a very good retirement pension

[LurkerBee]

I have relatives who work for the federal government. Their retirement plan was converted to a hybrid plan (pension and 401k) several years ago.

Several = 30.

Congress created the Federal Employees Retirement System (FERS) in 1986, and it became effective on January 1, 1987. So anyone hired since 1987 has the "three legged stool" retirement, of small pension + TSP (essentially a 401k) + SS. The older system (pre-1987) did not have SS.

 

[rapmarks]

My son works as a public school teacher, my daughter has one masters as a school counselor but they offered one fourth the pay the insurance companies offered, so she never did it. But she won't have a pension. You can't think that far ahead when you are a single mom with three children. She even turned doewn major university, half the pay as insurance company.

 

[rapmarks]

Mary ann I know what it is like to not get raises, and my daughter does too. Apparently what you get to start is it!

 

[pedro47]

My spouse retired from a city in Virginia about seventeen (17) years ago. They have not received a pay raised in over ten(10) years. There is no money in the city budget for retirees pay raises.
However, that same city will give them a one time bonus check sometimes at the end of the year in December.
Folks ! There is a huge difference between a bonus check and a permanent cost of living pay raise.

 

[PigsDad]

There are many professional positions where it does hold true.. For example, there are engineering, business, etc.. professors making 200k+ at large research universities who would be unlikely to make this in the private sector.

The equivalent job in the private sector would be closer to a corporate technical trainer / consultant. These positions make in the same range and can go even higher.

Kurt

 

[WinniWoman]

You know, I do have a pension!

Many years ago I was working for a private national home health care company going through takeovers and the opportunity to work for a hospital appeared. I was excited because hospitals had and still do have great benefits, including a defined benefit pension.

I applied and got the job as a director for their off-site weight loss program (Optifast) they were opening in my neck of the woods and I worked there for 3 years until they closed it. This was the diet program Oprah Winfrey was on at the time. When she gained her weight back, they closed most of the centers and we were all laid off. We were hoping we could be placed somewhere else within the hospital, but we were not.

Occasionally I get communications from the administrator of the pension. Evidently I am entitled to $29.24 per month beginning at 65 years old! I look at it as my monthly wine money! LOL!

 

[jackio]

I am a school nurse. Our starting salary is approximately half of what hospital nurses make on Long Island, even new grads. After 24 years, I make almost what a new grad in the private sector makes, but I went into it for the hours when my children were young. My full retirement pension (if I stay long enough to retire without penalty) will be approx. 55% of my salary. I did not work in this sector for less pay for the pension, but it will be a welcome source of income to me in my retirement.

My husband retired from the US Postal Service after 34 years. He took a 6% pension penalty when they offered an early-out. He did not pay into social security, but he has worked in the private sector post-retirement for long enough that he qualifies for social security. Unfortunately, there is a federal offset penalty for postal workers, and he will only be able to collect half of his scheduled benefit, even though he pays full social security contributions. Plus, he cannot collect half of mine, nor will he be able to collect my social security survivor benefits upon my death.

I believe there are other public sector workers who are affected by this offset penalty, particularly in the midwest and in Texas.

 

[Icc5]

We did it in the private sector in a Union job. We made less money but knew we would get a pension when retiring. We voted several times for raises to go into the pension funding instead of our pay checks. Luckily those were locked in because later pensions were reduced for future years. We lost out on what should have gone into a higher pension for the last 10-15 years and wages stayed flat (timing is everything). I retired about 5 years ago with 43 years in and my wife last year with 42 years.
Luckily I make more in retirement then when I worked by combing my pension with early SS. We will hold off on my wife's SS until she hits 70.

 

[rapmarks]

I am a school nurse. Our starting salary is approximately half of what hospital nurses make on Long Island, even new grads. After 24 years, I make almost what a new grad in the private sector makes, but I went into it for the hours when my children were young. My full retirement pension (if I stay long enough to retire without penalty) will be approx. 55% of my salary. I did not work in this sector for less pay for the pension, but it will be a welcome source of income to me in my retirement.

My husband retired from the US Postal Service after 34 years. He took a 6% pension penalty when they offered an early-out. He did not pay into social security, but he has worked in the private sector post-retirement for long enough that he qualifies for social security. Unfortunately, there is a federal offset penalty for postal workers, and he will only be able to collect half of his scheduled benefit, even though he pays full social security contributions. Plus, he cannot collect half of mine, nor will he be able to collect my social security survivor benefits upon my death.

I believe there are other public sector workers who are affected by this offset penalty, particularly in the midwest and in Texas.

Yes, Illinois teachers are afffected also

 

[VacationForever]

I am a school nurse. Our starting salary is approximately half of what hospital nurses make on Long Island, even new grads. After 24 years, I make almost what a new grad in the private sector makes, but I went into it for the hours when my children were young. My full retirement pension (if I stay long enough to retire without penalty) will be approx. 55% of my salary. I did not work in this sector for less pay for the pension, but it will be a welcome source of income to me in my retirement.

My husband retired from the US Postal Service after 34 years. He took a 6% pension penalty when they offered an early-out. He did not pay into social security, but he has worked in the private sector post-retirement for long enough that he qualifies for social security. Unfortunately, there is a federal offset penalty for postal workers, and he will only be able to collect half of his scheduled benefit, even though he pays full social security contributions. Plus, he cannot collect half of mine, nor will he be able to collect my social security survivor benefits upon my death.

I believe there are other public sector workers who are affected by this offset penalty, particularly in the midwest and in Texas.

It is called WEP (Windfall Elimination Provision) which applies to government pension recipients. Because of the regressive nature of payout of Social Security, i.e. it pays more for lower contributions and less for higher contributions, WEP's formula accounts for pension being received to reduce the amount of Social Security payout.

 

[x3 skier]

Retired as an Engineer from civilian service with the USAF after 32.5 years and went to work as a part time consultant for another 15. Between the consultant job, part time teaching at a university and co-op as an undergrad, I got in all the required quarters for SS. I never have understood the WEP and it’s effect on me, whatever it is or is not but since I can’t do anything about it, I don’t really care

Between the pension, SS and RMD, life is good for working almost 50 years.

Cheers

 

[lizap]

Several = 30.

Congress created the Federal Employees Retirement System (FERS) in 1986, and it became effective on January 1, 1987. So anyone hired since 1987 has the "three legged stool" retirement, of small pension + TSP (essentially a 401k) + SS. The older system (pre-1987) did not have SS.

I have relatives who are government attorneys in Washington and based on something they said, I didn't think it had been that long.

 

[lizap]

My spouse retired from a city in Virginia about seventeen (17) years ago. They have not received a pay raised in over ten(10) years. There is no money in the city budget for retirees pay raises.
However, that same city will give them a one time bonus check sometimes at the end of the year in December.
Folks ! There is a huge difference between a bonus check and a permanen cost of living pay raise.

That's a huge problem with city and state pensions. Louisiana has a very lucrative pension for state employees, but they rarely receive a raise.

 

[lizap]

The equivalent job in the private sector would be closer to a corporate technical trainer / consultant. These positions make in the same range and can go even higher.

Kurt

Corporate training is in my area, and I can say with a large amount of certainty, unless you are in business for yourself, it would be rare to make 250k in the private sector.

 

[pedro47]

X3 skier,
RMD is totally another topics in my opinion.

RMD + a Pension + Social Security = peace of mind in your retirement years.

All I can advise for this young generation is to start saving early and do not wait until you are forty (40) years old.

 

[lizap]

X3 skier,
RMD is totally another topics in my opinion.

RMD + a Pension + Social Security = peace of mind in your retirement years.

All I can advise for this young generation is to start saving early and do not wait until you are forty (40) years old.

I agree. Also, unless a single earner makes very good $, couples where both work are more likely to have larger retirement savings.

 

[VacationForever]

All I can advise for this young generation is to start saving early and do not wait until you are forty (40) years old.

It is hard for someone who makes very little to save, after paying for housing, transportation, food and healthcare. Many of us on TUG are fortunate to have had good careers which allow for savings after paying for necessities.

 

[pedro47]

I agree many of us on TUG are very fortunate to have had very good careers, with very good pension plans. This allow many of us to invest into IRA’s & ROTH retirement plans. Plus, by working with some outstanding employers in the 1950’s, 1960’s, 1970’s, 1980,s and 1990’s many of us were able to purchase stocks, very cheap company stocks, and very low costs mutual funds.

 

[rapmarks]

I agree. Also, unless a single earner makes very good $, couples where both work are more likely to have larger retirement savings.

Please send to my daughter in law

 

[klpca]

It is hard for someone who makes very little to save, after paying for housing, transportation, food and healthcare. Many of us on TUG are fortunate to have had good careers which allow for savings after paying for necessities.

While I absolutely agree with you that some of us had it easier than our kids do now, these young people can start small and bump their contribution up a little at a time to get to a max contribution. Anyone can afford one percent. Then you just bump it up a little at a time over 3 - 5 years and before you know it, you are contributing the maximum. I suggest bumping it up whenever you get any kind of raise. These young people need to live a little leaner. No Starbucks, eat out less, cut back on the $10 craft beers, shop around for a less expensive cell phone plan, shop at Goodwill. There are so many ways to save. We did it - for years we lived paycheck to paycheck, but always contributed the maximum to our retirement plans. I have three adult daughters in their mid 20's - mid 30's. One of them works a very low paying job and she still saves 12% of her salary to get her company match. In fact she is the most thrifty of the three - she lives on site (in a terrible place) but it's free. She has substantial savings, both in her savings account and her 401k. Most people wouldn't want to live the way that she does, but it allows her to work in a field that she is passionate about. To tell the truth, even I am surprised at how much she saves.

 

[pedro47]

When we were both young, we both brown bag for lunch for work, we could not afford to eat out, we did not own a timeshare or an expensive automobile, we only stay at the Holiday Inn hotel / motel; Friday and Saturday nights and on Sunday morning we went to church and there was no retail shopping on Sunday’s. We owned two push buttons telephones , no call waiting or forwarding features. We did not own ten (10) pairs of sneakers or ten (10) pairs of shoes. We did not own three (3) automobiles.

We had only one color television in our home and it was in the family room. But we both saved $50.00 each month. $100 per month went into a high yield saving account or a high yield bank certificate. All of our pay raises went too savings.
Today’s generation I would try to save $50.00 per month. Limit my eating out, stop buying that high cost brew beer, make your own coffee at home and take it to work, do you really need a large screen television in every room. I could add many more items to save $100.00 per month.
Remember this “one day you are going to retire.”

 

[Jan M.]

When my husband moved to Florida in December of 2010 to take a job with the State of Florida he started at 50% of what he had been making at his job up North in the same field. The State had no 401K that they made matching contributions to up to certain limits nor could he use the State vehicle that came with the job for personal use. At that time the State of Florida employees hadn't seen a pay raise in over 4 years. The big trade off for my husband was with the State of Florida he had a territory to cover that was much smaller than the private sector, a lighter workload and we had a little better health insurance at a little lower cost to us.

A little over a year after the started with the State, Governor Scott decided the State of Florida employees didn't deserve a pension plan they didn't contribute to so the free pension plan ended. He said the companies he ran in the private sector didn't get free pensions so the State of Florida employees shouldn't either. Of course there was outrage because the vast majority of the State of Florida employees are so underpaid to start with and the percentage they were now forced to pay was truly a hardship for many of them. The courts even got involved so to avoid legal action everyone got just enough of a pay raise to cover the mandatory contribution. With my husband's previous companies he had always had a free pension plan. We are aware that many pension plans aren't what they used to be and with some employers aren't even offered now. However what Governor Snot did, as my husband refers to him, and his callous attitude towards the vast majority of State employees who are so underpaid, just ticked my husband off royally.

The next time he was approached by the private sector he let them woo him back. He started at twice what he was making for the State of Florida, got a 401K with the matching contributions, a company car that we had personal use of and regular pay raises.

Because of the excellent work he did and the expertise he brought to his department with the State, two years ago my husband was contacted by his old boss from the State of Florida because was leaving and wanted my husband to take his position as department head. My husband said not even if you doubled my current salary. His current salary was more than his old boss with the State was making so there was no chance of that ever happening!

 

[geekette]

...It is hard for someone who makes very little to save, after paying for housing, transportation, food and healthcare. Many of us on TUG are fortunate to have had good careers which allow for savings after paying for necessities....

I didn't start out with a good career!!!!! Recessions that land people in whack jobs are not new, underemployment has occurred for many decades. Setbacks happen to everyone. Hard work doesn't = financial success automatically else I would have been a millionaire before graduating high school.

"Pay yourself first" is not something you hold off on until you are established. Pick a %, siphon it off of income every time and put it somewhere safe. It may not be able to stay there, crap happens, but save every time and only use it for actual emergency. The habit matters more than the amount set aside. The worst thing a person can do is quit saving because they seem to keep having financial disasters. "Save up for the next disaster" is what I would tell them.

Everyone has housing, transportation, food and healthcare costs and limited $. Everyone must set their own priorities as to how to handle their money and sort wants from needs to spend in accordance with income realities now and future. No generation gets a pass on "oh, life is expensive! It's not my fault!" because decreasing expenses is within the control of every person.

I like having 2 vehicles, because I can afford them now. Bought used. But back in the day, I was on foot or bike, often picking my living quarters to decrease transport cost. Eventually used cars with frequent unexpected high used car costs. No one ever said that I was entitled to quality transportation to float my princess butt. I dealt with my economic reality and eventually worked my way up to having more choices in life. There is no path to experience but to march right through life.

Food costs are to me the single easiest place to cut back, but I also buy sensible used cars within budget and maintain them, pay for necessary insurances like everyone else, and don't live in places I can't afford. I could get a roommate, grow more of my own food, make my own clothes, etc.

People make choices. My choices reflect my plan to avoid becoming old and poor, and I started that plan while young. I was in deep debt with a crappy job at recession and it sucked rocks. I happened to think how much worse it would be to be elderly, unable to work one job, let alone 3, in order to improve circumstances. Sacrificing wants and luxuries while young should allow my old age to be more comfortable and maybe even plush. I didn't plan for public or private service one way or another, I aimed for finding something I liked well enough to keep doing, and saved a portion of income each and every time. Employer benefits will be employer benefits, I have never chosen a job based on that, but the age of "this is the employer you will have for 20+ years" was gone by the time I graduated. Picked a place for a pension and made a go of it over entire career? Good for you, lucky few. I'm lucky to have had a near constant 401k since my mid 20s, and it matched for most of that time and some employers threw in more than match. I'm not unhappy to have had multiple employers, I have had an interesting career (to me).

I don't live as frugally as I could, but I don't mind having had the struggle early on because it is easy for me to separate wants from needs and identify exactly where I can cut expenses to adapt to decreased or stoppage of income, or how to increase my income. Having saved, I also have multiple places from which I could extract money if I need it, and a good credit rating providing more credit limit than I ever intend to exercise. Young people should not be sitting around making excuses, and no one should be making excuses for them. I would instead hope that they are making some kind of plan on how to navigate life and float their butts in retirement like every other generation has had to do.

There won't be a pension for me (401k instead, fine with me), but I can absolutely be happy for people that did get their promised pension because a lot of people didn't get theirs and usually thru no fault of their own.

 

[lizap]

Please send to my daughter in law

Our daughter, who has a masters degree in the health care field and could make very good $, refuses to work. They will pay a big price for this in about 35-40 years. We plan to spend everything before we die...we have already given and given and given...

 

[PigsDad]

All I can advise for this young generation is to start saving early and do not wait until you are forty (40) years old.

That is good advice, but it is not just for the younger generation. I am 30 years into my career, and I knew from the beginning to start saving for my own retirement (which I did!) and not to rely on a company pension or Social Security. I know it may sound harsh, but I don't have much sympathy for those who cry "Woa is me" when they find themselves 50 years old and no retirement savings. They were most likely living it up while us savers were busy living on a budget. And this happens at all income levels.

Kurt