Pensions

If you want a monthly paycheck like a traditional pension, you could always buy an annuity.

Your $100,000 = $680 for life.

(Takes 12 years to recuperate money)

Essentially buying a pension.

 

Good idea I need to look into it

 

I just keep money in a savings account and them pull it and burn it in a camp fire every year. Cause that's what you're doing when you put your money on wall street. The money masters crashed out the market in 07/08. Don't think when they get money hungry they won't again

 

China, you're obviously a smart guy. But you're way off base with your postings about the bankrupt Union pensions. Multi employer pension funds like the Teamsters plan are insolvent because of the lack of employer contributions! Less companies participating equals less money to support the retirees, it's simple math really.

Regarding Union dues - all locals are required to review their books at EVERY MONTHLY MEETING and those books are open for me to view at any time. I know where every penny of my dues money goes, you have have stated you worked Union in the past, if you were involved you'd know where your money is spent.

The Teamsters do endorse specific political candidates, just like large companies and CEOs. They're not always the Democratic candidates either. And because my Union endorses a specific candidate, it doesn't mean I'm voting for them.

I have no problem with your anti Union rhetoric, just make sure your facts are correct before spewing the hate. Again, I respect your knowledge, experience, and investment abilities (we're actually not dissimilar in a lot of ways), but please spread factual information about pensions and dues. Thanks.

 

There is one simple way to invest for retirement that most people overlook (myself included). I remember hearing once a long while ago and being surprised at simply having the discipline to put a little away every paycheck. I just found this, figured I'd share it:
http://www.bankrate.com/calculators/savings/save-million-calculator.aspx

 

That would have worked back in 1968 but today with the rate of return hitting 1.4% on savings, it doesn't work.

Where do you get 7% today?

It ain't the stock market.

It ain't a bank.

 

A couple points to start with:

1. I never said this is the retirement plan, but it is another way to contribute to your own retirement. Think of it as another way to diversify. Saving money can be hard these days, but I would hope you're not opposed to the idea?

2. Obviously you're not going to get 7% on a savings account, but did you attempt to plug in your own numbers to see what could happen? Here's two examples. Mine is the age 49, but I also did one for a 25 year old. Nothing to sneeze at there, that's a decent amount to supplement any other retirement a kid may have:

 

The biggest reason 401k is better than a pension is control. With a pension you are at the mercy off the planners who manager the pension, and the pension is an asset of the company so if they go broke it will be emptied out in bankruptcy court. A 401k is yours, it survives your death (think about what your spouse will live on once your pension is gone), you control exactly where and how it is invested, and a good 401k will outpace the return on investment of a pension any day of the week. Remember, many pension funds are also invested in the market, just like a 401k will be. Also, look into how many pension funds have become insolvent, even state employee funds are in trouble. Lastly, if you choose to set up a non-traditional IRA it can be structured to invest in trust funds where you can self manage and invest in solid, tangible goods like real estate. They are more complicated but with a good investment manager you can diversify enough to outperform a traditional pension every time.

 

Pensions aren't necessarily invested in the stock market. Mine is comprised of some stocks. A lot of my company's stock and bonds. Treasury bonds and asset based investments.
With a pension I know exactly what I'm gonna get when I retire. A 401k it is dependent on how well the market did. You can end up trying to retire and all of a sudden the market crashes and takes 50% or more of your retirement fund with it.

Also the money is funded 100% by your employer. A 401k is mostly your savings aside from any match your employer gives you.
Me having a pension I can still put away in a 401k, which I do.

But if it were one ir the other, I would go with a pension. I know exactly what I'm gonna get and the amount is adjusted for inflation. A 401k is a little more risky. Your pension is there till you die. Once you draw out your 401k your money loses value the longer you hold on to it to inflation. You have to draw out evert penny by the time you're 72 years old.

 

What about the risk with your pension becoming insolvent? Or the risk with it being invested mostly in your company's own stock? Your assumption that you know exactly what you will get is based on your company doing well enough their stock doesn't crash and your pension fund managers doing a good job. My 401k, ROTH IRAs, and other retirement investments have more than enough in it that I can retire comfortably off the interest they generate without touching any principle, and when the time comes I will divest into other funds that are more stable and protected. Even though I am self employed I could care less about the funds coming from my employer if I were an employee to fund the pension because in reality they come from you because your actual wage is figured to include the cost associated with the pension (not getting into the union/non-union argument). Again, I will happily give up some wage benefit for better control of my retirement savings (thinking about the Central States disaster and the NY fund problems). Lastly, it is not a selling point that the pension is there until you die, a 401k is yours for eternity, it can be passed on to your heirs, you just have to follow the rules to change how it is invested as you age. You do not draw down your IRA to a zero balance, you simply live off the income it produces without reducing the principle if you have it invested properly, which in a sense is exactly what a pension fund is doing. A 401k, or other IRA type account, is not a simple savings account, it is an investment that produces income if properly managed.

I am going through this with my father in law right now, he is retired from the Teamsters (driver for ABX/DHL) as well as the Port Authority of New York New Jersey (police officer). He just received the news of his Teamsters pension being reduced and his New York State Employee pension is in trouble as well. Now, since he rents an apartment from my wife and I it will become our problem when he runs low on money. I am not saying he definitely would have been better with some sort of IRA, but at least it would not have been someone else's decision to cut his income. And, since he has no other savings, when he dies his wife will also become our problem, and she will out live him for sure. I am saying, 45 years of contributions to two major pension funds and he has no control over his future, nor will he have anything to show for it if the pension funds dry up all together as he believed like you do that a pension was the end all be all of retirement and his "brotherhood" and "the boys in blue" had his back.