Your post made no sense to me.

1/18/2007 4:56:32 PM

That's because it was nonsensical.

1/18/2007 5:00:22 PM

Ok, just checking to make sure it wasn't me.

1/18/2007 5:11:06 PM

^
Drink a couple beers, reread it, and it will be crystal clear ... (er, maybe)

I know most folks have 401ks, but anybody with a 403b or a 457b? Any ideas on whether they should be managed any differently?

1/18/2007 5:46:39 PM

Alcohol, the cause and solution to all of life's problems.

1/18/2007 5:49:23 PM

What do you have against pensions?

1/18/2007 8:10:22 PM

1. I can take the money I would have put towards a pension and invest it myself and make more money.

2. I can take my 401K money with me whenever I switch companies unlike a pension.

3. If the company you work for goes bankrupt you could lose your pension, but I won't lose my 401K.

1/18/2007 9:56:33 PM

Quote :

"1. I can take the money I would have put towards a pension and invest it myself and make more money."

Maybe, maybe not. What if you live a long time? What if a major negative economic event happens? What if you retire in a major recession? I think you are mistaking the recent success of the market with your investing skills. You may think you know a lot about investing, but I guarantee you a pension fund manager managing billions of dollars knows more than you.

Quote :

"2. I can take my 401K money with me whenever I switch companies unlike a pension."

I don't know about all pensions, but I can take my pension contributions with me if I leave. Also, my contribution is only 6%, so I can still invest a lot in a Roth or 401k. It's a small price to pay for such insurance.

Quote :

"3. If the company you work for goes bankrupt you could lose your pension, but I won't lose my 401K."

If the state of NC goes out of business, I doubt your 401k would be worth much. Also, pensions are protected by Uncle Sam, so you wouldn't lose your pension.


Basically, in my situation, I'll be able to retire at 51 and get 55% of my final salary + insurance for the rest of my life.

[Edited on January 18, 2007 at 10:16 PM. Reason : ?]

1/18/2007 10:15:07 PM

Quote :

"If the state of NC goes out of business, I doubt your 401k would be worth much. "

What?

Quote :

"Also, pensions are protected by Uncle Sam, so you wouldn't lose your pension."

Ahahahaha. So naive. My gf's dad works for Delta and even though he still has a pension It's been cut quite a bit.

[Edited on January 18, 2007 at 10:19 PM. Reason : ]

1/18/2007 10:17:55 PM

I'm a state employee.

Quote :

"Ahahahaha. So naive. My gf's dad works for Delta and even though he still has a pension It's been cut quite a bit. "

yea, but those pilots are still getting ~$60k/yr from their pensions, cry me a f'ing river. I'm not saying that if your company goes under that you would have no ill effects, but you certainly wouldn't be out on your ass.

[Edited on January 18, 2007 at 10:22 PM. Reason : ?]

1/18/2007 10:21:49 PM

You still didn't explain: "If the state of NC goes out of business, I doubt your 401k would be worth much."

1/18/2007 10:23:09 PM

Ah, if something dragged the state down, it would probably drag industry down too.

1/18/2007 10:25:39 PM

Oh ok, so I'm guessing that goes back to the whole "I work for the state" comment you mentioned later. Well, its a little less cushy/reliable if you don't work for the state.

Let's talk about social security. It will keep paying you until you die no matter how bad a year the market has. Do you like that too?

1/18/2007 10:29:01 PM

Quote :

"Let's talk about social security. It will keep paying you until you die no matter how bad a year the market has. Do you like that too?"

Yes, it provides an important safety net. It's going to be really important for all the people who don't have pensions that either under funded their 401k's or their 401k's performed poorly.

1/18/2007 10:35:32 PM

Quote :

"It's going to be really important for all the people who don't have pensions that either under funded their 401k's"

fuck 'em

1/18/2007 10:36:26 PM

You won't be saying that when it's you or your family. And you won't be saying that when they come to your house and kill you to take your money. Poverty is expensive.

[Edited on January 18, 2007 at 10:40 PM. Reason : ?]

1/18/2007 10:38:51 PM

It won't be me and it certainly won't be my family.

Do you realize the chances of you getting worse returns in the market over a 10+ year time span than social security?

1/18/2007 10:43:06 PM

You seem to be planning for the best case (ie your 401k could be worth more than my pension). However, what happens if you fall short? I know a whole lot of people near retirement that have 401k's worth like $90k. That should last them 3 years. But many will live 30-50 more years.

I'm not concerned whether I leave my children 50k or 500k. I'm not concerned whether I retire to the country or the country club. I'm concerned about running out of money at 85 and living to 95.

1/18/2007 10:52:48 PM

Quote :

"fuck 'em"

Unfortunately, not how our society works. Not saying I agree with one side or another, but not how it works. Department of Defense / Homeland Security take up 25% of the budget, then Social Security / Medicare / Veterans Affairs take up about the next 50%. The last 25% gets split among about a hundredish other places.

Quote :

"I'm concerned about running out of money at 85 and living to 95."

Last thing I want is see is a nationwide cost of living comparable to DC/NY/LA/SF and overrun the value / worth of my retirement . If I'm making X now, and things are driven so I need X*5 when I retire, I'm not going to be happy. http://www.measuringworth.com/calculators/compare/ kinda has something on measuring the value a dollar from 1790-2005.

1/19/2007 6:08:22 AM

Quote :

"However, what happens if you fall short?"

The chance of that happening is infinitesimal. I've run the numbers.

Quote :

"I know a whole lot of people near retirement that have 401k's worth like $90k. "

Did any of them start saving when they were 22?

1/19/2007 7:32:05 AM

Quote :

"Last thing I want is see is a nationwide cost of living comparable to DC/NY/LA/SF and overrun the value / worth of my retirement . If I'm making X now, and things are driven so I need X*5 when I retire, I'm not going to be happy."

We've got it all wrong. Go live in Cali or somewhere like DC where the cost of living is insane, then after about 10-15 years move down here with a $500,000 house paid for. One guy at the last place I worked lived near SanFran, bought a house on interest only, then sold it 4 years later and moved here. After the sale of his home he had $180,000 in his pocket. He could have been even smarter and bought a house for that amount when he moved here, but instead upgraded and got a $300,000 house.

1/19/2007 8:06:00 AM

Quote :

"Basically, in my situation, I'll be able to retire at 51 and get 55% of my final salary + insurance for the rest of my life."

What about people with pensions that don't work for the state who have to pay their insurance out of pocket?
What happens when you turn 71 and your pension is worth half as much thanks to inflation?
What happens when you turn 91 and it's worth a quarter as much?

And before you say "oh it adjusts for inflation" you may want to check up on that since my dad's pension "adjusts for inflation" and it has gone up about 2% in the last 3 years.

1/19/2007 8:28:05 AM

^^ your buddy got lucky and wound up on the positive side of the housing bubble. If he was still in that house now, he'd be sitting on a huge loss.

1/19/2007 9:07:25 AM

not necessarily...the bubble hasn't popped everywhere.....i can't speak for san fran though.

1/19/2007 9:12:19 AM

Quote :

"And before you say "oh it adjusts for inflation" you may want to check up on that since my dad's pension "adjusts for inflation" and it has gone up about 2% in the last 3 years."

To my knowledge, adjustments to the state retirement plan go hand in hand with the raises that are given across the board to the state workers. So, if state workers dont get raises, neither does the plan. But I'm not positive about that... What I am pretty sure about is how rock solid the state retirement plan is... during the dot com bust, when everyone elses 401Ks were 10% of their original state, the State plan did not lose money. It is one of the best managed retirements plans that exists... I just want to make sure I get my 5 years in, so I'll have the opportunity to get state health benefits when I retire. Thanks to the new PPO plan, state health benefits are pretty good now.

[Edited on January 19, 2007 at 9:23 AM. Reason : .]

1/19/2007 9:19:21 AM

^^you're right, it hasn't popped everywhere-- i was specifically referring to the bay area, and especially for folks with interest only and negative amortization loans, which have been very popular in the big markets.

although the DC area is showing signs, at least in the condo market--

http://tinyurl.com/26yqrz

1/19/2007 9:22:36 AM

i agree...meanwhile, the part of baltimore i live in still doing strong

http://www.baltimoresun.com/business/realestate/bal-bz.ritz17jan17,0,4464796.story?page=1&coll=bal-realestate-headlines-1

...it has slowed, but i think its hard to keep up with the rate things were going for a while.

[Edited on January 19, 2007 at 9:31 AM. Reason : df]

1/19/2007 9:30:06 AM

The other point about pensions is that you can still invest in 401ks or IRAs. So it's not like all your eggs are in one basket.

But the notion that pensions suck and that you are better off without one is absurd. And the idea that your risk with a 401k is infinitesimally small is pretty naive. After all, catastrophic economic events have never happened, right?

1/19/2007 10:26:24 AM

I've run the #s in multiple calculators and I come up with a pretty high success.

I seriously doubt your friends near retirement have 90K in their 401K because of poor market returns. Most likely they started investing late or did not invest nearly enough. Most people are clueless about the amount of money they actually need to retire.

1/19/2007 10:31:09 AM

how are you disassociating your pension with a catastrophic economic event?

arent pensions large funds managed by pension managers that are vested in the same stock market your 401k is working off of?

if another crash comes, i'd not expect your pension to still be shitting golden eggs.


pensions for private companies are nice, but they are not as viable as they once were. with the current market for low retention rates on empolyees, the ability to move your 401k is a very nice selling point. however, about the only time i'd be comfortable with being pensioned only would be working for a blue chip company and not think i was going to last long after retirement.

at this point in my career, a company match with a company contribution added as well is more appealing to me.

however, if i were closer to retirement, a pension plan would be more appealing.

meh

1/19/2007 10:33:09 AM

Quote :

"how are you disassociating your pension with a catastrophic economic event? arent pensions large funds managed by pension managers that are vested in the same stock market your 401k is working off of? if another crash comes, i'd not expect your pension to still be shitting golden eggs."

It would certainly be affected, but the pension benefits from scale, expertise, and lower risk investment plus backing by the federal government.

Quote :

"pensions for private companies are nice, but they are not as viable as they once were. with the current market for low retention rates on empolyees, the ability to move your 401k is a very nice selling point. however, about the only time i'd be comfortable with being pensioned only would be working for a blue chip company and not think i was going to last long after retirement."

I certainly understand why industry has moved away from pensions. They simply promised more than they could manage, especially given global competition. But if given the choice of a pension and a 401k or just a 401k, it doesn't hurt. The portability thing is a cop out.

1.) A pension improves retention.
2.) There is no reason portability couldn't be added to pensions.
3.) Even with a pension, you can still invest in portable investments.

1/19/2007 10:50:44 AM

Quote :

"The other point about pensions is that you can still invest in 401ks or IRAs. So it's not like all your eggs are in one basket. But the notion that pensions suck and that you are better off without one is absurd. And the idea that your risk with a 401k is infinitesimally small is pretty naive. After all, catastrophic economic events have never happened, right?"

There is an interesting story related to this. Back in the 90s, there were a lot of EPA State Employee (high level positions, professors. etc) wanting to divest from the state managed fund. There were investment agencies trying very hard to get the government to allow the highest paid state employees to invest their state retirement funds in a non state managed fund. Many EPA employees took years of their state contributions to the private funds. The dot com bust happened. Needless to say, many state employees losts years of savings as a result. I believe that loophole was closed. During the same time, the state fund maintained, and did not lose money due to careful hedged investments.

[Edited on January 19, 2007 at 10:54 AM. Reason : .]

1/19/2007 10:53:09 AM

Quote :

"A growing challenge for many nations is population ageing. As birth rates drop and life expectancy increases an ever-larger portion of the population is elderly. This leaves fewer workers for each retired person. In almost all developed countries this means that government and public sector pensions could collapse their economies unless pension systems are reformed or taxes are increased."

-wiki

1/19/2007 10:56:01 AM

Quote :

"The portability thing is a cop out. 1.) A pension improves retention. 2.) There is no reason portability couldn't be added to pensions. 3.) Even with a pension, you can still invest in portable investments. "

i dont understand how portability could possibly be a copout when corporate retention rates of new hires are nearing all time lows ( around 30% for many major companies).


goen are the days when you took a job, and worked in the same position for the next 35 years.

[Edited on January 19, 2007 at 11:05 AM. Reason : e]

1/19/2007 11:04:41 AM

I certainly acknowledge the general challenges facing pensions in our future economy. If I was starting a company, I probably wouldn't offer a pension plan. But I am certainly going to get while the getting is good.

If if it comes to dissolving the state pension or raising taxes, it sucks for you. There are about 600,000 members of NC's pension systems and most of them vote.

But NC's pension is well run and well funded. At worst, I expect future state employees may have to make minor concessions to keep it going.

1/19/2007 11:05:26 AM

Quote :

"i dont understand how portability could possibly be a copout when corporate retention rates of new hires are nearing all time lows ( around 30% for many major companies)."

Maybe it's cause and effect, ie the low retention is caused by easy retirement account portability.

1/19/2007 11:06:28 AM

^ that makes no sense whatsoever.

you can associate an employer sponsored pension plan with high retention, because people will stick out a job they hate to get the required longevity to qualify for the pension.

But claiming a causal relationship between a portable retirement plan and low retention makes no sense. All it does is make it easier to leave a shitty job, but the cause is not the portable retirement plan, but the fact that the individual was not happy with that job.

1/19/2007 11:35:40 AM

So you think the only people who leave jobs do it because they hate the job and the only people who would stay from a pension are bad employees? That's a strawman argument.

I think a lot of it is that it is now easier to climb the latter by jumping from company to company than to wait for (and create) opportunities for advancement within your own company.

Now don't get me wrong. I'm not claiming that 401k's are solely responsible for higher turnover, but they certainly contribute to it.

1/19/2007 11:43:08 AM

Quote :

"So you think the only people who leave jobs do it because they hate the job and the only people who would stay from a pension are bad employees? That's a strawman argument."

That's not what he said at all.

1/19/2007 11:51:29 AM

yeah that's not what I said at all.

1/19/2007 12:13:03 PM

what #'s are you people assuming in your calculations?

Do you plan to keep all of it in agressive until you retire and use 12% growth every year? NO

Run your numbers for first 1/3 at agressive AVG ~12% till age 38
2nd 1/3 at moderate AVG ~ 8% till age 50
3rd 1/3 at conservative AVG ~4% till you DIE

Or something like that. I mean if you leave everything in agreesive and get 12% return you could potentially and possibly end up in one year losing 25% of your retirement when you're close to retirement like age 50. Imagine losing $500,000 in one year when you had $2M.

1/19/2007 2:39:15 PM

My calculations assumed averages slightly less agressive and slightly less conservative but I ran it with your numbers and I'm right on track.

1/19/2007 2:48:58 PM

david, what calculator are you using?

or a homegrown one?

1/19/2007 3:23:15 PM

Usually I use calcs on http://bankrate.com/

Since cornbread's calculations required 3 different time periods and return %'s I just used

http://bankrate.com/brm/cgi-bin/savings.asp

3 times using the outputs from the 1st and 2nd calculations as the inputs for the 2nd and 3rd calculations, although I would create a homegrown one if I planned to use cornbread's method in the future.

1/19/2007 3:40:35 PM

I contribue 20%, with matching of 8% dollar for dollar.

1/20/2007 2:23:07 PM

I contribute 10%, with a 6% match

1/22/2007 8:16:28 PM

im pretty excited about jan 2008, when my plan moves to a 10% match/contributed combination.

1/23/2007 8:04:04 AM

Quote :

"I do 6% + company match is 6% for 12% total plus a pension. I don't do any other investing right now. Too damn difficult with student loans, car, house, wife who stays at home with the kid, and medical bills paying off the kid from the crappy insurance that changed to crap just before we had the kid."

it's not too damn difficult...you just have to commit to your investing goals, then structure your budget (i.e., save first, then spend what's left...not the other way around). that might mean getting rid of your car(s) for something you can more easily afford (and maybe pay for outright with no payments). that might mean your kid going to daycare at least a few days per week and your wife getting a job (if that's a viable option).

Quote :

"You may think you know a lot about investing, but I guarantee you a pension fund manager managing billions of dollars knows more than you."

he doesn't have to know more than the pension fund manager to beat him in his own specific case.

Quote :

"Yes, it provides an important safety net. It's going to be really important for all the people who don't have pensions that either under funded their 401k's or their 401k's performed poorly."

Allow me to rephrase for him: Not "do you like SS as a political institution, but do you like it as your own personal investment? is it where you would CHOOSE to put any of your own money?"

____________________________________________________________________


Military doesn't have a 401k. We have the Thrift Savings Plan, but it isn't matched. It's tax advantaged for retirement, but I already max a Roth IRA and don't want the rest of my investing tied up and marked for retirement.

I put $333/month into the Roth IRA. It's mostly T. Rowe Price index funds (some TSM/S&P, some small and mid-cap)

I put $250/month into a money market that I use as a savings account (but with 4-5% interest rate)

I put $400/month (occassionally more) into my Scottrade account and buy individual stocks with it (although I might start doing some ETFs, too).

1/23/2007 12:23:38 PM

Quote :

"3. Aren't personal accounts too risky? Of course we all know that stocks can go down as well as up. But over the long term, investing is remarkably safe. Over the last 80 years, private investment in the United States has earned an average annual return of nearly 8 percent. That period included not only the market decline of the last few years but the Great Depression, World War II, several smaller wars, numerous recessions, the "stagflation" of the 1970s, and the bursting of the dot.com bubble as well. We need to remember that, with compound interest and stocks held over the working life of a typical U.S. worker, the money grows, even if the returns on that investment are lower in some years than in others. Some people ask, "What if I had had a personal retirement account and had retired in 2002 when the tech bubble burst and the stock market lost so much money?" Good question. If you retired in 2002, most likely you would have been contributing to your personal retirement account for at least 25 years and probably longer. If you started investing in 1978, the Dow Jones Industrial Average was 742. At the low point of 2002, it was 7,286. Despite the crash, you would have received a far higher return than you would have seen from Social Security. The numbers are even more amazing for 40 years of investing. Retirement investments are long-term investments, and historically long-term investing in the American stock market is the best deal going. In contrast, Social Security is becoming an increasingly bad deal for workers. We know that young workers can expect a return on their Social Security taxes of 1.5 percent or less. Furthermore, workers and retirees must keep in mind that Congress can change their benefits at any time. Thus workers and retirees must always consider the political risk of paying into the Social Security system when they have no legal right to benefits. Beware of those who refer to Social Security as providing "guaranteed" benefits. Retirees have no legal right to benefits, and nothing prevents Congress from changing the benefit levels at any time. Thus the risk of being in the stock market must be weighed against the political risk of a program that provides no legal rights to participants. Moreover, there will still be a safety net. Every personal retirement account proposal includes a safety net such that no one will fall below a certain level of retirement benefits. The Cato plan proposes a safety net so that no one will fall below the poverty line. That is a higher level than the current minimum benefit under Social Security. And finally, keep in mind that personal retirement accounts are voluntary. If you are uncomfortable with the stock and bond market with all of its risks and you are more comfortable with the current Social Security system with all of its risks you can always choose to stay in the current Social Security system. "

http://www.socialsecurity.org/reformandyou/faqs.html

1/23/2007 1:02:04 PM

Social Security is a social program, not an investment. This burden isn't going to go away.

It's not the Cato Institute, but what is?

http://www.pbs.org/wgbh/pages/frontline/retirement/world/401k.html

[Edited on January 23, 2007 at 2:39 PM. Reason : ?]

1/23/2007 2:35:54 PM