Pensions - How do you treat yours?

[Deleted]

"Consider your pension as icing on the cake in retirement." This seems to be the general MM point of view since most thinks it's not guaranteed. It sounds good but sometimes I feel frustrated with it. Why?

1. One of the reasons I'm hanging on to my job is because of it's pension. I could easily earn 20% more somewhere, but I like the idea of having a pension.

2. We save 22-25% (including employer matches) of our gross to retirement. Sometimes, I just want to spend more and decrease our retirement savings since we both have pensions.

Last time I reviewed the end of year statements H receives, it stated that his pension is worth $1.5M if he retires at 65. Not really sure what that means. But based on the pension calculators of both our employers, we would be looking at receiving ~$75k/yr (in today's dollar) total from our pensions if we retire when I turn 55.

I believe $75k/yr retirement income sounds awesome and enough to provide us a very comfortable lifestyle. With no more kids to support, no house payment, no more saving for retirement, etc, I think that amount will go pretty far.

LOL. Yes, I sometimes have the desire to lower our retirement savings rate and have a more cushiony budget. With 2 kids in daycare starting in fall, our current budget will get tighter. I think we'll be fine, but sometimes I just want to spend more now. LOL. Yeah, definitely not MM.

So, how do you treat your pension? Do you believe your pension will be there? Is there no such thing as a guaranteed pension?

ETA: The 22-25% we save is outside our pension plans.

[nevermind]

Well, as someone that has started jobs with pensions twice and had them phased out both times, I'm going to say that I consider pension money to be basically fictitious.

[Deleted]

I count mine and DH's. I believe both will be there when we need them. We contribute a significant portion (as does our employer) and both are healthy funds right now. Mine is with the federal government - if it goes under, I think the apocalypse has come and I won't need a pension. DH's is with the provincial teacher's association.

There is just no way I can pretend it won't happen and save that much. We're both vested; if I quit today I could pull a COL-adjust sum equal to 10% of my best 5 years salary when I retire (not sure if it's 55 or 60 or 65, but it's there and increases at 2% per year of service).

There are no guarantees in life, but at some point you decide what odds you'll play. I'm playing the odds that my pension is pretty f-ing bulletproof.

[cookies]

My pension went away as of 12/31/2012, as did my dreams of early retirement. Sigh. I'll still get a pension, but it might only be enough to cover groceries. So, that makes me team icing.

Maybe you can temporarily decrease your retirement by a few percentage points to get closer to 20% in contributions. I know it's not a ton extra in your pockets, but it may give you a little extra breathing room.

[puppyluv]

I am not counting on my pension because I don't plan on staying long enough to collect a decent sum Not to mention is has been underfunded for a number of years and there has been so much talk of pension reform in my state that I just don't believe it will be there beyond another 10 years.

However, mine also has a dollar value of the amount we put in (automatic 8%) plus interest. When I leave I get the balance in my account plus a full match on it. I am counting that amount in my retirement plans.

[Deleted]

Jan 7, 2013 9:46:12 GMT -5 cookies said:

My pension went away as of 12/31/2012, as did my dreams of early retirement. Sigh. I'll still get a pension, but it might only be enough to cover groceries. So, that makes me team icing.

Maybe you can temporarily decrease your retirement by a few percentage points to get closer to 20% in contributions. I know it's not a ton extra in your pockets, but it may give you a little extra breathing room.

I'm so sorry to hear about your pension. Can you share what industry you work in?

This year, we're actually cutting down on retirement contribution since I'll be on 4mos (mostly unpaid) maternity leave then plan on going back to work part time. In previous years, we target maxing both 401k (1 roth and 1 pretax), both IRA, plus X amount above that. This year we'll just focus on 401k and IRA.

[cookies]

I work in tv/media.

Thanks for your sympathy On the bright side, they did increase our 401k match by 4% to offset the cut of our pension. It's not going to help me retire any earlier, but I shouldn't have to eat cat food in retirement so that's good.

Sounds like you guys are doing really well with contributions!

[ladybrettashley]

DH contributes to a pension. He is required to contribute 10%, but he won't be vested until he is at his job for 10 years, and he doesn't plan on being there that long. So we only count on having the amount he contributes plus the guaranteed interest (something like 6% annually). We'll roll that into his IRA when he leaves. Even if he were vested, I think we would only consider his contributions to be "guaranteed."

[madringal]

DH and I both have pensions (banking and automotive industries). Neither of us count on it being there when we retire. But we also both have the option of taking what it has accumulated in a lump sum when/if we leave our companies. We can roll them over just like our 401ks.

[pamela]

We don't really count pensions. It makes me feel better about getting a late start and not being up to 15% (not counting match) yet because it is there, but it could disappear. I'm really suprised it hasn't already. But I work for a company with a really disparate work force (no mid-30's to early 40's) so I'm sure they are scared to get rid of it until the olds retire for fear of revolt or massive resignations.

[sillygoosegirl]

My pension, through my first job out of college, where I worked for 3 years, is supposed to be worth somewhere around $50/month when I retire. I don't count it in my calculations, mostly because it is such a small amount. I'm pretty confident about it being there, for what it's worth; I'm pretty sure it's insured through the federal government. I wish I could roll it over and combine it into my other accounts so I'd have one less thing to keep track of... For some reason, even though it has a cash value, it's not the kind of cash value you can rollover.

[galaxy8227]

DH has one and it will be nice if he receives it but we don't count on it. We make sure to save in other ways for retirement and if the pension is there we'll eat out and travel more in our old age

[marie427]

H and I both contribute to our state pension fund. We are counting on it but still contribute to other retirement accounts since we don't want to put all our eggs in one basket, so to speak.

Frankly, if New York State ever pulled the rug from under current workers who have been contributing to pensions for years already, like the pp said, apocalyptic events would happen here and the state would burn down in flames. And I'd be right there with a pitchfork in hand because this is deferred compensation and I could be working elsewhere for a better salary with no pension, but the pension is a great perk. As it is, they've made many reforms for newer employees and will even make further reforms for employees down the road...but for those of us who have been contributing for a long time, I feel things are pretty secure.

Now go ahead and flame me, MM. LOL.

[gibbinator]

We count dh's. He's in a very secure government job, belongs to one of the most powerful unions, and has seniority. Basically 1/2 the teachers in the school board would have to be cut before his job was on the line. Even if he lost his position at his school he'd be transferred to another school within the board. The government would basically have to collapse for him to lose the pension, in which case everyone is screwed anyway.

[flygirl22]

I count my vested pension in part of my retirement planning. If they were ever to cancel our pension, it would be for pension not already accrued and vested. At that point I would increase my retirement contributions as I see fit.

FWIW, I still contribute 15% to retirement, I would likely contribute more if there was a no pension at play.\

*ETA: I also don't understand why some don't "count" employer match as part of the percentage for retirement planning. Assuming it is vested, it's just like you made the contributions on your own. (Brought to you by a lot of advise on MM saying: "Contribute at least 15% to retirement before employer match")

[Deleted]

We both have one. I consider it, but also save outside of it. They are both "guaranteed" but you never know.

[delawarejen]

If nothing changes (a big if), and I retire at 65-ish, I will have one for $40/month from an old job and one for roughly a little over half of my ending salary at my current job (a private employer, not government). I would love to be able to count on those, just like I'd also like to count on Social Security, but who knows? My biggest financial fear is not having enough money in retirement so I also max out my retirement accounts (where I'm counting on the stock market - so I'm just gambling all over the place!). I still feel like those 3 things aren't enough and I should be burying money in coffee cans in the yard, but I'm a worrywart anyway.

[starlily]

I do count my pension as part of retirement planning. There are some guarantees in place regarding my contributions. I plan to retire once I hit 75% of my salary per the formula, so at 58 or so.

[froggy76]

IMO, there are 2 ways to think of your pension:
1) What you have earned so far that is vested
2) What you are expected to earn for the remainder of your career

#1 is yours and I think it makes sense to count it. #2 is not guaranteed. Your employer could freeze, terminate, or otherwise modify the pension plan. You could also leave your job (willingly or unwillingly) and never accrue another dime.

[Deleted]

Jan 7, 2013 10:14:58 GMT -5 RockNVoll said:

That sounds like a pretty sweet pension, d0ri! DH miraculously lucked into a job with a pension but for all the reasons stated here we only consider it a bonus and not a big part of our retirement planning. It sounds like you guys are doing a great job of saving and only you can say whether you can be a little looser with it. I do think it's important to balance enjoying today with planning for tomorrow, but obviously none of us knows how secure your pension is.

Yeah, I think it's pretty sweet. That's why although I'm sometimes tempted to jump ship and get a higher salary somewhere else, I always end up not even applying. The other factor is actually the health insurance; I can retire at 55 and continue to pay the employee premium.

I just realized the percentage for my pension calculation is 1.4%! Yaay! So, higher than my original calculation. I thought it's 1.2% but that's actually for new employees.

How secure are our pensions? Mine is mostly funded by the federal govt. It was 117% funded in 2008 but dropped to 98% (I think) later that year. Since then, they have started contributing to it.

H's pension? Not sure. He's in the banking/finance industry.

[Deleted]

Jan 7, 2013 11:24:07 GMT -5 @bluesky said:

I think it's sad we can't count on pensions. My husband's is high. It's around $3k per month after retirement. However we don't know how to consider this when retirement planning. His employer phased out the retirement years ago, but my husband still gets what he earned. He didn't contribute a penny so I don't know how "secure" it can be. He's called HR and thy don't really know much about it. Scary.

I've been at my workplace for 6 years and my pension yields about $40 a month. Ha!

Hope your H's will still be there when he retires.

Jan 7, 2013 11:48:50 GMT -5 delawarejen said:

If nothing changes (a big if), and I retire at 65-ish, I will have one for $40/month from an old job and one for roughly a little over half of my ending salary at my current job (a private employer, not government). I would love to be able to count on those, just like I'd also like to count on Social Security, but who knows? My biggest financial fear is not having enough money in retirement so I also max out my retirement accounts (where I'm counting on the stock market - so I'm just gambling all over the place!). I still feel like those 3 things aren't enough and I should be burying money in coffee cans in the yard, but I'm a worrywart anyway.

I understand. I want to spend more and decrease our other savings, but I bet I won't. LOL.

Jan 7, 2013 11:54:54 GMT -5 starlily said:

I do count my pension as part of retirement planning. There are some guarantees in place regarding my contributions. I plan to retire once I hit 75% of my salary per the formula, so at 58 or so.

75% sounds awesome!

Jan 7, 2013 12:33:36 GMT -5 froggy76 said:

IMO, there are 2 ways to think of your pension:
1) What you have earned so far that is vested
2) What you are expected to earn for the remainder of your career

#1 is yours and I think it makes sense to count it. #2 is not guaranteed. Your employer could freeze, terminate, or otherwise modify the pension plan. You could also leave your job (willingly or unwillingly) and never accrue another dime.

I have no idea how to calculate or put a value on #1 and #2.

[rosiedozie]

I honestly pretend like it doesn't exist - I hope it will be there when I retire but I'm very early in my career so who knows how long I will be here.

[aurora]

I think mine is pretty safe, realistically, but I also realize that there are a lot of scenarios by which I could receive reduced or no benefits since I'm not going to retire for decades. So, I compromise by only putting 12% to retirement accounts instead of the 15-20% I would ideally save without a pension.

[heckler]

I count on what we currently have invested. As in, my husband has a percentage he could take with him if he leaves the company just like a 401k. Mine is a state pension to which I contribute and I am grandfathered in as well. We are pretty solid that we'll have the money at retirement but will also likely start other retirement accounts as well. Maybe not MM but I don't think you can plan for everything and I'm not just considering them icing. A pension is one of the main reasons we have the jobs we do.

[imojoebunny]

Those numbers usually mean that if you work for and retire from that company, that is what you will get. I have a small pension from one company I worked for. If DH continues to work for his company, he will have a nice pension, including health insurance, which would be awesome, since I am 7 years younger than he is, if everything remains the same. Alas, that is unlikely, so we save and save.

The other part is that some pensions only pay if your alive. I know one women whose husband had an amazing pension. Unfortunately, he died 3 years after he retired at 64, the pension only paid as long as he was alive. It was painful to her retirement. Not devastating, but painful compared to the money they would have gotten if he had lived.

[kershnic]

To say I have a retirement plan would be somewhat untrue. But I generally do believe that the vested portion of my pension will be there. It's not a lot, but it's something. I wouldn't count anything not yet vested. New employees are not eligible for it, and they have decreased the rate at which it accrues, but they always seem to grandfather in what has been vested in the past.

[mollybrown]

We ignore them. DH is supposedly vested after 3 or 4 years, but I don't even know how much he would receive. We know that he is not staying with his company for more than a few more years.

I had a pension at my job (mostly employee funded), and chose to roll the balance to my IRA when I left. I know my 401k will be there for me when I retire...I didn't want to take a chance on a pension at a place that I don't work anymore.

[Roc A Bee]

I have a pension. It am part of one of the largest public pension funds--CalPERS, and I make a mandatory contribution of 7% monthly. It has been drilled into my head not to count it, but that is a big chuck of change to ignore. I also save 10% to a 403b, and I am starting a Roth this year. I hope to save 15% towards retirement, not counting my pension.

[mlvmd]

H and I both have pensions. Mine is small so I also contribute the IRS max to my 401k-equivalent. H's is quite large and dependable so we do factor it into his side of the retirement contributions. I read all of the rules regarding his so I could be more comfortable. He is vested and would definitely benefit from working his whole career at this employer however he can still get a good portion if he leaves. It is a formula of time at job, high three salary, times a percentage. Similar to fed but better percentage.

[gt7301b]

We both have pensions. Right now we can afford to save on top of our pensions, if that ever changed I would feel comfortable counting on one of them.