Pensions

You mean a traditional defined monthly benefit from a company's dedicated pension fund? I don't have one. I do have a 401K.

Between the 401K, a financial windfall in February 2023, and some luck I was able to retire a year before I planned, without housing expenses, and owning two paid-for vehicles less than six years old. Not having housing costs or auto loans let me delay starting Social Security. Drawing down the windfall funds covers roughly 65% of our monthly expenses, the 401K the other 35%. At some point in the next couple of years the windfall funds will reach a cash reserve point I don't want to go below. At that time we'll increase the monthly draw from the 401K and apply for SS.

If it hadn't been for the windfall, I would have worked and made contributions to the 401K for another 12 to 18 months, retired, and started SS and drawing a larger amount from the 401K than we do now. Without the luck, we would be paying for a house. Our overall lifestyle would be about the same either way, we'd just have a much larger cushion. Under that scenario, the 401K would probably be about 60% to 65% and the balance would be SS.
 
Charlie Spencer said:
You mean a traditional defined monthly benefit from a company's dedicated pension fund? I don't have one. I do have a 401K.

Between the 401K, a financial windfall in February 2023, and some luck I was able to retire a year before I planned, without housing expenses, and owning two paid-for vehicles less than six years old. Not having housing costs or auto loans let me delay starting Social Security. Drawing down the windfall funds covers roughly 65% of our monthly expenses, the 401K the other 35%. At some point in the next couple of years the windfall funds will reach a cash reserve point I don't want to go below. At that time we'll increase the monthly draw from the 401K and apply for SS.

If it hadn't been for the windfall, I would have worked and made contributions to the 401K for another 12 to 18 months, retired, and started SS and drawing a larger amount from the 401K than we do now. Without the luck, we would be paying for a house. Our overall lifestyle would be about the same either way, we'd just have a much larger cushion. Under that scenario, the 401K would probably be about 60% to 65% and the balance would be SS.
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Excellently done. I just wonder how many old-school pensions still exist? The retirement funding options that used to be considered company benefits have all but disappeared. I don't even trust a 401K. PepBoy froze theirs during COVID. No money in or out for 12 months if you had over X amount. Not sure how that's even legal. But a lot I don't know about financial stuff.
 
KTMLew01 said:
I don't even trust a 401K. PepBoy froze theirs during COVID. No money in or out for 12 months if you had over X amount.
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I'd like to see the details on that because that sounds like something was garbled in translation.

The money you put in a 401K is yours. You decide how much of your check to toss in each week. In most cases, the company doesn't hold it. It goes into an account in your name, usually managed by one of the big investment firms that handle corporate 401K accounts. Most companies then chip in a matching percentage each pay period. Where I worked we got a 100% match on the first few thousand dollars. Beyond that, the company tossed in between 10% and 20% of my contribution each week, depending on the previous year's financial success, management decisions, etc. If you're getting 20% up front, it's hard to worry too much if the market drops 10%; you're still ahead. Once you reach retirement age, you can start pulling it out.

With that said, while it all goes into your account, in most cases you don't have immediate access to all of the COMPANY'S contribution. Most companies have a vesting schedule, where you have access to an increasing percentage of the company's contribution. Where I worked, we were vested 20% per year. If you went somewhere else before five years was reached, you could only roll over or transfer a percentage of the company's contribution. After you'd been there five years, you were 100% vested. If you left you could then roll over all of the company's share. Either way, your contributions were all yours regardless of how long you had been there or how much you had.

So I could see a case where a company decided to stopped making contributions, extended the vesting period, or froze the unvested portion of their contributions to your account. But the money you put in and the investment growth is yours when you retire. In a properly run 401K, the only access the company has is to put in their share. Once you retire, they don't even have that.

I'd rather have a 401K than a pension. It's mine, I decide how to invest it, and I don't have to worry about the financial stability of the company. Did I make my own investment decisions? Hell, no; I don't have the knowledge and didn't want to put out the effort to acquire it. The investment company had several automated tools to manage the funds. The tools would walk you through deciding how many years until you retire, how much you would need, how much risk you were willing to take as an investor, etc. Based on your answers, the tools would adjust your portfolio as you aged. Every time we got a raise, I'd increase the percentage of my contribution. During my last couple of years working I was contributing about 20% of my check. That came out BEFORE taxes, too. We also had e-mail and phone access to a financial advisor, and he'd come directly to the plant for personal meetings three or four times a year. All that is why I could have retired comfortably without the windfall, just a year or so later and with a smaller but sufficient reserve.
 
Got a letter that was very clear. If you have above X amount, zero in zero out for 12 months. Also as I indicated, not convinced it was legal. But I had quit working for them 8-10 days before COVID lock-down and was able to get mine out before they shut off the tap.

Billionaire was afraid he'd lose 20 dollars so did a lock-down of his own.
 
KTMLew01 said:
If you have above X amount, zero in zero out for 12 months.
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I do recall hearing something about a requirement that a company's plan must have participants spread across the employees, that it can't be too top-heavy. That was based on salaries, not on account balances.

If we'd faced something like like that, I'd have rolled over to an IRA at the first chance, company match be damned.
 
The Texas Education System has its own retirement system separate from SS. It's kind of like a marged 401K and savings account. Basically, K-12 employees pay into the Texas Teacher Retirement System but NOT Social Security, Higher Ed employees pay into both SS and TRS.

It's a complicated thing: https://www.trs.texas.gov/Pages/active_member_social_security_at_trs.aspx

I currently have 5 years of service in TRS and my account balance is about 20% of my annual salary, but I only contributed it in 2017, 2018, 2019 (K-12), and then 2024 to current (Higher Ed). Of that, it almost doubled during 2024. The annual interest rate is about 2% and my contribution for 2024 was 8.25% of my salary. The fiscal year is September 1 to August 31, so the numbers don't line up to my W2 exactly, but those are roughly the numbers I see in my account portal.
 
I have a traditional defined monthly benefit type pension.

It amounts to about 85% of our income.

No complaints.
 
I have a union pension I'm drawing from when I was at the shipyard, 401k, some stocks and I am drawing from SS. Home, vehicles and rental property paid off.
The wife's sister has her CPA business, and looks out for us. We're not rich, but we're not destitute either. We're comfortable. Planning and prep go a long way. Stay on top of your portfolio, and don't be shy about making changes.
 
A private pension can also get Social Security. The two combined would put most right at fully employed income or maybe above. How does retirement work if long term Onion member?
 
Magicmiler said:
I have a union pension I'm drawing from when I was at the shipyard, 401k, some stocks and I am drawing from SS. Home, vehicles and rental property paid off.
The wife's sister has her CPA business, and looks out for us. We're not rich, but we're not destitute either. We're comfortable. Planning and prep go a long way. Stay on top of your portfolio, and don't be shy about making changes.
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I didn't plan anything.
 

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KTMLew01 said:
A private pension can also get Social Security. The two combined would put most right at fully employed income or maybe above. How does retirement work if long term Onion member?
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I could have relied on the Union pension and savings solely, but why? Union pension , SS & the rental property are what we are drawing from now. The rental property is all profit, and I won't touch the 401k till I'm 67.
The stocks are there as a safety, as I've had them forever, and there is plenty of equity in them. Like I said, the wife's sister (CPA) looks out for us, and is trustworthy..
 
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