Pensions and retirement

[jinkies]

I am not a financial expert, but yes I would count on the pension.

How far off from retirement are you?

[dcn]

H’s will be military - yes we count it.

[pierogigirl]

We count ours.

[Roc A Bee]

Yes I count mine! I contribute 7% a month, so I can’t just ignore that. If I retire at 59, I’ll get nearly 80% of my compensation.

[ohgillian]

Nov 26, 2023 16:37:11 GMT -5 quesyrah said:

Do you consider a pension in your retirement savings?

DH has a pension that he is fully vested in. According to the way the company calculates your retirement, he will get $4,100 a month from the pension.

He’s currently putting 5% to his 401K (just enough to get the 100% match) and we’ve been wanting to increase, but I’m wondering if it’s advisable to save without considering the pension or if it’s okay to assume we can rely on the pension.

I don’t want to name the company but it’s very stable, and I don’t really see a scenario where this pension does not actually pay out, but I want to be realistic.

I’ve heard horror stories from cities that have gone bankrupt and friends have said you never count on a pension because it may not be there when you retire.

I have a pension and I include it in my retirement planning. I have done enough research into its financial picture to feel confident. It's also a state pension plan, and the power of taxation plus the broad base of being statewide gives it a bit more security IMO. 

For any pension plan, it's a good idea to understand the extent to which its liabilities are funded. And just its overall financial picture. I don't personally have a WSJ subscription but if anyone here does maybe they can share a gift link of this article, which looks promising:

www.wsj.com/articles/where-to-check-up-on-the-health-of-your-pension-plan-11591278517

[Susie]

We definitely count H's (state government retirement system).

[flygirl]

I’d count a funded pension plan more than social security at this point 😯

[bee20]

At my peak I had 3 pensions, 2 of them have now closed and sent me a check for the calculated value. One is still remaining and I'm considering cashing it out just so I get it growing.

If I had just one employer and it was at $4100/mo though, yes, I would factor that in. My retirement has a few numbers: absolute basics (roof, food, car), then current lifestyle (some travel and splurges) then a luxe retirement (if everything goes well...this would include more and higher end travel, more home services and eating out). I'd want some plausible way to cover the basics if any one thing (Pension, social security, savings) faltered but I wouldn't not count it at all.

[ohgillian]

Nov 27, 2023 10:49:53 GMT -5 flygirl said:

I’d count a funded pension plan more than social security at this point 😯

Same. We have Social Security plugged in at 50% of what SSA estimates for us, but I have put full pensions plugged into our estimates.

[quesyrah]

Nov 26, 2023 16:59:06 GMT -5 jinkies said:

I am not a financial expert, but yes I would count on the pension.

How far off from retirement are you?

I honestly don’t know. He is currently 47 and can retire at 65, but he doesn’t think he’ll be ready yet so we’re thinking closer to 70.

[quesyrah]

Nov 27, 2023 11:35:01 GMT -5 ohgillian said:

Nov 27, 2023 10:49:53 GMT -5 flygirl said:

I’d count a funded pension plan more than social security at this point 😯

Same. We have Social Security plugged in at 50% of what SSA estimates for us, but I have put full pensions plugged into our estimates.

I honestly haven’t even thought about SS. How do you find out what they estimate for you?

[simpsongal]

Yes you should count it. I think someone mentioned here or a financial expert but you can get a rough estimate of your pension's value relative to typical retirement savings goal by calculating the annual payout by 25. So if you'll get $60K/yr in pension, that's worth the equivalent of about $1.5M in 401K. Just a rough idea of pension value (which can be huge). Lots of factors to consider there, e.g., whether it adjusts for inflation.

Private sector pensions are regulated by the federal government and insured up to a limit (also set by the federal government). Historically, Congress has been very generous about restoring and stabilizing pensions (esp in certain sectors like the auto industry....not airlines though).

ETA: I'm not sure of how much social security DH and I will collect, but I tend to consider that gravy...and largely designed to offset medical costs including medicare (which is much more expensive than I realized....).

[quesyrah]

Nov 27, 2023 10:58:45 GMT -5 bee20 said:

At my peak I had 3 pensions, 2 of them have now closed and sent me a check for the calculated value. One is still remaining and I'm considering cashing it out just so I get it growing.

If I had just one employer and it was at $4100/mo though, yes, I would factor that in. My retirement has a few numbers: absolute basics (roof, food, car), then current lifestyle (some travel and splurges) then a luxe retirement (if everything goes well...this would include more and higher end travel, more home services and eating out). I'd want some plausible way to cover the basics if any one thing (Pension, social security, savings) faltered but I wouldn't not count it at all.

He’s been with his company 20 years and plans to stay until retirement (unless of course he loses his job, knock on wood).

Our mortgage will be paid off by then, so the pension alone would be enough for us.

[quesyrah]

One of my biggest fears with retirement is that I had to move my parents to memory care (on an emergency basis) and I want to make sure that if DH or I or both of us need to be moved to assisted living or memory care that it’s easy and not stressful for my
Kids.

My parents were very comfortable and I sold their house which covered their care. Our kids will be able to sell our house so I should probably not worry about how they’ll pay for our care, but I can’t help having that in the back of my mind.

[ohgillian]

Nov 27, 2023 12:16:19 GMT -5 quesyrah said:

Nov 27, 2023 11:35:01 GMT -5 ohgillian said:

Same. We have Social Security plugged in at 50% of what SSA estimates for us, but I have put full pensions plugged into our estimates.

I honestly haven’t even thought about SS. How do you find out what they estimate for you?

You can create an account on ssa.gov and it will show you estimates for retiring at any age, in addition to the default estimates that it shows for early retirement, full benefits, retirement, and delayed retirement.

[mich1]

Your husband will receive this pension at retirement and this is anticipated him working as long as he thinks he's going to work. If your husband became disabled, or died, what happens with the pension with regards to you and your family?

You need to look at it from both ends. Both what happens with the company, and what happens if something happens to your DH? Do you receive survivor benefits?

My experience with pensions was that I was vested after 10 years, at 14 years my job moved to another system. Unfortunately, there was a hiring freeze on and I had to either leave my job or try to hang around for the last 6 years where I'd get the full bump. I moved with my job, as I needed the income and due to the hiring freeze, couldn't expect to be employed within the system for at least 6 months (maybe longer). It worked out for me, but crap happens not always within your control.

[quesyrah]

Nov 27, 2023 15:51:20 GMT -5 mich1 said:

Your husband will receive this pension at retirement and this is anticipated him working as long as he thinks he's going to work. If your husband became disabled, or died, what happens with the pension with regards to you and your family?

You need to look at it from both ends. Both what happens with the company, and what happens if something happens to your DH? Do you receive survivor benefits?

My experience with pensions was that I was vested after 10 years, at 14 years my job moved to another system. Unfortunately, there was a hiring freeze on and I had to either leave my job or try to hang around for the last 6 years where I'd get the full bump. I moved with my job, as I needed the income and due to the hiring freeze, couldn't expect to be employed within the system for at least 6 months (maybe longer). It worked out for me, but crap happens not always within your control.

I get 50% of his payment. If I die, I think the kids (our beneficiaries) would get nothing but not totally sure.

That is a really good point. We need to make sure that I’m still covered if we lose the pension.

[mich1]

Nov 27, 2023 19:12:13 GMT -5 quesyrah said:

Nov 27, 2023 15:51:20 GMT -5 mich1 said:

Your husband will receive this pension at retirement and this is anticipated him working as long as he thinks he's going to work. If your husband became disabled, or died, what happens with the pension with regards to you and your family?

You need to look at it from both ends. Both what happens with the company, and what happens if something happens to your DH? Do you receive survivor benefits?

My experience with pensions was that I was vested after 10 years, at 14 years my job moved to another system. Unfortunately, there was a hiring freeze on and I had to either leave my job or try to hang around for the last 6 years where I'd get the full bump. I moved with my job, as I needed the income and due to the hiring freeze, couldn't expect to be employed within the system for at least 6 months (maybe longer). It worked out for me, but crap happens not always within your control.

I get 50% of his payment. If I die, I think the kids (our beneficiaries) would get nothing but not totally sure.

That is a really good point. We need to make sure that I’m still covered if we lose the pension.

$4100 is a good pension if you add SS and other investments into the mix to supplement.  $2000 less so, even if you can draw off his SS record, because your expenses as a single parent are not going to halve.  Granted, the kids would get survivor benefits but once they turn 18, those will stop.  TBH, I think you might need to up the 401K savings too.  Make sure he has a good disability policy too.

[quesyrah]

Nov 27, 2023 20:17:56 GMT -5 mich1 said:

Nov 27, 2023 19:12:13 GMT -5 quesyrah said:

I get 50% of his payment. If I die, I think the kids (our beneficiaries) would get nothing but not totally sure.

That is a really good point. We need to make sure that I’m still covered if we lose the pension.

$4100 is a good pension if you add SS and other investments into the mix to supplement.  $2000 less so, even if you can draw off his SS record, because your expenses as a single parent are not going to halve.  Granted, the kids would get survivor benefits but once they turn 18, those will stop.  TBH, I think you might need to up the 401K savings too.  Make sure he has a good disability policy too.

I wouldn’t still be supporting kids when we’re retired though. I do agree we need to up the 401K, but at 65, our kids will be in their 30s. So even if he dies shortly after retirement I’ll only be supporting myself. And I’ll have his life insurance benefits too to live off of. I also have an IRA which I didn’t think to mention.

Or do I have that all wrong?

[sadlebred]

quesyrah You need to find out what happens to his pension if he passes. It might be more money that you would have.

[mich1]

Nov 27, 2023 21:15:13 GMT -5 quesyrah said:

Nov 27, 2023 20:17:56 GMT -5 mich1 said:

$4100 is a good pension if you add SS and other investments into the mix to supplement.  $2000 less so, even if you can draw off his SS record, because your expenses as a single parent are not going to halve.  Granted, the kids would get survivor benefits but once they turn 18, those will stop.  TBH, I think you might need to up the 401K savings too.  Make sure he has a good disability policy too.

I wouldn’t still be supporting kids when we’re retired though. I do agree we need to up the 401K, but at 65, our kids will be in their 30s. So even if he dies shortly after retirement I’ll only be supporting myself. And I’ll have his life insurance benefits too to live off of. I also have an IRA which I didn’t think to mention.

Or do I have that all wrong?

Women are more likely to outlive men.  If something happens to him at retirement, you’ll have half his pension and the larger of your and your husband’s SS.  Plus, there will only be one SS coming in, so your income could halve.  This is why you need to bulk up in other areas, because one person does not live on half the income of 2.  

[quesyrah]

Nov 27, 2023 23:37:00 GMT -5 mich1 said:

Nov 27, 2023 21:15:13 GMT -5 quesyrah said:

I wouldn’t still be supporting kids when we’re retired though. I do agree we need to up the 401K, but at 65, our kids will be in their 30s. So even if he dies shortly after retirement I’ll only be supporting myself. And I’ll have his life insurance benefits too to live off of. I also have an IRA which I didn’t think to mention.

Or do I have that all wrong?

Women are more likely to outlive men.  If something happens to him at retirement, you’ll have half his pension and the larger of your and your husband’s SS.  Plus, there will only be one SS coming in, so your income could halve.  This is why you need to bulk up in other areas, because one person does not live on half the income of 2.  

Okay I see.

So if he dies, I’ll have my IRA, his 401K(currently has about $105,000 in it so definitely to bring that up), 1/2 his pension and life insurance. We currently each have $500K but we’re planning to decrease that as we age and no longer have a mortgage (have $75K to go) and kids we’re supporting. But maybe we should leave it how it is so I know I have enough to live on.

I am also planning to go back to work once my younger graduates HS so I can contribute more to my IRA or a 401K as well. I figure at that point I have another probably 15-20 years I can work.

So hopefully we’ll be okay in retirement, especially since we won’t have a mortgage.

[mae0111]

I have a very small pension from a former employer. They stopped contributing to the pension after I'd worked there for a few years and shifted to a 401K. But we were able to keep the small pensions and it is guaranteed to grow at a rate of 5% or 90-day t-bill plus 0.5%. Because of the guaranteed rate of growth, I've opted not to take the lump sum at this point and just let it grow until retirement.

Upon retirement, I'll likely take the lump sum. There really won't be enough in there to make a difference on a monthly basis, so I'll probably just want control of the money. I don't know if that's an option with other pensions, or if it even makes sense for most people. But the cash value upon retirement will probably only be about $150K (assuming that 5% growth and no more, but next year it will shift to around 5.5% I think), so it's not worth the monthly stipend I'd receive.

[sadlebred]

My company currently has a pension, and I have about 8 years in it. At this point it won't be much, but it will help.

[suzubell]

Nov 26, 2023 23:55:06 GMT -5 Roc A Bee said:

Yes I count mine! I contribute 7% a month, so I can’t just ignore that. If I retire at 59, I’ll get nearly 80% of my compensation.

Same for me. It is the majority of my personal retirement planning. H saves separately and I put a few hundred in a 403b, but my pension is the bulk of my plan.

[lolalolalola]

I have never been lucky enough to have a DB pension. But yes I would rely on it. In Canada there is legislation requiring these pensions be funded adequately. Does this not exist in the US?

[sadlebred]

Dec 3, 2023 18:21:35 GMT -5 lolalolalola said:

I have never been lucky enough to have a DB pension. But yes I would rely on it. In Canada there is legislation requiring these pensions be funded adequately. Does this not exist in the US?

Sort of. If a private company declares bankruptcy the Pension Benefit Guaranty Corporation (US Gov.) will often take it over.

www.pbgc.gov/about