My previous employer had both a pension and 401k, so does my present employer.
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My employer used to have pension plan and 401k plan. Over time, the pension plan was decreased and then for new employees eliminated. This seems to be the corporate trend.
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If the employer offers a 401k and a pension plan, an employee can participate in both (unless the pension plan was frozen and new employees arenât eligible). Having both used to be standard.
H will have a public pension and a 401k. Both plans require employee contributions in addition to the employerâs share. I worked for employers who offered both types of plans, but the pension plans were terminated 20 years ago and I got a couple small lump sum payouts. Still have a tiny pension that will pay for a weekâs worth of groceries. No cash-out option. Rolled everything else over to my IRA, along with other 401k distributions. I try to keep everything consolidated.
Iâm running 80% equities, 20% money market/income funds in my IRA. Age 63. Donât plan to pull $ til RMDs begin.
My H (age 62) switched from 70/30 in his 401k to target funds in 2019. They are roughly 60/40 (2030), 65/35 (2035), and 70/30 (2040). We can swing a little more risk in the 401k/IRA because the pension and SS will cover most of our needs, at least until we need AL/home health care. The plan is that the 401k will pick up these additional expenses.
Ask me in 20 years (G-d willing) if this strategy worked!
(former pension/401k plan administrator here)
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We are more public employers with both pensions and outside retirement plans. Hâs is (as a teacher) technically a 403b. Mine as a govât worker is a 457. But neither receive matches from our employers.
Whereas my younger Sâ employer matches up to 10%. If they participate at all, they must save at least 2%, but are matched 7.5% on that 2%. It goes up from there.
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Companies I used to work had 401k matches back in the day, but those were some of the first things to go in 2008-09 recession. I am finally back working for a company that has a decent match. More recently companies I have worked for did a profit sharing once a year if it was a good year, but it wasnât guaranteed.
If I had it to do all over again I would have taken a pension job 30 years ago.
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It definitely helps risk averse people like me, but all pensions are not created equal. Iâll probably get 35-40% of my salary and it wonât ever be increased with cola. And for a lot of my working life I was grossly underpaid. By over $50K a year or more underpaid.
And the other trade off is that you canât leave. And in small organizations there might not be anywhere to progress or transfer. My big boss (2 levels up) who hired me almost 27 years ago is still here. I had one shot to move up 1 level, but I wasnât in the position at home to take it then.
So if you ever donât like your job, too bad. Keep going. We also lose about 5% a year of our pension for each year we leave early.
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Not all pensions are created equal. I was a federal government employee, but I only get 1% per year of my top 3 years salary. I know itâs not a bad deal, but I would have been paid much more in private industry. I made the choice.
My SIL was a state teacherâs union employee, and she got over half her final salary after only 20 years. Plus her insurance is cheaper than mine forever. My son works for a company that has no pension but gives a really nice match for retirement savings.
I try to encourage young adults to think about retirement benefits when they are evaluating different job offers, and to save as much as they can, at least as much as company will match.
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The thing is, I didnât realize until I was over 40 that if Iâd taken something like a government drone job or a solid union job, I couldâve retired with 20 years in, with a pension and still had a freaking LIFETIME to âdo what I really want.â I realized this when my BIL retired from the assembly line of GM at 50. I was so jealous.
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Well 30 years ago you would have had to pick the right pension job. When I started my job (almost 40 years ago) the retirement perks were grand. After 36 years my retirement pension is about 10% of salary - very helpful to have, but not what we had originally hoped for.
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And like H, you might have seen it frozen at a fraction of what you were supposed to get.
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My sonâs MIL decries that she didnât take a state job all those years ago. Sheâs in one now and will get a small pension upon retirement, once she gets 10 years in.
My neighborâs last day with the city is tomorrow after 20 years. She will get a pension, on top of the pension she already receives after retiring from the state with 20 years. Sheâs in good shape, which is great as her dh got no pension after a series of manual labor-type jobs.
I never thought about my pension as a proportion of my salary. If I wait until 65, itâll be about 20% of my last yearâs salary, which was more than 20 years ago. Interesting.
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I also was the 401k Administrator for the physician group (I was Administrator and CFO) during the 1990âs. Started the plan with Principal, very easy administratively. I participated max, plus as top heavy plan all the non-physician employees got an end of year boost as well.
DH and my early build up of funds was key - the time value of money and the returns over the years. His company changed hands several times and last 15 years was w/o pension plan as well. I was SAHM for 18 years due to practicality of bringing up the DDs with DHâs extensive work travel (and also my aggressive cancer treatment/battle during those years as well); my sunset career (4 1/2 years until retirement at age 65) - reentry to workforce had me in a professional position but making less than salary 30 years earlier, and more physical work w/o utilizing my work capabilities - but able to work on days I chose to be available, and in the end was working enough hours to pick up the health insurance when DH chose to retire before we both were Medicare age. It was worth the job reentry for my own SS money, the financial traction we made, the cost savings of group health insurance over out of pocket COBRA cost, a better appreciation of hard earned funds, and the life lessons. I worked in skilled care and rehab - so I could see the things to avoid with potentially preventable accidents, and various ways to handle life in declining years. More up to date with physician community as well - knowledge is power.
DH had to learn a life lesson himself - he went out on a bad weather day (snow/ice bad - everything closed) to walk âI wonât fallâ - well he did âI never broke a boneâ - well he did (right leg, so I also now have to be his driver). I had to go with AWD vehicle to go pick him up - he did have the foresight to bring his phone. Thankfully conservative management (no surgery) - break was âborderlineâ on requiring surgery. We have a Nordic Track at home - so when I got him after his fall, I said âI have just two words for you - Nordic Trackâ. I know he regrets 1000 times that he didnât listen to me. He had a home accident (preventable) 6 months earlier as well - maybe it is sinking in about not taking risks - he didnât listen to my advice then as well - told him to wait to do the task when another person was available, no he couldnât wait. Well lots of medical drama could have been avoided (bled like a stuck pig due to blood thinner, almost lost the end of his finger, then with initial stitches was not given an antibiotic nor antibiotic cream - avoided deep infection with antibiotic prescribed in time to avoid a bone infectionâŠ). I had to navigate the orthopedic group in order to get DH seen when his symptoms worsened with the leg break (8 am till 3 pm telephone tag and finally able to send pictures then able to see appropriate MD - had only seen a PA with initial visit 4 days earlier and given no pain medications, while MD reviewed X-rays at another building locationâŠand wasnât assigned MD that was available when needed pain meds and needed MD to do exam and give MD instructions and impression). Yes MDs are busy when there are a lot of accidents, but this is health care - people need to be seen when they need to be seen, and the available MDs as part of this large orthopedic group should be able to be utilized. DH is now assigned to the MD who actually saw him (and his orthopedic specialty lines up with DHâs needs). I thought through the options we had if the ortho group had not âcome throughâ, but we are too heavily invested with this ortho group (both DHâs spine MD and podiatrist is with this group). In hindsight, we needed to have a longer discussion with PA on the Monday visit - and handled things differently at that snap shot of timeâŠ
Some of what clouded things was I had scheduled out patient surgery Thursday for a medical condition - and had to arrange transport to and from the hospital for us. DH was able to be âmy personâ in the waiting room. Surgery was successful, and incision line is healing nicely.
I am trying to teach DH âthe ropesâ in case he has to advocate for me with the health care system! So far he has been observer to my efforts. DD1 as a BSN/hospital education manager would be the next generation taking over when we both may need her to do so â and we may eventually either live closer to DD1âs family or have a condo near them as 2nd residence. Thinking we may stay where we live now another 10 years at max - when we are more heavily into slow-go years. Time, health and unknowns will be decision factors.
H will have been a fed long enough to get 1.1% per year, so he should get about 35% of pay. He stayed with the govt for the pension and medical coverage, though he had offers in the civilian market that would have paid far more. This was to make sure Iâd be protected if something happened to him.
I worked for a small pension consulting firm and was truly underpaid. Boss offered me Director of Administration at one point, but I just couldnât do it with two young kids, a spouse who worked 70hr/week plus commute, and no nearby family. OTOH, it was extremely flexible, not just for the kids, but for when my medical issues started.
Teachers retirement plans that are replacing 50+% of pay probably donât pay into Social Security.
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And are subject to the offset and windfall provisions of SS. Even IF you paid into SS for a time, your benefit is significantly reduced. Ask me how I know. I also am never able to collect on my husbandâs earningsâŠeven if he dies.
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Yup. And if the state teachersâ retirement is underfunded, provisions get changedâŠa friend whoâs a prof at Ohio State has had her pension provisions cut back, meaning she has to work another five years for full benefits. Two of my nieces who teach in KY and GA donât pay into SS and are subject to WEP, etc.
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Feeling lucky here, though probably retired earlier than we should from city work. DH would be getting pension of 98% pay, but I have 100% joint survivorship, so itâs approximately 85% of his full pay. I have state teacher and city pensions that equal about half of my final highest salary. No COLA, so inflation will take its ever increasing bite. But we both also qualify for Social Security, and that has an inflation Increase, at least for now.
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If the employer has both pension and 401K, I am guessing they donât match employeeâs 401K contributions?
Mine did, to a point. I think up to 6%?
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My previous employer did.
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Nope - not here for H and I.
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