How much would it take for you to retire/leave work

[smokymountainrain]

There is something very comforting about a pension, knowing that you will never "run out" of retirement money. My father was a federal law enforcement officer for 25 years and while he didn't pull in big bucks during his working years, he now receives a pension more than 60 percent of his salary for the rest of his life, and if he passes away before my mother, she continues to receive half that amount for the rest of her life after he is gone. It's a terrific safety net.

For as nice as that safety net is, my company has a pension, but about 50% of our retirees opt instead for the lump sum.

And Lebowski's son's company has a 14% match on a 4% contribution to the 401k? Jeff, if he doesn't take advantage of that, let me know and after you've kicked his butt, I'll come over and kick him while he's down.

[Jeff Lebowski]

For as nice as that safety net is, my company has a pension, but about 50% of our retirees opt instead for the lump sum.

And Lebowski's son's company has a 14% match on a 4% contribution to the 401k? Jeff, if he doesn't take advantage of that, let me know and after you've kicked his butt, I'll come over and kick him while he's down.

Never fear. He is doing it. He's pretty savvy when it comes to finances overall.

[smokymountainrain]

Never fear. He is doing it. He's pretty savvy when it comes to finances overall.

[Jeff Lebowski]

Let's talk about the more typical 401(k) match. For example, something like an even match up to 5 or 6%. Years ago I had a friend who did not take advantage of that match. I asked him why and he shrugged his shoulders and said that he just preferred to have the money and invest it himself. I said "why don't you take the match and then pull it out a year later and take the penalty? You would still be money ahead. Why on earth would you turn down free money?" Again he just shrugged his shoulders. A few years later I was talking to the benefits office where I work and recounted the conversation. The guy told me that that thinking is very common and he told me the percentage of employees that forgo the employer match. I don't remember the exact number but it completely blew me away. And these are smart, educated people for the most part. This is partly why I am convinced that we need social security.

[imanihonjin]

Let's talk about the more typical 401(k) match. For example, something like an even match up to 5 or 6%. Years ago I had a friend who did not take advantage of that match. I asked him why and he shrugged his shoulders and said that he just preferred to have the money and invest it himself. I said "why don't you take the match and then pull it out a year later and take the penalty? You would still be money ahead. Why on earth would you turn down free money?" Again he just shrugged his shoulders. A few years later I was talking to the benefits office where I work and recounted the conversation. The guy told me that that thinking is very common and he told me the percentage of employees that forgo the employer match. I don't remember the exact number but it completely blew me away. And these are smart, educated people for the most part. This is partly why I am convinced that we need social security.

I hate the paternalistic nature of forcing people to do the right thing. However, there is no way that as a society that we are simply going to let people starve or be without because of their foolish choices early in life. So really the options become forcing people to do the right thing or bearing the costs later when a large portion of people fail to save much for retirement. Neither is the ideal.

[Uncle Ted]

Let's talk about the more typical 401(k) match. For example, something like an even match up to 5 or 6%. Years ago I had a friend who did not take advantage of that match. I asked him why and he shrugged his shoulders and said that he just preferred to have the money and invest it himself. I said "why don't you take the match and then pull it out a year later and take the penalty? You would still be money ahead. Why on earth would you turn down free money?" Again he just shrugged his shoulders. A few years later I was talking to the benefits office where I work and recounted the conversation. The guy told me that that thinking is very common and he told me the percentage of employees that forgo the employer match. I don't remember the exact number but it completely blew me away. And these are smart, educated people for the most part. This is partly why I am convinced that we need social security.

I don't understand why folks don't take advantage of company stock purchase plans as well. Where I currently work they give me 15% off of the lowest price during a six month period. In fact, there is an option to have the stock sold as soon as it hits my account. Of course, you will be hit with short terms capital gains. Last year I signed some of the stock over as a donation and the company I work for matched it dollar for dollar. Talk about leveraging your donations.

[beefytee]

Let's talk about the more typical 401(k) match. For example, something like an even match up to 5 or 6%. Years ago I had a friend who did not take advantage of that match. I asked him why and he shrugged his shoulders and said that he just preferred to have the money and invest it himself. I said "why don't you take the match and then pull it out a year later and take the penalty? You would still be money ahead. Why on earth would you turn down free money?" Again he just shrugged his shoulders. A few years later I was talking to the benefits office where I work and recounted the conversation. The guy told me that that thinking is very common and he told me the percentage of employees that forgo the employer match. I don't remember the exact number but it completely blew me away. And these are smart, educated people for the most part. This is partly why I am convinced that we need social security.

I've always done the match, but it got a little harder for me at the start of this year. Previous years, my company was matching 50% up to 6%. This year they changed it to the match 50% to the max that you can contribute ($18000 with a $9000 match). This is taking a big chuck out of my pay cheque but there is no way I'm giving up the free money. Luckily they offer a Roth 401K so I've stopped contributing to my Roth IRA to soften the blow. My wife refuses to stop contributing the max to her Roth IRA, so we will be out some disposable income this year.

I'm sure you all feel really badly for me.

[Jeff Lebowski]

I hate the paternalistic nature of forcing people to do the right thing. However, there is no way that as a society that we are simply going to let people starve or be without because of their foolish choices early in life. So really the options become forcing people to do the right thing or bearing the costs later when a large portion of people fail to save much for retirement. Neither is the ideal.

Bingo.

[Moliere]

My company matches dollar for dollar up to 10%. We have a very high participation rate in the plan.

I can understand someone not being interested in a pension. Millenials aren't really interested in working for the same company for 40 years and a pension only becomes lucrative if you have a lot of tenure. Pensions are dinosaurs and are being replaced by other types of retirement plans like 401ks.

[Jeff Lebowski]

My company matches dollar for dollar up to 10%. We have a very high participation rate in the plan.

I can understand someone not being interested in a pension. Millenials aren't really interested in working for the same company for 40 years and a pension only becomes lucrative if you have a lot of tenure. Pensions are dinosaurs and are being replaced by other types of retirement plans like 401ks.

Yep. And lots of companies have mismanaged pension funds.

[Moliere]

I hate the paternalistic nature of forcing people to do the right thing. However, there is no way that as a society that we are simply going to let people starve or be without because of their foolish choices early in life. So really the options become forcing people to do the right thing or bearing the costs later when a large portion of people fail to save much for retirement. Neither is the ideal.

Which is why I don't feel bad for people that complain about barely making ends meet on SS. That's the way it was intended, to help you barely make ends meet. If you want to take an annual cruise you should have saved money to do that.

[smokymountainrain]

My company matches dollar for dollar up to 10%. We have a very high participation rate in the plan.

I can understand someone not being interested in a pension. Millenials aren't really interested in working for the same company for 40 years and a pension only becomes lucrative if you have a lot of tenure. Pensions are dinosaurs and are being replaced by other types of retirement plans like 401ks.

Pensions may be dinosaurs, but to your detriment. While your 10% dollar for dollar match is excellent, and much better than my company's 5% dollar for dollar 401k match, it pales in comparison to my retirement if you take 401k combined with the pension. With the 5% dollar for dollar in the 401k plus the pension, I essentially contribute 5% and get a 21% employer contribution/match/benefit.

[Moliere]

Yep. And lots of companies have mismanaged pension funds.

Yes, but a lot of that has been reduced due to the regulations that have come out after the pension failures or lack of funding. And those regulations have also continued to push more companies out of having pensions since the cost to comply and the relative accounting is just horrendous.

[Moliere]

Pensions may be dinosaurs, but to your detriment. While your 10% dollar for dollar match is excellent, and much better than my company's 5% dollar for dollar 401k match, it pales in comparison to my retirement if you take 401k combined with the pension. With the 5% dollar for dollar in the 401k plus the pension, I essentially contribute 5% and get a 21% employer contribution/match/benefit.

Right, but the only applicable comparison would be your total comp package, which is not an easy comparison to make even when you have the full details since everyone has different goals and wants.

[smokymountainrain]

Right, but the only applicable comparison would be your total comp package, which is not an easy comparison to make even when you have the full details since everyone has different goals and wants.

imanhonjin said this:

I have a pension and am constantly baffled when we hire new candidates who are only concerned with what their salary number is. They seem to like the idea that we offer a pension program, but it is a non-factor almost when making their decision. It is shocking to me and I am always a little bit happy when negotiations break down and we end up not hiring a person who doesn't understand how valuable a benefit the pension is.

you then said you can understand people not being interested in a pension. My point is that you should always be interested in a pension even if it isn't the deciding factor in your decision making process. Pensions are extremely valuable and to simply dismiss it as a non factor as mentioned above is stupid.