I was shocked comparing my wife's 401K to my

[upaloopa]

defined benefit plan.
My wife has 73% more money saved in her 401K than I do in my defined benefit plan. But if she and I were to get monthly payments from our plans starting today I would be paid 63% more per month than she would get. That is because I am in a union and all union members contribute to the pot that is invested to generate the payout. Both our employers contribute to our plans but my wife is the sole employee contributing to her retirement savings. I have my union brothers and sisters contributing to mine and the whole pot is invested together. My wife has only her contribution and her employer's contribution to earn dividends on.
If we want a middle class and a better retirement we need to organize and demand better benefits.

[NightWatcher]

1. My Garbage Pail Kid cards didn't turn into the investment I had hoped for

So if the Beanie Babies don't work out, I'm hosed.


You're just another typical union thug, getting together with other union thugs to make deals with business owners so you won't get played against each other in an effort to drive down wages and benefits. (Do I need the sarcasm thingee?)

[badtoworse]

4. Are any of them actually worth anything?

Last edited Wed Oct 29, 2014, 05:52 PM - Edit history (2)

I gave Dribbling Derek, Vomiting Vicki, Alien Ian and Mad Donna (among others) to my admin many years ago.
ETA: I didn't look closely enough at the card. This one's a scream and it looked like a real Garbage Pail Kid card. Where did you find it?

[unionthug777]

10. i resemble that remark !!!!!

unions !!!

[Enthusiast]

12. LMAO!

[Hoppy]

13. YES ! ALWAYS USE THE SCARCASM THING.

You'd be surprised (or maybe you wouldn't) at the stuff that gets flagged. Interesting, on the juries I have served, the result is a consistent 4 - 3 vote to remove.

[Elmer S. E. Dump]

29. I got so screwed by Pokemon I finally gave up.

I even caught them all! Then the bastards made MORE! So I caught all of them too. Then they came out with a SHITLOAD MORE!! That was the day I had a little Bonfire. Charizard was no match for a bonfire, and MewTwo went down with not so much as a whimper.

[Paulie]

59. Oh no!

Maybe if there was a Ho-Oh in the mix they would have survived.

[Elmer S. E. Dump]

63. Unfortunatley he/she was undiscovered!

[dflprincess]

35. Bad news - the bottom dropped out of the Beanie Baby market a long time ago

I was at garage sale this summer with my 5 year old grandniece this summer. She picked up several Beanie Babies for .50 a piece - they were in great shape and even had their tags.

[DonCoquixote]

51. worse news

Your average beanie baby market is probably better regulated than Wall Street.

[dflprincess]

104. And, if not regulated,

it's a far better example of a "free market" than the banksters who support private profit and socialized risk.

[yellowcanine]

133. There are lots of people out there with baseball card collections who will be disappointed also....

Not to mention match books, beer cans, etc.

Collecting is for enjoyment, not investment.

[Blue_In_AK]

2. My husband is a retired marine engineer with a defined pension, too,

from MEBA. It's a lifesaver. We'd probably be able to get by on our social security, but that check coming in every month sure is nice.

[cloudbase]

30. I'm retired MEBA as well.

It was a well run plan.

[badtoworse]

3. You should provide more information if you intend for people to make an informed judgment.

How long and how much has she been contributing? Is there an employer match and how much is it? What has she invested in?

My wife and I will get the bulk our retirement income from our 401k's and we will do very well. We've both held a number of jobs in our careers and the 401k portability HSS been great benefit.

[CTyankee]

5. Anecdotal, but I have noticed over the years that union members generally have an easier

time retiring than your average worker (not those with gold plated retirement plans like Goldman Sachs employees, etc). who depends on contributions out of their own pockets for an IRA.

I worked for nonprofits with 403b plans and faithfully contributed every payday for years. I saved a miserly amount of money. It was because I was paid so little to begin with, I couldn't contribute that much each pay period.

[upaloopa]

6. I have been employed by my employer for 7 years

she has over 10 years. My point is that I will get more than I put in and she will get
only what she put in.
Mine is for life hers is until it is gone. And she will get 60% of mine for life after I die.
And I only have 27% of what her balance is.

[SickOfTheOnePct]

7. She'll most likely get more than she puts in

Not as good as defined benefit plan, obviously.

[badtoworse]

8. You can buy a lifetime annuity with your 401k money that does the same thing

That is what we will do with at least part of our 401k money.

[FBaggins]

40. There's still something missing here

Defined benefit plans don't have balances. Where are you getting your figure from?

This really isn't an apples/apples comparison. It seems pretty clear that your specific defined benefits plan is very attractive (likely due to the union negotiations)... while your wife's plan may or may not be attractive (we don't know how well it's invested)

As a comparison... I have both types of plans. The defined benefit pension is very typical for corporate pensions (for those few companies that still have one)... an annual benefit at retirement that's a bit over 1% of final pay for every year with the company. The 401(k) is better than average (a 100% match up to the first 6%)... but nothing stunningly better than other plans.

Were we to calculate the present value of that future stream of income at retirement (for the defined benefit plan)... it would be around half of the current value of the 401(k)... and that's largely because of the low interest rate environment. The 401(k) is really doing even better than that in a normalized rate environment.

[upaloopa]

62. Every year I get a statement that adds my employer

contribution to date and my contributions to day to get the balance in my account. Yes there is a balance.

[upaloopa]

64. I will work 8 yr and 7 mos and after l will

receive $1,600 a month for life. In a couple of years I will have received more than I put in. Can't see a 401K doing that.

[whatthehey]

72. it would likely not - you are benefitting from fellow members receiving less however

There is no magic way db plans manufacture money from thin air that iras do not - you're simply taking money that other members pay. Not implying fault or chicanery it's just how the system works per contract. Iras are more discrete as the I indicates that's all - nobody pays more into them to help folks who pay less.

[upaloopa]

77. We all a agreed to pay for each other that is

why it is called a union. We negotiate a contract and vote for it. Also the money is wisely invested and has been invested for many years. What you lack with a 401K is the unity. It once was something we prized but according to you it is now to be scorned? Sign of the times I guess.
For us the whole is greater than the sum of its parts.

[A HERETIC I AM]

74. "Can't see a 401K doing that."

I will work 8 yr and 7 mos and after l will receive $1,600 a month for life. In a couple of years I will have received more than I put in. Can't see a 401K doing that.

That's because you don't understand how 401(k) investments and distributions can be managed and how your Pension Plan actually works.

Do you think the money that you will receive in excess of your contributions will just magically appear?

[upaloopa]

78. I didn't fall off a turnip truck yesterday.

My observation is that arguments are the sole reason some people post here. What beef do you have with me?

[A HERETIC I AM]

79. No beef whatsoever.

But I have been a member here for quite a long time and I can tell you that the level of understanding on how pensions actually accomplish their goals, as well as general knowledge of how things work in the investing world is deficient, to say the least.

This is not unique to DU members either, not by a long stretch.

Most people don't know the difference between a Mutual Fund and a Christmas fund quite frankly, as evidenced by several other posters in this thread and after reading your posts on this subject it is clear to me that you are not fully aware how your pension fund is invested, what it's return is or how much annual return your wife might/could/should expect from her 401(k) etc.

Pension funds are invested in the market just like 401(k)'s can be (I say "can be" because they are "self directed" which means the individual can place the money in a Money Market fund if he chooses and get very little return)

The idea that you are going to get back more than you contributed is a canard. So will your wife, for that matter. The managers of your pension fund didn't fall off the turnip truck yesterday either, and they are relying on the fact that either you or several of your peers will drop dead long before they have to start sending you money your money didn't earn or money over and above your contributions and earnings.

[upaloopa]

80. We get a full report every year on how our pension funds

are invested and the returns and why. We have a very open and available pension system. I read my wife's 401k quarterly report and know how her money is invested.
You have a far too high of an opinion of yourself and of your opinion.
Just think, practically everyone of the posters here is better versed in something than you are. So what does it matter how much better you understand investing then I do? Get over yourself.

[A HERETIC I AM]

92. LOL....

Okie doke, forgive me. Reading your OP and the post I responded to above made me think you don't understand what is going on, so allow me to show you why I came to that conclusion;

My wife has 73% more money saved in her 401K than I do in my defined benefit plan. But if she and I were to get monthly payments from our plans starting today I would be paid 63% more per month than she would get. That is because I am in a union and all union members contribute to the pot that is invested to generate the payout.

Bullshit. That is NOT the reason. The mere fact that you are in a Union has NOTHING to do with it. AT ALL. What it has to do with is the methods and trading avenues your pension fund manager has available that your wife DOES NOT, including but not limited to trading options, futures contracts, short selling, accessing the commodities markets etc., thus allowing them to get an annual rate of return your wife's 401(k) choices can only dream of. Why can't your wife's 401(k) access those things? Because it is ILLEGAL. Sure, your pension payments will be drawn from a larger pool of money, but your description of the reason is simplistic and inaccurate. The fact is, many pension funds servicing non Union people do the same thing.

Both our employers contribute to our plans but my wife is the sole employee contributing to her retirement savings. I have my union brothers and sisters contributing to mine and the whole pot is invested together.

This is a half truth. While it is true that the rest of the members contribute to the same fund, it is disingenuous to say they are "contributing to mine".

My wife has only her contribution and her employer's contribution to earn dividends on.

Again, this statement shows a misunderstanding of how Mutual Funds work. I'll give you the benefit of the doubt that you left out the other types of gains a Mutual Fund can experience, but since you didn't elaborate, I have no way of knowing, do I?
Hint: Dividends are but one of SEVERAL ways a Mutual Fund can realize gains. I don't care if you know the others.

If we want a middle class and a better retirement we need to organize and demand better benefits.

Couldn't agree more.

Again, from your post above;

I will work 8 yr and 7 mos and after l will receive $1,600 a month for life. In a couple of years I will have received more than I put in. Can't see a 401K doing that.

Depending on how ANY account is invested, one is likely to see much more than contributed, only a little or about the same and in many cases, less. A 401(k) is merely an account, NOT an investment. How the funds are allocated among the various funds offered as well as the returns of those funds determines how much will be there to draw from. But you knew that.

If you have $100,000 in your pension fund and $100,000 in a 401(k), the amount that money will generate and "pay out" as you put it will be determined by the investment choices and their returns. I will say again, it has nothing to do with the fact that one is a Union pension and the other is not.

In your post Number 70 below, you said this;

My wife gets a quarterly statement on it is a monthly amount she would receive for life if she were 65 and retired now.

The reason your wife's statements show that is as a courtesy to her from the 401(k) provider and it is my bet they are hoping to annuitize the account for her when she retires. She is under no obligation to do so, as she can move it to an IRA (another thing I would think you are aware of, but you make no mention of it anywhere in this thread), but that figure is merely an annuity calculation based on an assumed Life Annuity. Sure, a portion of the calculation comes from an actuarial table. The rest comes from the amount and an assumed long term annual rate of return.

The fact that you have been there for a mere 8 years and 7 months but can expect a $1600 a month payment for life is one reason so many pension plans are in trouble. You haven't been there NEARLY long enough to have contributed your fair share to that income stream, yet there it is. I'm glad you can expect that windfall at your age, but it isn't common and is getting less and less so.

You have a far too high of an opinion of yourself and of your opinion.

Yup. Particularly in subjects I am well versed in. How? Because I was in the business. I'm back to being a truck driver. Ask me about Auto Transport. I know what the fuck I am talking about in that subject as well.

And FWIW, I'm a Teamster these days.

Having just returned from a 4 1/2 day Fl to California trip, I'm going to take a nap, so I won't bother responding further.

Glad you hit the jackpot with your job. All the best.

[upaloopa]

93. I am not even going to read all of that.

You know your stuff that is enough for me. There comes a point where dragging this out is unpleasant and I have gone far beyond that.

[econoclast]

98. Underfunded pension plan

Would be my first guess. They are promising 1600 a month but there might not be sufficient assets in the plan to actually meet that promise. Lots of plans, especially state and local government plans are woefully underfunded. They make the numbers look good by assuming an enormous rate of return every year that they realistically won't achieve. And then they take hellishy large risks to try to make ends meet. See Detroit.

[upaloopa]

99. God you don't even have a clue what you are talking about! I really wonder where you get the sense

of ego that let's you post such shit!
We have $2.5 billion in assets.
Yes billion with a B
Go to our website and read a while then come back and tell me how underfunded we are!

http://www.countyofsb.org/sbcers/default.aspx?id=19048

PENSION FUND STATUS REPORT


--------------------------------------------------------------------------------

The SBCERS Trust has experienced a solid recovery since the 2008-2009 market declines. This is due in part to the long-term strategy of the Fund which is established by the Retirement Board. The Fund reached a value in plan assets of $ 2.5 billion in August, 2014. The attached chart illustrates the value of the SBCERS Pension Fund over the past decade. No one can guaranty future performance; although the Fund’s past 10-year track record is commendable. SBCERS is confident in the Fund’s ability to provide for member’s benefits over the long term.

[econoclast]

103. Pretty chart. Past performance is no guarantee of future results

And remember, the balance sheet has two sides, assets and liabilities. No matter how big the assets are and how fast the assets grow, if the liabilities are larger and growing even faster, there is bound to be a problem.

Not going to do a whole financial analysis here ... hey its not my pension plan and I have no rooting interest ... but I did a quick Google search of SBCERS and one of the first things to come up was an article about a Grand Jury investigation in 2011 concluding that the SBCERS retirement plan was underfunded by 1 Billion dollars.

Just saying'

Maybe everything got squared away. Could be. And I hope you get every penny you were promised. But I think, as a general principle, if the name of your retirement plan shows up in the same sentence as "Grand Jury investigation"and "underfunded", its time for a more thorough, independent analysis of what's what than just taking the plan administrator's word for it.

[upaloopa]

105. This is a game to you isn't it?

Nothing means nothing you just have to win good you win
It always gets to me when someone says this board is made up of intelegent posters.
Not true

[Live and Learn]

107. Yep, a few CA counties (usually right wing managed counties) did poorly on their returns

but the majority did fairly well. My pension plan managers seem to have real expertise since they managed to stay well above average through the last Bush decade and are doing extremely well.

My retirement fund's returns well exceeded even the private mutual fund returns we were offered.

The fact is these retirement boards play in the same market (but are also able to divest investments as they see fit, i.e., real estate) and have usually done pretty well because they hire professionals with lots of experience to do the investing and are non-profit.

Do you really expect the majority of working people to find the time and expertise (when even the supposed professionals have been bankrupted doing so) to manage their own retirement funds?

I'll stick with my UNION negotiated, apparently investment wizards at my retirement board over any self attempt to save or invest. Every time I have attempted to save money in our bank accounts has ended in an emergency happening that required the withdrawal of the funds immediately.

So happy we do have at least one pension in the family to look forward too.


I can't imagine what the future generation is going to do for retirement.

[deaniac21]

97. Nanner, nanner, nanner, I can't hear you.

All this math an stuff is hard. I just want to feel good.

[Yupster]

100. One problem is that financial companies

generally have very strict rules against their licensed employees participating on internet message boards talking about anything close to finance.

Therefore, you have the odd situation where the experts who know what they're talking about having to stand on the side while people who don't have a clue what they're talking about post away.

Anyone using DU as a source of financial information is in trouble.

[A HERETIC I AM]

101. Very true.

However I am no longer under any regulatory threat, as my licenses expired 24 months after leaving my last desk.

But you are absolutely correct. DU can count among its members at least 3 or 4 licensed financial professionals, among them a 401(k) "expert" if you will, as well as a retail broker or two and an Options Trader who doesn't post that often.

They all without a doubt are careful about what they say and don't do anything that might get them in trouble.

I was the same way when I was licensed. I was OK providing very generic answers on general subject matter, but never gave specific financial advice. There is a big difference between describing the attributes of a blended fund and saying "Buy shares of XXXXX"

[JDPriestly]

115. But you know that once you are past your retirement age, your investment

counselors will advise you against taking risks. That reduces the disposable income you receive in this economy, with the current interest rates, to a negligible amount per $.

So, when you are young and saving your money, you think your account is growing. And it probably is because you may be in growth stocks and other investments that can show earnings and growth.

But what you forget is that those investments go up and down over time. Yes, over a period of years they may show gains. But if you have to cash them in at a given time and that time happens to be a bad one for the stock market, you can lose a lot. Once you retire, your medical and dental costs, for example, are not always in sync with the stock market's rises.

The stock market cannot be relied upon to provide income, real reliable income in your elder years. It's unpredictable as we have seen, at least for the ordinary retiree who doesn't have millions.

There is nothing like Social Security. The 401(K)s and other plans are great, but Social Security is steady income although not a lot of income.

The 401(K) concept is not the best way for MOST PEOPLE who barely earn enough to live from day to day to save for retirement.

You have to start saving very young, very early to make a 410(K) pay. And people earning median wages, say $50,000 per year or less or worse yet, minimum wage, aren't going to retire on 401(K)s. They are going to retire on Social Security and supplement it with very small amounts from savings including 401(K)s. The ERISA Act that was passed under the Nixon administration is something I really do not like for many reasons.

We need to increase the benefits from Social Security. It's really the only secure investment for retirement.

This is particularly true for older baby boomers and those of us born before say 1955. The 401(K)s were not available when we were young. Therefore we haven't benefited from the long-term gains that can give investments in stocks an allure. And when I think about how many companies have gone into bankruptcy or been finagled into assetless shells over the past 50 years, I really wonder about the stock market as even a longterm investment.

[A HERETIC I AM]

116. "But what you forget is that those investments go up and down over time."

Pardon me, but I haven't forgotten a damned thing in this regard.

I have no idea why you would say such a thing, as I never alluded to such a misapprehension in the least.

Mutual Funds have been available to the average investor since the 1920's in this country, so the statement in your last paragraph is complete nonsense. The primary advantage of the 401(k) and IRA's is the deferred taxation of gains realized along the way. There is not now, nor has there ever been any restriction whatsoever on an individual opening and contributing to a regular, run of the mill investment account in which one can purchase Mutual Funds.

The stock market cannot be relied upon to provide income, real reliable income in your elder years.

Yeah. Right. Tell that to the millions of older Americans with dividend paying portfolios.

I get that you don't like the stock market. Fine. Knock yourself out using other avenues. You are free to do with your money as you see fit. But please don't suggest I "forget" something in this discussion. It is very narrow, and nothing I have written is esoteric.


And FWIW, Social Security funds are invested heavily in the bond market, specifically US Treasury Bonds.

[JDPriestly]

117. The tax deferrment is great if, while you are working, you are paying high tax rates.

For lower income people, they have very little value. You have to pay the tax once you retire if your income in retirement is high enough to qualify you to pay taxes.

Theoretically you pay taxes at a lower rate in retirement than while you are working. That is mostly because it is assumed your income will be considerably lower in retirement than it is when you are working.
In my case, that is certainly true.

Bonds don't show the gains that stocks and mutual funds are purported to show. As I pointed out, the growth of our investments in the stock market and I include in that mutual funds depends on the state of the market when you calculate your gains or losses. In retirement, your big expenses are medical costs, things like dental work and hearing aids, co-pays for medications in the donut hole, co-pays for major healthcare items. I am shocked in retirement to see how fast the medical bills add up. And I am not really sick.

If a person makes really good money while working, a 401(K) can be part of the retirement planning. But really, if you make an average salary or very little money, your 401(K) is not going to be big enough to match what you will get out of Social Security or probably a union or government pension.

I am very disappointed personally in how 401(K)s work out. I think a lot of people are. The investment advisers, the Wall Street people, make out well I guess.

[meaculpa2011]

119. As a teacher my wife was able...

to contribute to two types of enhanced benefit programs beyond her base pension. They have both done very well, mostly in equities.

When she retired we annuitized one fund and let the other ride until we are required to withdraw.

By state law, both funds are required to pay guaranteed rates. We get a greater return on the annuitized portion, but the other pays a guaranteed 7% on the fixed income side, although we were about 80% invested in variable until last month when we converted to 100% fixed. A few years ago we rebalanced to 50/50 but the variable side did much better than 7%.

Bottom line: Her defined benefit pension and her individual program pay about the same each month.

As I see it, the main value of individual plans (that we chose not to annuitize) is that when we're gone our kids will inherit the balance.

Even after we're required to withdraw, the required amount will be about half of the annual return so the fund will continue to grow.

With that said, since we were living on my earnings for most of the last thirty years, she was able to contribute about a third of her salary into these plans. And... I intend to work until they shovel dirt in my face.

[GummyBearz]

60. Aside from earning dividends/stock growth...

Subtracting the amount earned from dividends/stock growth, if you get more out than what you put in, its a sham. It wont last forever. Congrats on living off younger generations savings, who are paying the difference between what you put in and what you took out.

[One_Life_To_Give]

9. Real value of your plan

The real value of your plan IMO is the value of a annuity which matches the payout you will receive. $80k/yr for life is worth about $2million. Because that is what you would have to spend to get that guaranteed return.

[JDPriestly]

20. So $1 million saved and accrued in growth or interest would equal an income of about $40,000 per

year.

And if you can only save one tenth that amount, say $100,000, your income would be $4,000 per year.

Let's look at a report on actual median savings.

The median amount of outside retirement savings is $49,000 for workers ages 51 through 60, and $30,000 for workers ages 30 to 40.

http://www.towerswatson.com/en-US/Insights/Newsletters/Americas/insider/2013/retirement-savings-how-much-do-workers-really-have

So if the median worker saves $49,000 per year, based on your percentages, that person would have a retirement income of $2,000 per year earned on his savings. There is a minimum required withdrawal on 401(K)s and deferred taxed IRAs at the age of 70.

If you save 10% of your income and your work say 40 years at $45,000 per year, you save and accrue in value and interest a total of on average $4,500 per year or $180,000. Wow. You might actually get an income of almost $8,000 per year. That's less than minimum wage, and not everyone can save anything, especially not those who only earn minimum wage.

We need to safeguard Social Security more than ever. Privatizing it will not work. I'm on Social Security. I know how important it is. You can save what you want. But don't count on being able to save enough to retire on. All kinds of things can make that dream impossible -- illness, a lost job, an accident, a lawsuit, a divorce, a death in the family, depreciation on your house, loss of value in the stock market -- all kinds of things.

Social Security cannot replaced by savings and investment schemes.

To save $1,000,000 and assuming it doubles over your lifetime to $2,000,000, you have to save over a 40 year working life, $25,000 per year. $1,000,000 saved accruing interest, dividends, value, but also suffering losses and recessions could grow to $2,000,000, But $1,000,000 divided by 40 years of your working life is $25,000, per year saved.

If you make on average $50,000, you are not going to be able to save $25,000 per year. Even if you make $200,000 on average for year, you probably won't save $25,000 during the years in which you are raising and educating children.

The idea of a 401(K) is great for people who earn a lot of money, but for most of us it is a nice little extra, but cannot support us in retirement.

[nikto]

36. Excellent post with honest numbers

Everybody who ever thought their 401K was ever gonna' really do it for them,
needs to read your post----About 8 times.

[whatthehey]

61. how do honest numbers include zero gains?

Saving 4500 a year for 40 yrs only adds up to 180k total if you have no gains, no matching, no interest, no dividends - in other words if you just stick it in a mattress.

By contrast I have contributed just short of 7.8k to my 401k this year, but the balance thanks to matching and gains has increased by 22.5k.

Those are real, accurate numbers based on what actually happens, not zero gain imaginings.

To imagine a balance that only doubles over a 40 yr working life as the later example does assumes about a 1% growth rate. Long term stock market gains have averaged about 10 annual compounding for decades.

I plugged in a 40 yr retiree as of now into this handy calculator and found the annual average was 8.2%, and that the first dollar saved is now worth nearly $13.

http://www.moneychimp.com/features/market_cagr.htm

[nikto]

106. You're gonna' be rich

[whatthehey]

108. comfortable is more likely. Certainly a lot richer than I would be without the 401k though.

[LondonReign2]

109. Yes, that analysis completely ignores gains

Over 40 years, the effect of compounding is extremely powerful.

Here is a fun one:

*A 20 year old contributes the maximum annual deferred amount for 2014 of $17,500 and then NEVER CONTRIBUTES ANOTHER DOLLAR.
*Assuming an 8% annual gain, after 40 years the person has $380,000, never having put in a single dollar more.

[mackerel]

47. @JDPriestly Excellent post

[Fumesucker]

48. +2,000,000

[LittleGirl]

49. excellent post

You're so right when you say that 401k s were set up for high earners. There is no way someone making 50k a year can save anymore than a couple of grand a year. I know, I lived those days. My 401k is low and we'll have to live off my spouse's retirement when that day comes. Thanks

[LondonReign2]

110. OK,but...

Assume you can only save $2,000 per year.

* In years 1-10, you save $2,000 per year, for a total of $20,000
* In years 11-40 you don't contribute any further money at all. Zero.
* At the end of year 40, assuming 8% annual returns (very inline with historical norms), you now have $314,800

Assume you can start at $2,000, but increase it by $200 each year

* In years 1-10 you save $2,000, $2,200, $2,400, $2,600 etc. per year, for a total of $29,000
* Again, you contribute nothing in years 11-40
* Under the same 8% annual gain assumption, you now have $436,600

[LittleGirl]

114. That's great if you start young

I didn't make 50k until I hit 45 and before that much much less so I didn't have any savings, nor work for a company that even offered a 401k.

I'm 55 now and unemployed so there is no way I can make up for lost time. Thanks for your efforts. Maybe someone younger than me can use that information for their own good!

[LondonReign2]

128. Understood

Yes, you are absolutely correct, the compounding requires getting started early for best effect. As a 55 year old it is VERY hard to make up that time.

You noted that you didn't work for a company offering a 401(k) plan -- I'll just say, for the benefit of others in that situation, you can still start an IRA and contribute the $2,000 annually pre-tax.

[LittleGirl]

137. That's right

and starting an IRA would be a good idea for someone that gets a 2k windfall that they didn't need for survival. Good info! Thanks so much.

[One_Life_To_Give]

58. Putting a dollar value on the pension

My intent was to point out the $ value of the Defined Benefit Pension. Earning a pension of say $40,000 per year for life has a present day cash value. It actually had a value throughout the time it was being earned. It shouldn't be viewed as just magic IMO. But something that has been earned by the individual and paid for by some combination of employee/employer payments.

In the OP the Union made certain that people saved a certain amount for their retirement. By electing to keep a defined benefit plan instead of substituting it for quick cash today. As we see many people do not have either the means or the discipline to achieve those results. Fortunately for the OP they had tens of thousands of $ in annual income put away for retirement without their necessarily being conscious that it was done on their behalf.

So what is the current Cash Equivalent of a 66yr old's Social Security today? If you just landed here from AlphaCentauri you could buy the same benefits for? According to CNN's annuity calculator that would be just under half a million. Most people don't realize the government gives us half a million on retirement.

[jtuck004]

11. Your pension is supporting you. Her 401K is supporting a LOT of people

who never did her work, never did anything but push paper around so the could collect fees, as if they provide any value whatsoever.

She's a job creator.

[nikto]

37. Bam!!

Well said.

[Enthusiast]

14. Kicked and recommended a whole bunch!

Thank you, upaloopa.

[Wellstone ruled]

15. Can relate to this.

Our Teamster defined monthly amount along with our IRA's annual requirements allowed us to pull the pin seven years early. Figured sixty two years was enough and been kicking back of ten years. Nothing fancy and we do enjoy a few wasteful thingees from time to time. This is a really scary thing if the Rethugs take control if the Senate. Our IRA's and 401's are going to be raided by the Banksters. Hatch becomes Chairman of the Banking Committee watch out baby. Rules can be changed by posting them in the Congressional Register for ninety days and then they become a rule of law. Thank You a sleep at the wheel Politicians.

[JDPriestly]

16. Excellent post. Thanks.

Pooling your money gets you the leverage and the clout to get more back on your investments. 401(K)s don't work that well. The mutual funds you get to choose from in my experience are not as good as your union funds.

[A HERETIC I AM]

76. ..,...

sorry, but......

[Adrahil]

17. I'd be interested in seeing the numbers behind this.

Last edited Wed Oct 29, 2014, 09:12 PM - Edit history (1)

A lot of defined benefits plans are paid for by assuming the number of younger workers contributing is always increasing. In this way, the pensions paid can be more generous than what the retiree's own contributions would justify. The problem is that with people living longer,mans union membership shrinking, I wonder what the projected solvency date is? Corporations can contribute, of course, but corporations can also go bankrupt. About 10 years ago, I was looking for a new job. One company offered a 401k and the other a defined benefit. I was tempted to go with the defined benefit, but I suspected it couldn't last. And I was right. 3 years ago, they cancelled the plan, and gave those who had it a CRAPPY buy out, and conversion to a 491k equal to 1.5% of their salary during employment. Wow. Glad I did not do that.

[upaloopa]

18. I work for county government. Our work force remains

pretty steady. Union memberships remain steady also. Two years ago we went to a two tiered system. New hires have a different formula than we do. Their plan is a mix of 401K and pension. I am not too sure what it is but they will have a less generous payout.
We take a lower pay scale to get the pension. But over time private sector pay and benefits have fallen below ours. The bosses want the working class to fight among each other over things like this taking us all to the bottom.
When I started working 40 years ago most everyone had a defined benefit plan.

[Adrahil]

34. I hear ya. I was a fed gov employee for 20 years.

I'll get a small pension from that, but in general, I think the defined benefit pension is doomed.

[nikto]

38. Yeah, the defined benefit is doomed...

If the top 1/10th of 1% corporate/banking elites win and crush the little people once and for all,
while we fight a vast war in 6 or 7 countries at once.



But, short of that, society can provide a DB pension for many workers if it "wants" to.

Our elites just don't want to.



Last I heard, it was called "class war".

[Gidney N Cloyd]

41. Well DBput! I'd add 'if the MSM makes it conventional wisdom that DB's don't work.'

[Adrahil]

55. You are correct. They don't want to.

And right now, we don't have either the political tools or the market forces to make them. Thus, they are doomed.

I don't really like it, but there it is. Hell, we are having a hard time holding on to SS's rather meager payouts. And frankly with such weak protections on DB plans, I wouldn't ever depend on one. Look at all the folks who have their DB plans gutted when the company goes toes up, or declares bankruptcy. That is not a situation I'd EVER want to face in retirement.

But regardless of what I want, it ain't gonna happen, and the demographics don't support it as well as they used to.

I think we're stuck with SS, 401K's and IRAs.

[SheilaT]

19. One of the enormous benefits of the 401k plans

has been their portability. If you don't work at the same job for a very long time, it can be possible to have almost no pension in the end, depending on how they're set up. It does help that about 40 years ago the ERISA act was passed, which among other things made it easier for employees to become vested in a pension plan. But again, if you didn't stay long enough to get vested, you'd have no pension benefit in the end.

401k's are not perfect, by any means, but anyone who takes advantage of whatever matching there is from the employer, and perhaps puts in as much as possible, over the long run can do quite well.

Not that I disparage pensions, and I do wish we had stronger unions and better defined benefit pensions all around.

[upaloopa]

21. It takes 5 years to be vested in our plan.

If we leave before that we get back what ever we paid in. No plan 401K or pension let's you keep the employer contribution until you are vested which is usually about 5 years.
I will get a defined benefit for life after working 9 years. Not too shabby. My wife will get 60% of that for life when I die. Normally it is 10yr but I will be 70 then.

[badtoworse]

22. That's not true in my experience.

The longest vesting period I've seen through about 7 jobs and 401k plans has been 1 year.

[upaloopa]

24. I never had a 401k so I pass to you

[llmart]

27. 1 year?

Your post doesn't make any sense. 5-year vesting is the norm.

[badtoworse]

52. Here is my experience with 401k company matching funds

Current job (Independent Power Co.) - 1 year
Previous Job (Financial Services Firm) - 1 year (left after 20 months and retained the match)
Job before (Large Investment Bank) - 1 year (left after 17 months and kept match)
Job before (Independent Power Co.) - 1 year (left after 10 months and kept match as part of merger package)
Job before (Independent Power Co.) - 2 years (left after 15 months and lost match)
Job before (Independent power Co.) - 1 year (left after 7+ years and kept match)
Job before (Independent Power Co.) - Don't remember (left after 15+ years and kept match + a DB pension)

In my experience, the 5 year vesting applies to DB plans

[SheilaT]

23. Yes, five years, which is good.

I'm old enough to remember when it took twenty to twenty-five years to be vested.

[whopis01]

32. But there are plans with no vesting period

My previous employer contributed to a 401k (not a match - the employer contributed whether you put anything in or not) and there was no vesting period at all.

[SheilaT]

45. The hospital I recently retired from also

contributed whether or not the employee put in anything, but there was a 5 year vesting period for that money. You need to appreciate how unusual it is to have immediate vesting.

[tammywammy]

39. Where I work, you are fully vested immediately.

They contribute a percentage of your salary whether you participate in the 401k or not, and they have a match if you do participate. There's also a wide variety of plans to choose from depending on how aggressive you want to be.

[LittleGirl]

50. Spouses' company just added another year to their vesting

it's now 6 yrs to be vested. It's a crock of b.s.

[llmart]

28. I'll take the defined benefit plan any day.....

Having a fixed amount come in every single month for the rest of my life is some comfort just as Social Security is some comfort. You always know that at least you'll get that much. 401k's are at the mercy of the stock market and it's easy to be fond of them when the market is doing well (like now), but when it falls to pieces like it did in 2008, most people don't have the stomach for that level of uncertainty.

I worked for a public library as a union person for 7 years and I had a defined benefit pension with a retirement age of 60. Getting that monthly check in addition to my Social Security allows me to not have to touch my IRA (which is mostly made of up monies from 401k's that were moved into the IRA whenever i left a job) until I'm 70-1/2 years old.

[antigop]

44. defined benefit pensions can be portable. There is nothing preventing a db plan from providing an

immediate annuity you can draw when you leave the company (assuming you are vested).

I know of one company that has a plan like this.

Vesting rules for both DB and DC plans are described on the DOL website:
--------------------
In a defined benefit plan, an employer can require that employees have 5 years of service in order to become 100 percent vested in the employer funded benefits (called cliff vesting). Employers also can choose a graduated vesting schedule, which requires an employee to work 7 years in order to be 100 percent vested, but provides at least 20 percent vesting after 3 years, 40 percent after 4 years, 60 percent after 5 years, and 80 percent after 6 years of service. The permitted vesting schedules for current defined benefit plans are shown in Table 3 below. Plans may provide a different schedule as long as it is more generous than these vesting schedules. (Unlike most defined benefit plans, in a cash balance plan, employees vest in employer contributions after 3 years.)

In a defined contribution plan such as a 401(k) plan, you are always 100 percent vested in your own contributions to a plan, and in any subsequent earnings from your contributions. However, in most defined contribution plans you may have to work several years before you are vested in the employer’s matching contributions. (There are exceptions, such as the SIMPLE 401(k) and safe harbor 401(k), in which you are immediately vested in all required employer contributions. You also vest immediately in the SIMPLE IRA and the SEP.)

Currently, employers have a choice of two different vesting schedules for employer matching 401(k) contributions, which are shown in Table 2. Your employer may use a schedule in which employees are 100 percent vested in employer contributions after 3 years of service (cliff vesting). Under graduated vesting, an employee must be at least 20 percent vested after 2 years, 40 percent after 3 years, 60 percent after 4 years, 80 percent after 5 years, and 100 percent after 6 years. If your automatic enrollment 401(k) plan requires employer contributions, you vest in those contributions after 2 years. Automatic enrollment 401(k) plans with optional matching contributions follow one of the vesting schedules noted above.
--------------------

ETA: Cash balance pension plans are a form of DB plans that are also portable.

[SheilaT]

46. Interesting. I've never known of a defined benefit pension that was portable.

The ones I've ever known of were only with the company offering them.

[yellowcanine]

134. And defined benefit plans are not always fully funded....

It is a problem.

[SheilaT]

136. Yep. Not fully funded.

And companies get to shed their obligations if they go bankrupt, exactly as various municipal governments are trying to do these days.

I have a pension from my ten years at USAir. I get about a third of what I should get, thanks to that very same underfunding and then shedding. Lucky for me I never counted on it to be a significant part of my retirement.

[madville]

25. I currently am in two pension plans

I have one locked in that will pay me about $1500 a month in today's dollars when I turn 58.

The other that I am currently working on is a government job at 1% per year, so do 20 years, get a 20% retirement for life at age 60, or a reduced benefit can be taken at age 57.

I'm actually about to resign from the latter job/plan to go back to the private sector and make 50% more a year again. Crunching the numbers, I'll do much better taking the higher salary now versus making 1/3 less with the expectation of getting maybe another $800 a month pension at age 60.

So you have 7 years in now? How long do you have to work and to what age before you can draw the pension? What calculation do they use for years worked? The county here is 1.7% per year last I looked.

I just hope there is something left in the pot when we all get to those retirement ages. I think we'll see more and more municipalities/cities/counties filing for bankruptcy and pension relief as time goes on unfortunately.

[Omaha Steve]

26. PLEASE tell the taxpayers that the private sector pays 50% more

Conservatives never say that when a public union goes to negotiations.

Marta used to get 1% per year of service BEFORE they eliminated her private pension for a 401k. She also has a private union pension.

Because I'm a union public employee my pension calculation is 2.25% times years of service. I also have a savings plan.

OS

[madville]

33. Not always the case

But in my technical field and in my career experience the two private sector jobs have paid more than the two government jobs. Make no mistake though, the private sector jobs worked me way harder and got their money's worth, the government jobs were much more laid back workload wise.

I have no major problem with either work scenario, both have their pros and cons whether it be pay or benefits or work conditions.

[upaloopa]

53. I will only work here 9 yrs and 7 mos. I will

be 70 then. To retire with a pension you have to work 10 yrs or till you are 70.
I feel lucky to get this job when I did. I had no retirement plan before coming here.

[malaise]

31. +1,000

Great post

[Spitfire of ATJ]

42. You're lucky they matched her 401k. A lot of places don't even do that....

The new attitude is that they aren't responsible to provide you with a living when you're working for them, much less after you leave.

[brewens]

43. I hired on at my job with a pension plan but they fazed it out. I was just under the required years

of service that would have gotten me a few hundred bucks payout when they did that. I think they applied what I had accumulated to my 401k and since then, I've done what I could. I have almost 40 large in there now, after seven years. They match 6% and I've always done at least that. I actually hit it pretty good, changing employers and rolling over a thousand or so right at the time the market was crashed when I started my current job. Things went up and it grew pretty well. I've had it all stashed in a money market fund for the last several months that stays at $1 per share. I'm thinking the markets will tank again and I need to keep what I've got.

it was really dissapointing though. I finally hooked up with a job where I just in the neck of time actually had a pension plan! It was beautiful! I was going to get to be fully vested and I really like the job, provided I could stick with it.

[Youdontwantthetruth]

54. It starts with US, the 99%, Buying UNION Made Products

If we want better for all, Buy Union Made

Put your Money Where Your Mouth Is, you say you support labor, then you must own a union made car right. You seek out and buy union made goods and services, correct? Anything less means you really don't support Labor.

Sadly as the Democratic Party moves further to the right, the party and many of its members become more hostile or indifferent to labor.

Policy will not fix things, action by the 99% will.

[raouldukelives]

56. The great thing about 401k's is you are in there with the big boys.

When those missiles launch, when mountain tops are removed, when water tables are poisoned, when polar bears swim, when science is denied, when education is attacked, when prisons expand, when regulations are ignored, when Jim Crow returns, when corporate candidates win and crimes against humanity are bribed away, you'll be there.
Safe and confident knowing your donations are doing all they can to help Lockheed, Monsanto and BP usher America and the world into a new era of prosperity and should they succeed, ah, the riches!
So, it's not all bad.

[whatthehey]

66. Where do you think defined benefit plans keep their money?

[Live and Learn]

132. A good defined benefit plan is much better divested than simply

playing the stock market.

[whatthehey]

138. But is likely very heavily invested in it

And diversification (I'll assume that's what you meant - divesting makes zero sense here) is very easily achieved within equities.

A pension fund manager who ignores the only source for legal gains above 5% or so in much of the last decade should be sued let alone fired.

[Live and Learn]

139. All I know is that ours has outperformed all the others in our state and

Last edited Wed Nov 5, 2014, 11:46 PM - Edit history (1)

is currently and never has been in danger of default. Anyone that cares to look can find how the funds are invested at anytime. I know that ours is very diversified and has excellent managers. So, if it is okay with you, I will keep ours.

Any pension fund manager that places all funds in the stock market (like some pension funds in our state did) and loses it during a crash are the ones that should be sued and fired!

[whatthehey]

140. ok - look and see what percentage they have in stocks and get back to me.

[Live and Learn]

141. Here you go.

" title="source: imgur.com"

[libtodeath]

57. In a 401k all the big players have escape routes when the market crashes

little fishes feeding the big fishes is what a 401k is.

[Gidney N Cloyd]

65. Fewer fingerprints to be found when draining 401Ks than when stealing pensions.

Accidents happen. Things break. Buildings catch fire.

Markets fluctuate, don't 'ey?

[dionysus]

75. but, if you want to avoid getting stuck in a crash, you can have your 401k go into

bonds and cash funds.

when the market crashed the last time, most of my money was in cash and bonds so I lost less than everyone else.

of course when it rebounded, I gained less than everyone else, because I has less of my money going into stocks.

you can mitigate risk if you go the cash\bonds route.

401ks aren't all that bad, but of course I'd much rather have a pension.

[yurbud]

67. Democrats should have made card check a top priority when they had a chance

at start of Obama's presidency.

They squandered a historic moment.

[Proud Public Servant]

68. Isn't this apples to oranges?

I'm curious as to what you mean by your wife "getting payments" from her 401k. My understanding has always been that the payout rate for a 401k is set entirely by the recipient. Maybe yours is different, but I have both a defined benefit plan and a 401k (or, technically, a 403b), and here's how I understand them:

Upon retirement, my defined benefit plan will pay out a fixed amount for the rest of my life, with survivor benefits for my spouse; using the current formula in place, I suspect my defined benefit plan would pay out about $55k/year in current dollars.

Upon retirement, what happens with my 403b is up to me, and it can be passed along as an inheritance; if I can keep savings on track, my 403b should be worth at least $1 million.

So, if I retire at 65 (mandatory in my job) and live to 95, my plan will pay out $1.65 million, which is more than I'm likely to ever have in my 403b. On the other hand, if on my 66th birthday my wife and I take a cruise on the Titanic II and drown in the North Atlantic, my defined benefit plan will have been worth a total of $55k (to me, anyway); my 403b, on the other hand, would be a million-dollar inheritance for my kid (note to self: do not tell her this ).

The only way to genuinely compare the two would be to know exactly when I am going to die. The longer my period of retirement, the likelier it is that the value of my defined benefits will outpace the value of my 403b. But it's impossible to say right now how that will play out.

[upaloopa]

70. My wife gets a quarterly statement on it is

a monthly amount she would receive for life if she were 65 and retired now. My retirement committee has told me what I will get each month when I retire in a few months.
I will get a fixed amount per month for life also. Right now taking what our employers have contributed plus what we have contributed, I have about 70% less dollars contributed than she has. But taken what we have now if we were both to retire today I would get 63% more dollars per month. She has a 401K and I have a defined benefit plan. Those are the facts I stated in my OP. How you want to interpret them isn't my business.

[Proud Public Servant]

71. I'd be curious about the underlying assumptions

Defined benefit plan payouts are linked to length of retirement, regardless of ultimate cost; 401k payouts are governed by the value of the 401k, regardless of length of retirement. Sounds to me as if your wife's 401k manager has decided what her life expectancy is.

[upaloopa]

73. I think it is done by an actuary

[dilby]

69. Unions are great but not all industries have them.

So for those of us who work in those industries it's nice to have the 401k option.

[blackcrowflies]

81. you get more, someone else gets less

Without reading all the zillion comments, I will note that although you get more, others of your union sibs get less than they would otherwise.

[upaloopa]

83. Not true. What you are paid is determined by formula.

It has nothing to do with what other people get. Everyone in the plan has the same formula applied to their circumstances.

[GummyBearz]

84. Yea until the formula breaks down

If you take out more than what you put in, where does the difference come from? It comes from borrowing younger generations contributions, since they are not close to retirement yet.

I can cut a pizza infinitely different ways. But if I give my self a bigger slice, it means someone else got a smaller slice.

[upaloopa]

85. You don't know anything about what you are posting. Here is our website. Read up

http://www.countyofsb.org/sbcers/

The SBCERS Trust has experienced a solid recovery since the 2008-2009 market declines. This is due in part to the long-term strategy of the Fund which is established by the Retirement Board. The Fund reached a value in plan assets of $ 2.5 billion in August, 2014. The attached chart illustrates the value of the SBCERS Pension Fund over the past decade. No one can guaranty future performance; although the Fund’s past 10-year track record is commendable. SBCERS is confident in the Fund’s ability to provide for member’s benefits over the long term.

[GummyBearz]

86. Uh... yea...

Sounds like every other salesman's pitch I've ever heard.

Subtracting the dividends/ticker price gains, you can't pull out more than you put in, no matter how nice the sales pitch is.

Anyway, want to buy an ocean front property in nebraska? I'll give you a great deal.

[upaloopa]

87. Still trying for a win. Somehow you are smarter

than a retirement board, our county supervisors and a group of actuaries.
Why is it so fucking important to you to win an argument with me? You don't even know me. I started out with an innocent OP and get I to a food fight somehow.
Ok you win I lose

[GummyBearz]

90. Actually its the other way around...

If what you are saying is true. You win, and I lose. That is why I posted to your thread.

Look around at all the companies nixing pension plans for the younger employees. Every company from Disney, to Lockheed, to Xerox. The 60+ year olds are getting their pensions, as they were promised, and the 25 year olds are subsidizing it, while at the same time losing their own pensions. This is why its fucking important to me. When I read something from an older generation saying they are "getting more out than they put in" it just reminds me that its people in my generation that are paying for it.

So in conclusion, you won, I'm fucked. Its not your personal doing, and my bitterness on the topic may imply that, so I apologize if that is the case.

[upaloopa]

91. I feel for younger people I really do.

I think the most important thing we could do is work so the young people have the same advantages we did. It will take getting money out of politics and for people who think like you to make the laws that turn things around.
It may be too late for your generation but we could maybe help your kids' generation.
The most disappointing thing in my life is my loss of faith in our system to promote the common good. That was the title of my high school social studies text book, "The Common Good." That was in 1963. I was in that class when Kennedy was killed. I think that was the beginning of my loss of faith. Till then I thought everything would go in a progressive direction.
I am truly sorry that people younger than me will not have what I had. But I still vote for progressives. Maybe after my lifetime the right will die out and a new progressive time will take place.

[GummyBearz]

94. Well

We may have finally found a point that we can both agree on. Enjoy the rest of your day, I will try to do the same

[upaloopa]

95. We agree on more than that I see

[Travis_0004]

102. The plan had 900 million in unfunded liabilites on Dec 2013

Thats money that has been promised, but doesnt exist, so thats money taken from future employees, future taxpayers, or broken promises to future retires.

[LondonReign2]

111. "If you take out more than what you put in, where does the difference come from?"

"It comes from borrowing younger generations contributions, since they are not close to retirement yet."

Errrr, no. Not at all.

It comes form the earnings (i.e., investment gains) from the money going in and then working over the employee's career.

[GummyBearz]

112. Dividends and ticker price gains are standard for any retirement plan

Subtracting gains from dividends/ticker price increases (which would occur in a 401k as well), you can't take out more than you put in, unless you are taking from someone else's piece of the pizza.

See the guy who posted comment #102 right above you:

" The plan had 900 million in unfunded liabilites on Dec 2013

Thats money that has been promised, but doesnt exist, so thats money taken from future employees, future taxpayers, or broken promises to future retires."


edit: included post #102 for convenience

[blackcrowflies]

113. I'm glad someone else understands this

The country is littered with pension plans going bust because people swallowed the snake oil.

Please do not believe sales hype.

[Live and Learn]

118. Why would you subtract the gains made by dividends and gains?

That makes no sense.

Our pension fund has done very well even though for many years now, many employees didn't contribute anything. I am in an older contributory plan. And the newer plans are contributory as well. But even with the majority of employees still currently being on a non-contributory plan the pension is well funded.

Our pensions are not invested solely in the stock market which is why it has done so well.

[GummyBearz]

120. It makes sense when trying to do an apples to apples comparison

I am saying minus the gains you got (which obviously you can with draw), you cannot with draw more than you put in.

Its trying to make an apples to apples comparison. I could have put $100 in microsoft stock in the early 80's and withdrew $5,100 later on. But I can't with draw more than that unless I am taking from someone elses piece of the pizza, as was implied earlier in the thread

[Live and Learn]

121. But we are not taking out more collectively.

You are failing to take in to account how pension funds are invested. They are not just invested in the stock market but in a variety of ventures.

You are also failing to take in to consideration the fact that not all retirees live long lives. Pension benefits cease being paid to n individual upon their death so any monies that would hve belonged to them are still in the collective pool instead of in their individual IRAs.

Another plus is that you can't borrow against your pension or take it out early like people with other retirement plans often do.

A properly run pension plan is far superior for the majority of people than asking people to attempt to save on their own.

I am certain that this country is heading for a retirement crisis in the not to distant future because of the drive away from defined pensions and reliability on individual retirement savings and IRAs.

Wall street is the only entity profiting off of the current system and it likes to take your money and run.

[GummyBearz]

122. So about that $900M shortfall in this defined benefits program...

Where does the $900 million shortfall in this specific pension plan fall into place in your world? The shortfall will be made up by future generations contributions, right? Why do HUGE companies such as Boeing (who I know is unionized), Xerox, and a whole lot more end up having their pensions go bankrupt?

It's because people do live a lot longer than they used to, and they do take out more than they put in, and at some point it becomes unsustainable, just like a pyramid scheme. Go on all you want about how defined pensions are a god send. But when you end up taking more out than you put in, it has to come from some future employee's pocket in order to keep the pyramid from crumbling.

I'd rather save for myself, put my money into stocks that I know will be around when I am old, diversify in the event of a crash, all while NOT paying commission fees to a fund manager from wall street who as you rightfully said only wants to take money from anyone he can. And then retire when I can afford to retire based on my choices. I am somewhat young, and I would rather not fund other people's retirements, who are 50 years older than me. I'd rather fund my own.

Now back to my first question... who is going to pay for that $900million gap between what this specific plan has already promised, and what it actually can afford to pay? If you reply something like "there will be stock market gains in the future", then save yourself some time and just ignore my question.

[Live and Learn]

123. Only in poorly run programs.

My pension plan does not have any shortfalls and has an excellent record.

Not everyone is living longer anymore. In fact, women have lost gains in that area recently. It is basically only the well off that are still making gains. And since the majority of people in this country have gotten quite a bit poorer in the last decades I suspect a further loss in those gains will be realized.

Now, back to your first question. Promises made should be promises kept. We have already seen the promises reneged upon by private companies and it should not be tolerated. Those making the promises are also the ones that pick the investors. If you pick a poorly run plan then you should pay the consequences.

As for saving and investing yourself, fine it you are good at it. But, the majority of people are not. I think you will find that life has a way of getting in the way of your attempt to save and invest. Even if you do manage to do well, do you really want the majority of seniors living in abject poverty. Quit focusing solely on yourself.

This entire right wing mantra about not having to contribute to someone else's well being is based upon selfishness and greed and will bring the country to its knees if allowed to continue.
The collective well being translates in to individual well being.

[Lonusca]

124. You need to tell the OP they are in a poorly run program

Their program has this 900M underfunding

[GummyBearz]

125. I think we have a generational divide issue here.

My company (a huge company) just broke its promise to anyone under the age of 50. I won't get the pension when I retire, yet I still have to pay for the guys who are 50+. In your eyes I am being selfish, in my eyes I am giving away money out of every single pay check to others. How the hell is that me being selfish?

The selfish are the ones taking it, who also happen to be the ones which own houses worth ~$800K, that I will never be able to afford since I was born 20 years too late. Selfish people to me are the boomers that are retired with pensions, big houses, etc, while my generation toils away to cover the gap in their benefit plans.

Do I want seniors to live in poverty? No, I absolutely do not. Do I want to live in poverty before I even get to become a senior myself? No to that as well.

[Live and Learn]

126. Not a generational divide simply a divide on how to solve the problems

and who caused them. Why are you blaming baby boomers? Are you blaming them for living too long? They didn't create the system.

The company that broke its promise is the one to blame, along with the lawmakers that allow it.

[LondonReign2]

129. I could be wrong, but I don't think that is correct

You say the company "broke it's promise" on pension plans. I presume you are talking about a plan freeze or plan termination?

First question--is this a DB plan and is the plan contributory? Meaning, have you had any deductions taken from your paycheck for this plan? Because if you have, those deductions are automatically vested. They are yours; they aren't being taken to use for other current or future retirees.

Second -- your plan has to have some sort of vesting schedule. If you have vested, you still are eligible for that benefit. It will no doubt be small because you are young and presumably haven't been in the plan very long to build up a large benefit, but it is still yours. If you haven't been there long enough to be vested, then it is true you aren't eligible for any benefir, but on the other hand you haven't contributed anything (and if you have, see point #1 above).

[LondonReign2]

127. Sorry, but you don't fully understand how DB plans work

OF COURSE the plan is expecting investment gains when determining what future benefits are. How could they not? Investing in the stock market over a 40-year period (assumed retirement time frame) has ALWAYS resulted in both absolute and real (inflation adjusted gains). No one is 'taking from someone else's pizza".

Yes, the plan is underfunded at the moment -- like the vast majority of plans. That represents the amount the company (or in this case organization) needs to fund, NOT the employees.

[GummyBearz]

130. Sorry, I understand it better than you

I wont hold my breath waiting for my loving billionaire CEO to say "hey, how about I cut our quarterly profits in order to fund this huge shortfall in the pension fund for the young guys"... it doesn't happen.

As mentioned earlier in the thread my company eliminated the pension funds for anyone under about 25 at the time in order to pay for the 50+ year olds who were retiring soon. You think the company is going to fund that little $900M shortfall out of their profits? hahaha... great joke. It is funded by the younger generations working there.

Luckily for me I also saved a lot of money in a 401k as well as a personal schwab account, without paying a wall street fund manager (I do my own research and buy and sell stocks myself for the last 8 years). So yes I know how stock market gains work as well. At least I have that money saved... I guess the government could always take it away from me, but I'm sort of getting used to being screwed over at this point.

One thing I wont do is bury my head in the sand and pretend a $900M shortfall will magically get covered by either the worlds most generous CEO, a new stock market bubble, or a helicopter dropping money out of the sky.

[LondonReign2]

131. I kind of doubt you understand them better than I do

since they are what I do professionally.

Here is a start for you: funding of pension plans is a balance sheet item, not a profit-and-loss item. You don't "cut quarterly profits" as a funding mechanism. It is a cash (or other asset) transaction. there is an expense line item based on the actuarial value.

Your resentment is misplaced in thinking you are being screwed because "it is funded by younger generations". That's simply not the case, but I doubt anything I can say will change your mind. The fact is, you earn benefits in a DB plan based on how long you work there -- you don't fund other people's benefits.

Now, you SHOULD be resentful -- but not at "older workers" that you mistakenly think are robbing you of your benefit. You should be resentful at the company for dropping the plan in the first place and screwing you. Yes, it is nice to have a 401(k) option as well, and congratulations on taking advantage of it. However, you company is the one screwing you, because whatever matching funds they contribute are surely FAR less than what they were putting into the DB plan.

In short, its the company yanking the rug out (and contributing far less to your 401(k)) from under you, not pre-funding older workers.

[GummyBearz]

135. I can half agree

It is mainly the companies fault. But I AM still paying for the companies pension short fall by getting lower (below inflation rate) raises, giving up my own pension (note, I am vested at a 5 year mark which is nearly nothing compared to what being vested at a 45 year mark is, as you should well know, the benefits ramp up exponentially at the end of one's working tenure).

So now, 10 years into it, I have a defined benefit plan that credits me for 5 years of work service, regardless of whether or not I work there for the next 35 years.

So back to the OP, which had the premise that defined benefit plans are so much better for workers than 401k's. In my experience, it is the exact opposite. Defined benefit plans suck balls as they can be severely stripped down at any moment by the company. Where as my 401k (thus far) has not been taken away from me.

[Live and Learn]

142. +1 nt

[ileus]

82. Now that's a plan worth getting behind.

[pansypoo53219]

88. pensions. NOT WALL STREET.

what happened to PENSIONS?

[Proud Public Servant]

89. Two things did

1) the unions that secured them went away.

2) The one-job-for-life went away.

That being said, though, remember: pensions are Wall Street; it's just pension managers playing the market rather than you.

[A HERETIC I AM]

96. You really should look at the .pdf document he linked above.

Just scroll down and have a look at the "Portfolio" pages.

They're invested in everything from Swaps to Government CMO's to Futures contracts to "Domestic Equity" (Another word for "Stocks&quot , Private Equity, Assorted bonds of various ratings, Real Estate, foreign currencies, lending securities (typically to cover selling short by others) ....in short, it is a pension fund taking advantage of everything Wall Street has to offer.

http://www.countyofsb.org/uploadedFiles/sbcers/2013%20SBCERS%20CAFR.pdf

Don't for one second think just because it is a pension, it isn't invested in the market.

That one is to the nines.