<p>“No pension are guaranteed”
…but that’s the entire idea of having a pension! You make a contractual agreement between you and your employer with the understanding that when you retire, you will be guaranteed compensation in the amount that you agreed upon many many many years prior. </p>
<p>I’d like to see harsh criminal action against these CEOs for stealing the livelihoods of their employees. But instead they get millions upon millions of bucks upon their exit.</p>
<p>Immoral</p>
<p>Jsmathwiz, it is immoral. It is disgusting.</p>
<p>sryrstress - “S1 and S2 will get to retire at approx 52 with 80% of last year’s salary…for life.”</p>
<p>Can I ask, are these public safety positions (Police or Fire)? That’s a very generous payout from even a government pension. Public safety positions many times have accelerated benefits that exceed those offered to non-public safety personnel.</p>
<br>
<br>
<p>Your perspective is from a high-cost-of-living area.</p>
<p>[A</a> Cost of Living in Costa Rica from $1,200 a Month.](<a href=“http://internationalliving.com/2010/11/cost-of-living-in-costa-rica-from-1200-a-month/]A”>http://internationalliving.com/2010/11/cost-of-living-in-costa-rica-from-1200-a-month/)</p>
<br>
<br>
<p>I don’t have a problem with that - it would go to our heirs. Some would consider that a benefit.</p>
<p>dstark -“I see in the future people with assets of 2 million who are going to outlive their money, and there aren’t that many people with assets over 2 million.”</p>
<p>IMO - if people are outliving $2,000,000 it’s a spending problem. Not sure I feel bad for them.</p>
<p>Plenty of studies have established a 4% withdrawal rate (indexed for inflation) as safe. Heck, if you are a worry wart, grab 3.5% per year. Back tested, these withdrawal rates will last in perpetuity</p>
<p>If someone takes out 3.5% per year from $2,000,000 + Social Security, their probably looking at $90,000 annually. If your spend rate is larger than that, that’s a spending problem.</p>
<p>I was pretty vague in my post.</p>
<p>I said the future…</p>
<p>People retiring in 10 years with 2 million and then living another 30…well some of them are going to have problems…not everyone…</p>
<p>Spending of $80,000 ten years out is equivalent to spending $60,000 today if inflation averages 3 percent a year compounded annually during those ten years…</p>
<p>A net worth of 2 million 10 years from now is equivalent to 1.5 million
today.</p>
<p>Most parents on this board are in their 40’s and 50’s. </p>
<p>I don’t think spending $60,000 a year these days is extravagant living in
most parts of the US.</p>
<p>You have people on this board complaining that living on $250,000 is tough ( ok…college isn’t cheap). </p>
<p>[Will</a> the 4 percent rule of thumb leave retirees empty handed? | OregonLive.com](<a href=“http://www.oregonlive.com/finance/index.ssf/2013/02/will_the_4_rule_of_thumb_leave.html]Will”>Will the 4 percent rule of thumb leave retirees empty handed? - oregonlive.com)</p>
<p>“No pensions are guaranteed”
…but that’s the entire idea of having a pension! You make a contractual agreement between you and your employer with the understanding that when you retire, you will be guaranteed compensation in the amount that you agreed upon many many many years prior.</p>
<p>I’d like to see harsh criminal action against these CEOs for stealing the livelihoods of their employees. But instead they get millions upon millions of bucks upon their exit.</p>
<p>Immoral"</p>
<p>I agree. But after seeing what has happened to so many pensions, I have no trust that no matter how secure something looks now, it can disappear in a flash in the future. That includes social security, I don’t count on it being there, but I hope that we can sustain it. The pension that was an absolute, no matter what it says in your contract, or how you bargained for it, just can’t be depended upon. That is sad, unsettling, and potentially criminal mismanagement…but it’s a fact that people have to come to grips with. You can’t stop saving because you’re counting on your pension and social security.</p>
<p>^^ I have to agree with the above. 2 million is not a lot to live on over the next 30 years. This was driven home to me when I looked at my father’s receipts from bills he had paid over the years (he had records for more than 60 years). Its astonishing to compare the cost of living over that time period. An example: my father had surgery in 1953 and was in the hospital for a week. The total cost was roughly $150. There is no guarantee that inflation isn’t going to be much higher than today. Also must people do not want to sit in a rocking chair on a porch for the rest of their lives.</p>
<p>Doct, that is what I see.</p>
<p>I look at what my parents spend. What my inlaws spend. </p>
<p>And most people aren’t going to have 2 million in assets. They are going to have substantially less…most people don’t have 1 million in assets…</p>
<p>I don’t mean to paint such a gloomy picture. </p>
<p>Life is good…</p>
<p>Even with inflation two million would would be plenty to live on as long as you’re not living in say new York or DC type places.</p>
<p>If my house was paid off I could easily make ends meet on like twenty( thirty with inflation) thousand or so a year… My largest bill is my mortgage.</p>
<p>24 years to go… Lol</p>
<p>I also technically could retire from my current job in 16 years with benefits (this of course could change). That obviously probably wouldn’t be the greatest idea to do under the age of fifty. ;)</p>
<p>My set up is similar to the IBM one that tom described. We had a cash benefit pension. It’s now froze and they put more into our 401k. This worked out well for me as I’m young but not so much for the older folks. the money put in the pension was a percent of your salary based on your age. I was always in the lowest age bracket. I’m at fifteen percent combined onto the 401k right now.</p>
<p>We have a calculator that tells us what the pension would grow to as of certain dates. It gives you the figures in monthly or lump sum. I always wondered with something like that if it’s better to take the lump sum and just spend the interest or if it’s better to take the monthly payments?</p>
<p>Say you get 250k as a lump sum or 250 a month… (making up numbers)… Wouldn’t it be best to take the lump sum? Or are these things taxed differently?</p>
<p>Sent from my DROID BIONIC using CC</p>
<p>Well fendergirl, I would be more confident about what you wrote if you didn’t ask that last question. Lol
I am teasing you.</p>
<p>You are better off taking the lump sum using your numbers.
You can make more than 250 a month investing the after tax lump sum payment than you can receiving a 250 a month pension.</p>
<p>Also it will take 45 to 60 years or so for the 250 a month to equal the after tax lump payment if you put the lump sum payment in your mattress.</p>
<p>We just filed our last FAFSA and CSS profile!!! One more year of schooling to pay. Mortgage at 3% and will be paid off fairly soon. </p>
<p>It will be all about retirement from there on. </p>
<p>
</p>
<p>Are you counting the new born here? What is the % of those over 50 who does not have 1 million in assets today, aided by the uprising stock market?</p>
<p>[Wealth</a> in America: 1.8 million Americans top $2M - Mar. 2, 2012](<a href=“http://money.cnn.com/2012/03/02/news/economy/wealth_in_America/index.htm]Wealth”>Wealth in America: 1.8 million Americans top $2M - Mar. 2, 2012)</p>
<p>There are more households with a net worth of 2 million today. And there are people that lie so the net worth numbers are probably a little low…</p>
<p>But still… Not many is the answer.</p>
<p>I think there are about 9 million households with a net worth of 1 million but you can look that up…</p>
<p>BTW, how do you check if your employer is fully funding the pensions? </p>
<p>I am only eligible for “cash” carrying pension - they say they put a percentage of the yearly salary, excluding bonus, in a treasure bond. They also match 5% of salary into our 401K, which we could see the amount in the “statement”.</p>
<p>If this is a publicly traded company, read the 10k.</p>
<p>Or just call the department that handles retirement.</p>
<p>Also… To save time google your company’s name and pension funding… See if anything comes up.</p>
<p>Also depends on whether the net worth of $2m is something you can or want to cash out. At today’s area prices I have a good chunk of my net worth in farmground. I don’t want nor plan to sell it. It will generate cash flow, but I want to leave the asset to my children. I know that’s a choice :)</p>
<p>
For DW’s tiny little $324 pension, the company’s computed lump sum value is around $55K, which assuming a 20 year life expectancy when she hits 65 (I don’t know what they actually use), works out to a return of around 3.7% or so. If rates go up, the lump would go down… I can’t see rates going any lower.</p>
<p>The two big questions when taking a lump sum are:</p>
<ul>
<li>can I earn more than the implied interest rate?</li>
<li>what do I do if I live longer than the assumed life expectancy?</li>
</ul>
<p>There are other questions I don’t know the answer to, like “could a nursing home get that asset” or “would medicaid require I spend the entire lump to qualify, even if my spouse was dependent on it to live”, etc.</p>
<p>“Even with inflation two million would would be plenty to live on as long as you’re not living in say new York or DC type places.”</p>
<p>The pertinent phrase in here is “would be plenty to live on”. You can live on very little. The question is do you want to enjoy your retirement or are you going to just get by. What’s the point of retiring if it is to just get by?</p>
<br>
<br>
<p>You should get an annual report or a pointer to the annual report. HPQ used to mail me the report every year. Then they set me up with a Fidelity account which has all of my pension information in it including annual reports.</p>
<p>As far as people with $2M goes - the number would probably be a lot higher if you added in the lump-sum values of pensions.</p>