Public/private pensions

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dangkhoa

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What are you think about public and private pensions?

I noticed a lot of private companies killed pension and replaced with 401k, even some state government switched to independent contractors or 401k.

I'm not fan of 401k.
 
401k has been around for a long time. However, there's nothing to stop you from setting up your own retirement funds (although you may not get matching funds from an employer). Get a financial advisor to help you through your best options.
 
Pensions is taking a hit for many, (both employer and unions) the 401k is still there and is going stay for a long time. You can contribute 401k to help with your future retirement. Like AlleyCat said, get a financial advisor to guide you with your options.
 
dangkhoa said:
What are you think about public and private pensions?

I noticed a lot of private companies killed pension and replaced with 401k, even some state government switched to independent contractors or 401k.

I'm not fan of 401k.
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Same here, not fan of 401K.

The pension is dying in USA, unless you don't mind to become a teacher, state employee or employee in public school system (some positions are outsourced aren't eligible for pension).
 
Pretty much the only people today who get a pension is someone who works or worked for the government, state, city, etc. Unfortunately, they haven't been run correctly with employees not paying in enough to pay for the amount they receive once they retire and many are now billions of dollars in the red. I just read in the paper yesterday that the UC system having just raised tuition gave their retires a raise even though their pension system is billions underfunded and they now have hundreds of retires making over $100,000 to $300,000 per year in their retirement. The article stated that for someone to get a pension of $100,000 or more per year would of needed to put in between two to three million into their account to pay for that kind of retirement. As the Donald would say "SAD!"
 
My math teacher gave me advice... save in a back when you're young. The money you place in the bank will "compound." You wait 65 years and then you have a loud of money. There are a lot of ways you can do that. Compounded weekly, monthly, yearly. (Usually, banks do monthly.) and you either set up an account to put in a certain fixed amount weekly, monthly or yearly. Such as $100 monthly. Or you just put in a huge amount and just let it sit. The thing that makes it work is leaving it alone for 60 years.

I am not a huge expert on life or banks... but that is something I was told.
 
Even if you receive a pension, it’s secure but usually has you living below your means. There’s a host of other plans out there, some depending on your risk tolerance. Definitely seek a financial advisor, we don’t know where your circumstances fall into, but if you still insist on something similar, opening an SPIA with participating insurance companies is as close as it gets.
 
Curious here, Fox and Dang are not a fan of 401K? Why? 401k helped your taxes since it's pre-taxes but of course you'll ended up have to pay taxes when you retired. it wouldn't make any differences anyway since it's still an "Income" and require to include income tax... however using 401K ROTH is after taxes and that, you don't have to worry about taxes. Remember both 401K ROTH and IRA ROTH are different. It would be good idea to start investing while you are young...You can start small $20 per pay period and it will grow eventually. Then you can contribute between 2 to 3 percent increase per year. That's only $20.60 next year... then keep on increasing it. There are few that hit 3 millions at his/her retirement. At 3 millions... you don't have to worry about Medicare and SSI etc... you can't predict what going to happen SS government in the next 10 years you know? IF people already in the age of 45s or 50s You may need to max out your contribution in order to retire comfortable. Forgot one more thing to add, working in a private company, some company will contribute your 401K match for up to like $300 per pay period.. meaning If I contribute $300, company will add $300 more to my investment. IF I contribute $500 company will add $300 to it as an example.
 
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femme Fatale said:
Even if you receive a pension, it’s secure but usually has you living below your means. There’s a host of other plans out there, some depending on your risk tolerance. Definitely seek a financial advisor, we don’t know where your circumstances fall into, but if you still insist on something similar, opening an SPIA with participating insurance companies is as close as it gets.
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In many states, public pensions allow the recipient to receive a nice living wage that will allow them to live at pretty much the means they were at when they were working and above it within only a few years do to 3% annual COLA's. 43 of the 50 states pay their pensioners 81% or more of their "base pay" after 30 years of service, this is especially true in states such as CA, OR, AR. NM, TX, WV. who pay many of their retired employees 90 to 115% of their "base pay" after 30 years of service. All 43 states have underfunded pension liabilities into the hundreds of billions of dollars.
 
seb said:
In many states, public pensions allow the recipient to receive a nice living wage that will allow them to live at pretty much the means they were at when they were working and above it within only a few years do to 3% annual COLA's. 43 of the 50 states pay their pensioners 81% or more of their "base pay" after 30 years of service, this is especially true in states such as CA, OR, AR. NM, TX, WV. who pay many of their retired employees 90 to 115% of their "base pay" after 30 years of service. All 43 states have underfunded pension liabilities into the hundreds of billions of dollars.
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That particular pool is shrinking fast. I also think 401k matches (if allowed) are fairer than pensions. The impact of inflation almost always means that if you're working for the company at close to retirement age, the pension is worth more than if you're far from retirement age. In other words, working for 10 years for a company between the ages of 55 and 65 creates a pension with much higher purchasing power than working 10 years for the same company and for the same salary between the ages of 25 and 35. The pension system is unintentionally ageist.
 
femme Fatale said:
That particular pool is shrinking fast. I also think 401k matches (if allowed) are fairer than pensions. The impact of inflation almost always means that if you're working for the company at close to retirement age, the pension is worth more than if you're far from retirement age. In other words, working for 10 years for a company between the ages of 55 and 65 creates a pension with much higher purchasing power than working 10 years for the same company and for the same salary between the ages of 25 and 35. The pension system is unintentionally ageist.
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For public pensions the pool is underwater by billion and billions of dollars and the public will be asked to pay, so the people covered under the pension can continue to live a very nice life! Since most public pensions get an annual COLA the recipients pension double within the persons retirement life and some double again if they live long enough.

Problem with 401's is they aren't safe, secure or protected from collapse. Look what happened to peoples retirement savings that were in 401's in the 2007, 2008 recession, many were left with 401's that were effectively wiped out!
 
seb said:
For public pensions the pool is underwater by billion and billions of dollars and the public will be asked to pay, so the people covered under the pension can continue to live a very nice life! Since most public pensions get an annual COLA the recipients pension double within the persons retirement life and some double again if they live long enough.

Problem with 401's is they aren't safe, secure or protected from collapse. Look what happened to peoples retirement savings that were in 401's in the 2007, 2008 recession, many were left with 401's that were effectively wiped out!
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Yep. The best recommendation I can make are IRA accounts, 20 or 30 years. Sadly, you will be at the mercy of bankers when the bubble bursts again.
Buy a house and property and have precious metals for bartering.
 
seb said:
Problem with 401's is they aren't safe, secure or protected from collapse. Look what happened to peoples retirement savings that were in 401's in the 2007, 2008 recession, many were left with 401's that were effectively wiped out!
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Any monetary investments aren't safe. Same goes for housing market... during the crashed, home values completely dropped, under water mortgages and on. Yes it's hard to get it recovered. We all taking risk and keeping fingers crosses.
 
Pensions began during decades when the economy was expanding, the labor pool and population was expanding, and labor unions were strong. Politicians promised public workers nice pensions to win their votes, knowing they would be long gone from office before the bill came due.

In present times the labor pool is contracting, the percentage of people working is shrinking, the tax base shrinks while politicians scream that lowering taxes is the answer. Well it isn't. There are no good answers but it's likely that taxes will have to go up as public pensioners are forced to take lower payments, or some will lose their pensions entirely. This will pit neighbor against neighbor.

Recent news: "The agency that delivers retirement benefits to thousands of Los Angeles city employees is looking to scale back its investment projections — a move that could blow a hole in an already precarious municipal budget.

The board that oversees the Los Angeles City Employees’ Retirement System will meet Tuesday to consider cutting its “assumed rate of return,” the yearly expected earnings for its investment portfolio, from 7.5% to 7.25%.
The move is expected to shift about $38 million in retirement costs onto the city’s general fund, which pays for police patrols, firefighter staffing and other basic services, in mid-2018. The pension board also has the option to pursue a more dramatic step: taking the investment assumption to 7%, which would add $93 million to the city’s yearly pension burden, officials said.

City Councilman Paul Koretz, who represents part of the Westside, said he thinks a move to 7% would be “way too extreme” for the city budget."
Can you imagine???? The pension agency asks to lower it's math formula to 7%, which is still at least 2% too high in order to simply be truthful in it's budget. Then the city councilor says we can't do that because it blows up this years budget! He wants the pension people to keep lying so politicians won't have to struggle so much.

Anyway, that kind of thing is happening all over the country and pension administrators continue to make rosy projections of how much interest the funds will earn even when they have not come close to those projections for years. Deeper and deeper in debt.

401ks or IRAs will run the same risks the whole economy runs, but they are the only tools we have.:dunno: Do the best you can, then help your neighbors when you can because people in strong, connected communities will survive better than those in communities where people are isolated from one another.
 
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