into the game and see how small, possibly hard-to-miss, amounts can add up and compound. I say this even though there was definitely a time when I would have opted out of even a 1% automatic 401(k) contribution and had spreadsheets to back me up on that decision.
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jerseygirl
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Post by jerseygirl on Jan 14, 2020 10:31:33 GMT -5
Good to have people save tax free in 401k But taxes will go up in future due to the large debts US has . Right now taxes are low due to Trumps tax plan. Good time to move IRAs to Roth accounts, pay the low tax now and be tax free when tax increases happen. Some companies have Roth 401k so put in money to regular 401k up to company match then rest into 401k Roth We’re retired and getting killed with taxes on required minimum deductions, will only get worse especially if Warren or Sanders elected. Will start now rolling over to Roth’s . Couldn’t contribute when working since we were over limit
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Deleted
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Post by Deleted on Jan 14, 2020 10:35:33 GMT -5
I’ve said it before but I would get rid of 401k’s and allow everyone the same contribution limits in an IRA. People could then bring their IRA routing information to their employer for direct deposit just like they do their checking accounts for their paycheck. I don’t think the big finance lobby would allow it because now they can bid by employer to win huge batches of customers, in my idea they would have to win over each individual customer. I've never understood why they don't just make the IRA limit 25K and you have to subtract anything you contributed to a 401K from that limit. It's ridiculous that some people only have access to 6K of tax preferred contribution space just because of where they work.
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Deleted
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Post by Deleted on Jan 14, 2020 10:39:46 GMT -5
Good to have people save tax free in 401k. But taxes will go up in future due to the large debts US has . Right now taxes are low due to Trump's tax plan. Good time to move IRAs to Roth accounts, pay the low tax now and be tax free when tax increases happen. Some companies have Roth 401k so put in money to regular 401k up to company match then rest into 401k Roth. Yeah, that's a concern of mine, too. The conventional wisdom has been that you'll be taxed at a lower rate when you're retired, but for one thing, money taken out of an IRA or 401(k) is taxed as ordinary income- no favorable treatment for long-term capital gains or dividends. Unless you withdraw it as a Qualified Charitable Distribution it also goes into your Adjusted Gross, which can then trigger extra taxes on your SS and IRMAA surcharges on your Medicare premiums. And, as you noted, taxes can go up. I'm glad to see the development of Roths- it was an option only fairly late in my career and I've made too much to do Roth conversions since I retired.
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gs11rmb
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Post by gs11rmb on Jan 14, 2020 10:51:19 GMT -5
I'd make minimum contributions mandatory and prohibit loans and withdrawals. I'm sure that sounds draconian to a lot of people but you can't (as far as I know) take loans from pension plans and contributing is often required. If 401Ks were meant to help replace pensions then I don't see why people shouldn't be forced to contribute. I think it's fairly obvious that millions of people say they can't afford to contribute but would do so if they were given no other option. They'll be grateful when it's time to retire... I sound like a parent .
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bean29
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Post by bean29 on Jan 14, 2020 11:29:37 GMT -5
The last set of changes are not even in place yet, and some people still want to change things more saying they do not do enough?
As far as I know, the last 401K changes don't go into effect for a year yet. I work for a small employer, we don't have automatic enrollment, default funds or automatic increases.
I am looking forward to groups of employers being able to have a "group plan" so that I can offer a 401K plan to DH's employees. I am expecting Intuit IOP or QuickBooks payroll to offer the option to their users.
Personally, I find that my biggest hurdle to get past is making the initial decision. I agree that some Target Date funds are too heavily weighted to bonds, but weighed against making no decision or possibly someone choosing high risk investments? I think it is a fine choice - if the alternative is possible someone not investing at all. I think people are overthinking this. It is the default choice. It can be changed.
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Deleted
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Post by Deleted on Jan 14, 2020 11:41:09 GMT -5
I agree that some Target Date funds are too heavily weighted to bonds, but weighed against making no decision or possibly someone choosing high risk investments? I think it is a fine choice - if the alternative is possible someone not investing at all. I think people are overthinking this. It is the default choice. It can be changed. What I did when I was looking at Target Date funds was choose one with a longer retirement horizon than my actual, so it had the more aggressive mix that I wanted.
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Tiny
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Post by Tiny on Jan 14, 2020 11:42:09 GMT -5
My improvement would be to make it easy for an employer without a 401K plan to be able to have payroll deductions to employees personal retirement plans (IRA/ROTH, whatever). The account would need to be "portable" - so if an employee works for Small business X in Pennsylvania and then moves to Oregon and starts working for Small Business Y - they use the same retirement account. I'm pretty sure the big Financial Service Corporations aren't gonna want to service these smalls accounts (if median income is 40K - 3% of that is $1200. Especially since the accounts will most like be "small" for decades. Hence the government regulation that forces them to do. it.
I think 401Ks (and all the other numbered plans) work fine for people working for Big Employers. I think something needs to be done for people without easy access to payroll deductions or with small employers.
I think someone should be able to have a brand new personal IRA set up and then have their Small Business Employer able to put the employees $25.00 "retirement" deduction per check into the account... without penalizing the Small Business Employer OR the employee. I get that the $25.00 might not be enough to buy into an index fund or what ever. The employee shouldn't be penalized (feees to be paid) for having a small amount to start with.
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NastyWoman
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Post by NastyWoman on Jan 14, 2020 12:18:50 GMT -5
I'd make minimum contributions mandatory and prohibit loans and withdrawals. I'm sure that sounds draconian to a lot of people but you can't (as far as I know) take loans from pension plans and contributing is often required. If 401Ks were meant to help replace pensions then I don't see why people shouldn't be forced to contribute. I think it's fairly obvious that millions of people say they can't afford to contribute but would do so if they were given no other option. They'll be grateful when it's time to retire... I sound like a parent . Let's get something straight: 401k were NOT, I repeat NOT, invented to replace pensions. The original reason for establishing them was to give high earners a way to reduce their taxes and stash away money for retirement. Companies have over time taken this as a way to get rid of expensive pension plans and to move risk onto their employees. So while I understand that making contributions may need to become mandatory if we don't want to go back to most of the elderly living in abject poverty, we have to recognize how we got here in the first place.
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Deleted
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Post by Deleted on Jan 14, 2020 12:49:00 GMT -5
Let's get something straight: 401k were NOT, I repeat NOT, invented to replace pensions. The original reason for establishing them was to give high earners a way to reduce their taxes and stash away money for retirement. Companies have over time taken this as a way to get rid of expensive pension plans and to move risk onto their employees. So while I understand that making contributions may need to become mandatory if we don't want to go back to most of the elderly living in abject poverty, we have to recognize how we got here in the first place. I totally agree and these were reasons the writer cited supporting those financial writers who didn't like 401(k)s. The funny name comes from a section of the tax code that some creative accountant found and he realized that it could be used to defer compensation on a tax-free basis for highly-paid executives. I was fortunate enough to work during the period when both 401(k)s AND DB pensions were available to workers and in the insurance business it was pretty common. My two non-COLA DB pensions are each $900/month and I'm grateful for them. It wasn't till later that companies decided that they could terminate their pension plans and use a 401(k) as a "substitute". Heck, some didn't even provide a match, and given the risks they just dumped onto the employees they got away with murder. I worked for a GE sub that was acquired. The acquiring company had closed their DB plan to new entrants but instead we got 6% of salary deposited into the 401(k) even if we contributed nothing else. The match was 100% on the first 6% so I was contributing 6% and getting another 12%. And that's how to treat your employees decently when you terminate a DB plan. I had a coworker who always withdrew the 6% immediately and spent it.
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Deleted
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Post by Deleted on Jan 14, 2020 13:04:22 GMT -5
I didn't even know there were companies that allowed you to make withdrawals, that sure seems like a recipe for disaster. Ours certainly doesn't except for hardship, but there are people that always have a loan going against their balance. However, where my son and his dad work they don't allow loans against the 401k either.
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phil5185
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Post by phil5185 on Jan 14, 2020 13:55:30 GMT -5
""401(ks) were just a way for employers to the investment and longevity risks onto employees as they eliminated pension plans""
IMO the investment and longevity risk should be owned be the employee - furthermore, I want to own (& control) that risk myself, I don't want my Corporate Board of 401k's directing what I should invest it.
""How would you fix the 401(k) system?""
Maybe we should leave it alone?
Our IRS Code now tens of thousands of pages long, that's what you get when the Govt tries to fix things over a period of 110 years. That Code is essentially unworkable at this point. The 401k system worked reasonably well in 1982 when it first came into general use, no 'matches', no Roth, no hardship, no 401k loan, no catch-up, yada. When I retired in 1998 my account was well funded. And it continues to grow in retirement.
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Deleted
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Post by Deleted on Jan 14, 2020 15:32:09 GMT -5
""401(ks) were just a way for employers to the investment and longevity risks onto employees as they eliminated pension plans""
IMO the investment and longevity risk should be owned ye the employee - furthermore, I want to own (& control) that risk myself, I don't want my Corporate Board of 401k's directing what I should invest it. If it were just you and me (and our clones) I'd agree 100%. But what about the people who can't save (low earnings, HCOL area, extended unemployment or disability that depleted savings) or those that could, but go to Disney World and take cruises every year and buy so much stuff they have to leave their cars in the driveway because the garage is for storage? I see the sad stories all around me- pitiful FB posts on items in my feed relating to retirement from people trying to live on $850/month in SS, the recent widows in my church who had to sell the house because they couldn't afford to live in it.. maybe if they or their husbands had been forced to save more in a 401(k) they would have been left in a better position. It's a little late to remind them that SS was meant to be part of a 3-legged stool, with the other two being private pensions and personal savings.
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Tiny
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Post by Tiny on Jan 14, 2020 15:53:12 GMT -5
""401(ks) were just a way for employers to the investment and longevity risks onto employees as they eliminated pension plans""
IMO the investment and longevity risk should be owned be the employee - furthermore, I want to own (& control) that risk myself, I don't want my Corporate Board of 401k's directing what I should invest it.
""How would you fix the 401(k) system?""
Maybe we should leave it alone?
Our IRS Code now tens of thousands of pages long, that's what you get when the Govt tries to fix things over a period of 110 years. That Code is essentially unworkable at this point. The 401k system worked reasonably well in 1982 when it first came into general use, no 'matches', no Roth, no hardship, no 401k loan, no catch-up, yada. When I retired in 1998 my account was well funded. And it continues to grow in retirement.
What should all the workers who don't have access to an employer 401K do? What if your employer has a sucky plan? I will admit - that all of the 401K plans I've been in came with some "training" or "information" on investing. Not really all that great - but it explained about risk and the types of investments. How "common knowledge" is it that an IRA can be opened at a Financial Services Corporation (like Fidelity or your local bank)? I also think it's a problem that individual IRAs have a 6K max while employer sponsored plans are higher. And Yeah, 401K came in to more useage in 1982... but only for SOME corporate employees. In 1984 My first "real job" employer didn't offer a 401K. In 1986 I made the jump to a job "downtown" and couldn't contribute to the 401k until my 1st year anniversary. There was no match. My next Corporate job (1989) - I negotiated being able to contribute to the 401K right away (no 1 year wait for me!) AND tuition reimbursement. I had to AGAIN negotiate immediately being able to contribute to a 401K when I jumped to a new job in 1996... That silly "you have to be an employee for a year before we'll let you contribute to the 401K" is, wll, just silly. And it still happens. Just read about some poor smuck who took a job (didn't negotiate waving the 1 years thing) and can't contribute to the 401K for year. He was looking for advice on what to do for the year (contribute 6K to an IRA? what to do with the other 12K he could save... and it sucked to not get the tax break). If you change jobs (to climb the pay scale) often - you could loose out on quite a few years of contributions. So, yeah, the 401K works great for EVERYBODY!!
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giramomma
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Post by giramomma on Jan 14, 2020 16:04:49 GMT -5
""401(ks) were just a way for employers to the investment and longevity risks onto employees as they eliminated pension plans""
IMO the investment and longevity risk should be owned ye the employee - furthermore, I want to own (& control) that risk myself, I don't want my Corporate Board of 401k's directing what I should invest it. If it were just you and me (and our clones) I'd agree 100%. But what about the people who can't save (low earnings, HCOL area, extended unemployment or disability that depleted savings) or those that could, but go to Disney World and take cruises every year and buy so much stuff they have to leave their cars in the driveway because the garage is for storage? I see the sad stories all around me- pitiful FB posts on items in my feed relating to retirement from people trying to live on $850/month in SS, the recent widows in my church who had to sell the house because they couldn't afford to live in it.. maybe if they or their husbands had been forced to save more in a 401(k) they would have been left in a better position. It's a little late too remind them that SS was meant to be part of a 3-legged stool, with the other two being private pensions and personal savings. Well, the good news is at least they get SS. I'm guessing that I'll have to wait until I'm over 70 to get 50% of my SS benefit. And that's me being optimistic. I actually think eventually multi generational families living together will be the norm, because the grands can't afford to live on their own.
It think it will be interesting to see which "costs" society more, SS/medicare or folks supporting 3 or more generations in a household.
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Deleted
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Post by Deleted on Jan 14, 2020 16:10:38 GMT -5
I'm a lot more optimistic about SS than gira, but private pensions as part of the 3-legged stool? Not many people have them anymore.
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Deleted
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Post by Deleted on Jan 14, 2020 16:34:10 GMT -5
I'm a lot more optimistic about SS than gira, but private pensions as part of the 3-legged stool? Not many people have them anymore. I know- that was the thinking of the original framers of the SS program. They've pretty much disappeared to new hires except for public services. It makes personal savings even more important and it's why I think it's awful when companies terminate their plans and don't give even a portion of what they save in the form of more generous 401(k) plans. Well, the good news is at least they get SS. I'm guessing that I'll have to wait until I'm over 70 to get 50% of my SS benefit. And that's me being optimistic. I was puzzled by this- are you saying that you figure that the Full Retirement Age will be raised again and again and that even past age 70 you won't be able to get your full benefit because of that? Or are you affected by the Windfall elimination Provision?
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Tiny
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Post by Tiny on Jan 14, 2020 17:33:47 GMT -5
I'm a lot more optimistic about SS than gira, but private pensions as part of the 3-legged stool? Not many people have them anymore. I know- that was the thinking of the original framers of the SS program. They've pretty much disappeared to new hires except for public services. It makes personal savings even more important and it's why I think it's awful when companies terminate their plans and don't give even a portion of what they save in the form of more generous 401(k) plans. Well, the good news is at least they get SS. I'm guessing that I'll have to wait until I'm over 70 to get 50% of my SS benefit. And that's me being optimistic. I was puzzled by this- are you saying that you figure that the Full Retirement Age will be raised again and again and that even past age 70 you won't be able to get your full benefit because of that? Or are you affected by the Windfall elimination Provision? I don't want to speak for giramomma - but maybe she's referring to the thing where SS runs out of money in 2035? Or perhaps she's referring to her SS benefits being taxed/prorated (because she's going to have substantial pension income AND saved substantially in tax differed accounts) A pension can be a game changer. I will receive a pension (at 65) and it's more substantial than I ever thought - even if I quit today (at 55) and don't take it til 65. The pension combined with the substantial amount I've saved in tax differed retirement accounts and some SS thrown in for fun... should give me a "comfortable" retirement. Maybe even starting at 59.5.
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tskeeter
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Post by tskeeter on Jan 14, 2020 21:22:06 GMT -5
I'm a lot more optimistic about SS than gira, but private pensions as part of the 3-legged stool? Not many people have them anymore. I’m not sure that private pensions were really all that we think they were. Decades ago I read that in the heyday of private pensions, only something like 10 or 20 percent of workers (non-government) ever qualified to collect a pension. Vesting periods were commonly 20, 25, 30 years or more. Few workers were with a single employer for long enough to vest in their pension benefits. Employer to employer portability was one of the advantages to 401K’s that the financial media touted as a reason why workers should push their employers to shift from defined benefit pensions to 401K based retirement plans.
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azucena
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Post by azucena on Jan 14, 2020 21:34:35 GMT -5
My company just eliminated the pension for new hires as of 1/1. Those of us hired before that get to keep it. The retirement dashboard shows my benefit at $1000/month. Since it's been increasing slightly every year, I figure that's the amount I would get at retirement if I left it today. I'm 41 so I have a good 20 years of earning left for it to continue increasing so I haven't delved into the nitty gritty.
As company eliminated pension, new hires get an additional 401k match of 5%, which gives them 10% match on their initial 10% instead of the 5% match on first 5% match that I get. Almost seems like their deal might be better in some ways, but I work in a company of actuaries so I trust someone crunched the numbers Once again proves I work for a generous company as they could have just said new hires were so out of luck.
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jerseygirl
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Post by jerseygirl on Jan 15, 2020 0:12:23 GMT -5
If you can take your pension as a lump sum instead of monthly that’s a good deal. I took lump sum and invested and doing much better than monthly pension. A big plus is my kids will inherit my account but with monthly pension nothing after you pass
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Deleted
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Post by Deleted on Jan 15, 2020 0:14:06 GMT -5
The traditional pension my first company had was stopped for new employees back in 04 then they completely froze accruing benefits at the start of this year. I would have hit the first major milestone this year and would have been completely SOL.
Glad I left for more money in 07.
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Deleted
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Post by Deleted on Jan 15, 2020 7:48:27 GMT -5
I’m not sure that private pensions were really all that we think they were. Decades ago I read that in the heyday of private pensions, only something like 10 or 20 percent of workers (non-government) ever qualified to collect a pension. Vesting periods were commonly 20, 25, 30 years or more. Few workers were with a single employer for long enough to vest in their pension benefits. Employer to employer portability was one of the advantages to 401K’s that the financial media touted as a reason why workers should push their employers to shift from defined benefit pensions to 401K based retirement plans. ERISA changed the vesting rules, which I suppose hastened the demise of pension plans because it made them more expensive for the employer. Yes, I remember "cliff vesting"- you were 100% vested on your 25th anniversary with the company, for example, and 0% vested the day before. Naturally, companies were fond of finding reasons to fire people just before they vested. ERISA required gradual vesting over 7 years or cliff vesting over 5- a big improvement. When I look back at my job changes, only the first was truly voluntary and a move for better opportunities. Reasons for the other moves included one downsizing after 10 years, dysfunctional politics at 2 places, and a couple where the work was drying up and I could see the handwriting on the wall so I got out. My longest stay was 10 years so a gold-plated pension that vested in 25 years wouldn't have done me much good. So yes, in that respect, 401(k)s were a big improvement. Almost half of my invested assets are in IRAs, so that would have come from 401(k) rollovers- I made too much money for an individual IRA. We still need to address the issue of people who can't save and don't, and people who make bad investment decisions (selling out of panic at the bottom of the market, handing over control to an incompetent "advisor"). I think the automatic enrollment and the target-date funds help that.
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Tiny
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Post by Tiny on Jan 15, 2020 12:13:56 GMT -5
My company just eliminated the pension for new hires as of 1/1. Those of us hired before that get to keep it. The retirement dashboard shows my benefit at $1000/month. Since it's been increasing slightly every year, I figure that's the amount I would get at retirement if I left it today. I'm 41 so I have a good 20 years of earning left for it to continue increasing so I haven't delved into the nitty gritty. You could kind of think of the 1K a month pension benefit as being 300K you don't need to have in a retirement account - if you go by the 4% rule 300K * .04 = 12,000/12 = 1000K. I know nothing is engraved in stone and you should/do need to keep saving (in retirement accounts). Pensions are a tricky thing depending on how well they are funded. FWIW: without a pension benefit - I really would have to save the 2.5million I'd need to replace 80% of my current income I really would need to work until I'm 67 (full retirement age) and wait to take SS as long as possible. I've saved a minimum of 8% (with some years at 10% in a 401K since the late 80's. I've bumped up the savings to 25% just over 10 years ago (I went up in bumps of 5% over the course of 2 years) - because I was afraid I wouldn't have enough saved (didn't pay any attention to the pension). 8% savings and then a bumped to 10% with NO EMPLOYER CONTRIBUTION for decades wasn't enough. When I dispense advice to the youngsters in my life I recommend starting at 5% and quickly building to 10 to 15% or to just bite the bullet and start with 10% and then build to 15%.
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phil5185
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Joined: Dec 26, 2010 15:45:49 GMT -5
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Post by phil5185 on Jan 15, 2020 13:41:06 GMT -5
""Pensions are a tricky thing depending on how well they are funded.
FWIW: without a pension benefit - I really would have to save the 2.5million""
The fact that the employee is the one who funds the pension is often missed. Ie, if someone has a pension that is worth $2.5m it is because that money was deducted from their pay and invested for them.
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tcu2003
Senior Member
Joined: Dec 31, 2010 15:24:01 GMT -5
Posts: 4,942
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Post by tcu2003 on Jan 15, 2020 14:03:18 GMT -5
I actually think eventually multi generational families living together will be the norm, because the grands can't afford to live on their own.
It think it will be interesting to see which "costs" society more, SS/medicare or folks supporting 3 or more generations in a household.
I already know several people/families where this is happening, for one reason or another. My mom is retiring next month (she’s 68), and will likely move in with us within a year. She can afford to stay on her own if she stays in my small hometown/her paid for house, but my sister and I both live in the same metro area about 2.5 hours away, and she wants to be near her kids and grandkids. The reality is she can’t afford anything near us, and frankly, I could use an extra driver to help coordinate kid activities or even make sure dinner happens in a timely manner, so the plan is for her to move in with us. We bought our house knowing we’d likely have a parent move in, so there is a guest bedroom and a full bath on our main level that will become hers. One of my coworkers lived with her mom when she got divorced and was a single mom to a toddler. Then when she earned more and decided to buy a house in a better school district, her mom decided to move with her to help with the grandkid and because she was close to her daughter/grandkid. When my coworker switched jobs and moved 2 states away, mom moved in with another daughter in our area. This mom can afford to live on her own, but likes being around her family and helping out. From everyone I’ve heard, it’s working really well for this family. My SIL’s (wife of DH’s bro) mom lived with her and BIL and their kids. Mom had a late in life divorce that left her in bad shape financially, and she has MS on top of that, so it’s easier for SIL to help care for her mom when she’s in the same household. I have a coworker who lived with one of her sons, DIL and grandkids to help out with with the kids, and again, because she likes being around people and not living by herself. Definitely not the norm yet, but I do seem to hear about multigenerational living more often.
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