Retirement savings?

[ExiledInIllinois]

 

This is why the defined benefit system has largely been discontinued by private enterprise in favor of defined contribution plans. Government should do the same.

 

The problem with defined benefit plans is that you can only guess how much money you need to invest today to pay people retirements in 40 years. Compound that with the rules that allow under-funding (even after taking the best guess), which bad management, corrupt unions and government all are happy to continue to allow (so they can get what they want today regardless of what happens in the future), and you have a recipe for disaster -- everyone is happy to dump the liability onto the taxpayers, who are certainly justified in wanting reasonable limits on retirement benefit promises that exceed the available funds.

 

With a defined contribution plan, the money goes into your account right now. No surprises, everyone knows what's in there. The employer doesn't owe you anything.

That's all fine and dandy... I think M'sN realizes that, but what do you do about the one's already in and get boned as he got boned w/the airlines. Airlines who are turning huge profits now. I think they owe him something... Not just boopkus what they seem to be getting away with.

 

As a FER's employee working for the gov't (DoD)... I fund my own pension (1.5% goes to that). The second part is my TSP (401K). Agency puts in automatic 1%. They match dollar for dollar up to 4%. Next 1% is half match and after 5% no matching. There is no more limits to how much you can contribute to your account. I fund mine 20%. The third part is Social Security, which all fed employees kick into. Well, mostly all, there are few CSSR employees still hanging around. Social Security that I will never see. I kissed it goodbye years ago being the age I am.

[Johnny Hammersticks]

My state pension pays 60 percent of the average of my 3 highest years salary. My wife and I also have 403B plans that we have been maxing out since 2006. I hope we will be in good shape. All the student loans and our house will be paid off just before we retire. Also, not that we've been able to accumulate a good bit of liquid assets, I'd like to start to dabble in the stock market.

[ExiledInIllinois]

My state pension pays 60 percent of the average of my 3 highest years salary. My wife and I also have 403B plans that we have been maxing out since 2006. I hope we will be in good shape. All the student loans and our house will be paid off just before we retire. Also, not that we've been able to accumulate a good bit of liquid assets, I'd like to start to dabble in the stock market.

That's what I am hoping for my pension when I retire... 60% of highest three. They will probably raise me to freaking age 75! LoL

 

Old CSSR's (Civil Service, no SS) would get closer to 80%... Of course they would just get their SS credit @ some other job. They had no matching on TSP I think... BUT kicked in 7.5% towards their pension. FER's has been around since I think 1984... There is still one guy @ my work who is CSSR's and of course has his SS points. :-/

[Chef Jim]

Such loaded questions.

 

401k's

Roths

Traditiona IRA's

SEP IRA

Stock options

Creative SS planning.

 

How much you need? As has been mentioned here already. More than you're likely to have.

[ExiledInIllinois]

More than you're likely to have.

Nonsense! Be more w/less.

 

http://bemorewithless.com/the-story-of-the-mexican-fisherman/

 

 

"This is the story that started the be more with less movement for me. While I knew all work and no play wasnt the way, I thought I would forever be stuck in the cycle of working to live. I thought I would always have a car payment, credit card debt and not enough month at the end of the money. I thought I had to work harder to make more, buy more and have more. At one time, I really thought that would make me better somehow.

 

This story is my inspiration to slow down, reassess, and get real about how I want to live life.

 

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

 

The Mexican replied, only a little while. The American then asked why didnt he stay out longer and catch more fish? The Mexican said he had enough to support his familys immediate needs. The American then asked, but what do you do with the rest of your time?

 

The Mexican fisherman said, I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life. The American scoffed, I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.

 

The Mexican fisherman asked, But, how long will this all take?

 

To which the American replied, 15 20 years.

 

But what then? Asked the Mexican.

 

The American laughed and said, Thats the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!

 

Millions then what?

 

The American said, Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

[Chef Jim]

Nonsense! Be more w/less.

 

http://bemorewithless.com/the-story-of-the-mexican-fisherman/

 

 

"This is the story that started the be more with less movement for me. While I knew all work and no play wasnt the way, I thought I would forever be stuck in the cycle of working to live. I thought I would always have a car payment, credit card debt and not enough month at the end of the money. I thought I had to work harder to make more, buy more and have more. At one time, I really thought that would make me better somehow.

 

This story is my inspiration to slow down, reassess, and get real about how I want to live life.

 

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

 

The Mexican replied, only a little while. The American then asked why didnt he stay out longer and catch more fish? The Mexican said he had enough to support his familys immediate needs. The American then asked, but what do you do with the rest of your time?

 

The Mexican fisherman said, I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life. The American scoffed, I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.

 

The Mexican fisherman asked, But, how long will this all take?

 

To which the American replied, 15 20 years.

 

But what then? Asked the Mexican.

 

The American laughed and said, Thats the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!

 

Millions then what?

 

The American said, Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

 

That is a cute story but the majority of Americans will not have enough for the things they need let alone the things they want. Medical costs through retirement is pushing $300k. Many Americans retire with a third of that for everything.

[ExiledInIllinois]

 

That is a cute story but the majority of Americans will not have enough for the things they need let alone the things they want. Medical costs through retirement is pushing $300k. Many Americans retire with a third of that for everything.

Yeah. Cute story. But, eventually everybody dies. Keep you alive longer, costs go up. Not sure how the Mexican fisherman planned for medical expenses. ;-)

[Chef Jim]

Yeah. Cute story. But, eventually everybody dies. Keep you alive longer, costs go up. Not sure how the Mexican fisherman planned for medical expenses. ;-)

 

His children will take care of him. That's their culture that we don't do at all here. Mom and dad are kicked to the curb.

[ExiledInIllinois]

 

His children will take care of him. That's their culture that we don't do at all here. Mom and dad are kicked to the curb.

Then that's where you buy insurance. I don't have enough liquid cash on hand to carry my own comprehensive car insurance. And I am surely not going to cover all heath costs until I kick the bucket.

 

My parents took in their parents when they were aged, I would surely do the same for mine. Actually, my brother takes care of my father. I grew up living w/my grandfather (father's side)... My grandmother (mother's mother) lived w/us until she was able to be on her own (she was always very independent).

 

It's not so nice spin that we as a culture kick our parents to thd curb. I simply don't and won't live by it and my parents didn't. They actually made their house bigger to accommodate the extended family.

[Nervous Guy]

 

His children will take care of him. That's their culture that we don't do at all here. Mom and dad are kicked to the curb.

 

****!!! AGAIN??

[Garion]

This is why the defined benefit system has largely been discontinued by private enterprise in favor of defined contribution plans. Government should do the same.

 

The problem with defined benefit plans is that you can only guess how much money you need to invest today to pay people retirements in 40 years. Compound that with the rules that allow under-funding (even after taking the best guess), which bad management, corrupt unions and government all are happy to continue to allow (so they can get what they want today regardless of what happens in the future), and you have a recipe for disaster -- everyone is happy to dump the liability onto the taxpayers, who are certainly justified in wanting reasonable limits on retirement benefit promises that exceed the available funds.

 

With a defined contribution plan, the money goes into your account right now. No surprises, everyone knows what's in there. The employer doesn't owe you anything.

Agreed. A pension is much more attractive to the employee but less sustainable given the issues noted above. I have a pension from one employer as well as retirement savings but I am not convinced the pension will be there when I retire. Get it if you can but as a matter of US govt policy we should be moving to defined contributions if we want to control govt costs.

[Tiberius]

I have a 401k, IRA and several brokerage accounts I fund religiously.

 

I decided I wanted to be able to control my own destiny so I thought having a giant pile of cash, investments and dividends coming in would help me become more independent. So I started educating myself and saving. I did a lot of math on the future, compounded interest and gains and dividends and it really hit me how a penny saved is really two pennies earned. So I went through my whole budget and shaved off every dollar I could. Quit drinking, cut back on fast food, saved here and there and stuff my money into investments.

[Clippers of Nfl]

Agreed. A pension is much more attractive to the employee but less sustainable given the issues noted above. I have a pension from one employer as well as retirement savings but I am not convinced the pension will be there when I retire. Get it if you can but as a matter of US govt policy we should be moving to defined contributions if we want to control govt costs.

I dont get this statement.

 

You mean lets say you have 50k in a pension today in 2015. Your retirement is in 2035 for example. Why wouldnt it be there in 2035?

Uncle Sam is just going to say thank you for the 50k... I have a 401k and pension. But I dont get your statement.

I have a 401k, IRA and several brokerage accounts I fund religiously.

 

I decided I wanted to be able to control my own destiny so I thought having a giant pile of cash, investments and dividends coming in would help me become more independent. So I started educating myself and saving. I did a lot of math on the future, compounded interest and gains and dividends and it really hit me how a penny saved is really two pennies earned. So I went through my whole budget and shaved off every dollar I could. Quit drinking, cut back on fast food, saved here and there and stuff my money into investments.

Cheap.

[Tiberius]

I dont get this statement.

 

You mean lets say you have 50k in a pension today in 2015. Your retirement is in 2035 for example. Why wouldnt it be there in 2035?

Uncle Sam is just going to say thank you for the 50k... I have a 401k and pension. But I dont get your statement.

Cheap.

Yup!

[plenzmd1]

I dont get this statement.

 

You mean lets say you have 50k in a pension today in 2015. Your retirement is in 2035 for example. Why wouldnt it be there in 2035?

Uncle Sam is just going to say thank you for the 50k... I have a 401k and pension. But I dont get your statement.

 

Cheap.

1) he is talking about a pension that a company/ entity says they will pay you when you retire. They may, they may not. Not really your money till they start paying you. Many corporations , and many more governments/ school districts etc are severely underfunded when considering their obligations to pensioners and many cannOT meet those obligations.

 

2) the cheap comment...I agree. Just read an article about a janitor that died with $8m estate. Saved every penny , never took vacation , and horror of horrors maybe even stopped drinking! Yep, he never worried bout mo net when he got older, but he also prolly died thinking damn, I would have loved to see Paris in springtime, or the joy on the face of someone when I gave them a car so they could get to work etc. Seems like a waste to not live life just sos you have the absolute most you can when you retire.

 

Lotto chit you can't do at 65 that you could have done at 35.

[Dorkington]

I'm on track to hit the low side of what I need according to various calculators. But the plan is also to move somewhere with a dirt cheap cost of living.

 

Frankly, though, I'll be surprised if I have anything when I retire. I'm generally not a lucky in life person hah

[dpberr]

Way too much emphasis on retirement investments and not nearly enough emphasis on lifelong debt management.

 

I get a kick out of baby boomer couples who "want" to retire but still have the mortgages (sometimes multiple, sometimes upside down), HELOCs, multiple car loans, credit card debt and kiddo college debt. There is no way they can retire and be financially secure. They do it anyway and find out they need to go back to work at an X rate because they are hemorrhaging cash or they run into some very expensive healthcare.

 

They think they can maintain the very same lifestyle with their income restrained (retirement is like a parent with a strict allowance for 30 years) when they were making good money.

 

Too many people say "well my parents retired when they were 62!" Well your parents probably had their house and cars paid off and the credit card spent most of its time in a drawer. And they didn't have the life expectancy and the expensive non-employer subsidized healthcare you're going to have to navigate. They may have retired during much better economic times than the present.

 

My advice is consider debt first, retirement second because if you have a lot of the first thing, there is no way you're going to do the second thing.

Edited April 30, 2015 by dpberr

[Clippers of Nfl]

1) he is talking about a pension that a company/ entity says they will pay you when you retire. They may, they may not. Not really your money till they start paying you. Many corporations , and many more governments/ school districts etc are severely underfunded when considering their obligations to pensioners and many cannOT meet those obligations.

 

2) the cheap comment...I agree. Just read an article about a janitor that died with $8m estate. Saved every penny , never took vacation , and horror of horrors maybe even stopped drinking! Yep, he never worried bout mo net when he got older, but he also prolly died thinking damn, I would have loved to see Paris in springtime, or the joy on the face of someone when I gave them a car so they could get to work etc. Seems like a waste to not live life just sos you have the absolute most you can when you retire.

 

Lotto chit you can't do at 65 that you could have done at 35.

WTF. That is effed up. If the money is there I thought they had it set aside already....Regardless of bankrutpcy, merging, or stuff like that.

Big time lame.

 

I cant really stand cheap people. I do understand the difference between not having money and being cheap tho.

Way too much emphasis on retirement investments and not nearly enough emphasis on lifelong debt management.

 

I get a kick out of baby boomer couples who "want" to retire but still have the mortgages (sometimes multiple, sometimes upside down), HELOCs, multiple car loans, credit card debt and kiddo college debt. There is no way they can retire and be financially secure. They do it anyway and find out they need to go back to work at an X rate because they are hemorrhaging cash or they run into some very expensive healthcare.

 

They think they can maintain the very same lifestyle with their income restrained (retirement is like a parent with a strict allowance for 30 years) when they were making good money.

 

Too many people say "well my parents retired when they were 62!" Well your parents probably had their house and cars paid off and the credit card spent most of its time in a drawer. And they didn't have the life expectancy and the expensive non-employer subsidized healthcare you're going to have to navigate. They may have retired during much better economic times than the present.

 

My advice is consider debt first, retirement second because if you have a lot of the first thing, there is no way you're going to do the second thing.

Very true about the debt thing.

[BillsFan-4-Ever]

I'm on track to hit the low side of what I need according to various calculators. But the plan is also to move somewhere with a dirt cheap cost of living.

 

Frankly, though, I'll be surprised if I have anything when I retire. I'm generally not a lucky in life person hah

you are not alone in that department.

I may have to work until I'm 80

[stevestojan]

 

That is a cute story but the majority of Americans will not have enough for the things they need let alone the things they want. Medical costs through retirement is pushing $300k. Many Americans retire with a third of that for everything.

RETIRE with less than $300k much less $100k??? I have well more than that and have 25 years left minimum and I'm still very panicked.