Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

A preview of the U.S. without pensions

mercurynews.com

Post reply on HN
Print view View original

131–140 of 221 posts

Re: A preview of the U.S. without pensions

#131

Post by richardwhiuk »

hkmurakami wrote: post #58
jstewartmobile wrote: post #54

Earlier quoted context omitted.

That was almost 15 years ago, so I'd have to do some digging to name names. On the whole, perhaps things have gotten better since then. It is still a thing though. Father-in-law had most of his stuff at Edward Jones. Some of their fees put mine to shame: https://www.edwardjones.com/planfees/fees-compensation/mutua... edit: Most of his had different titles, but their largest holdings were the same handful of stocks. W…

those pdfs give basically no inforamation at all. I certainly hope that the equity funds are actively managed (rather than passively managed, though tbh actively managed funds that are provided in a 401k plan are going to be crap about 95%+ of the time) if they are charging 1%+ in fees.

actively managed funds mostly don't outperform the S&P 500 anyway, so not sure why you'd want an actively managed fund anyway

Re: A preview of the U.S. without pensions

#132

Post by e40 »

sbennettmcleish wrote: post #91

These "company managed" pension schemes have always fascinated me and would seem ripe for corruption / raiding by the company if they're short a few $$$. Seems like in Australia we're in a pretty good position with "superannuation" https://en.wikipedia.org/wiki/Superannuation_in_Australia being compulsory since 1992 and is typically managed by completely unrelated parties to your employer. The payments are generally…

That's why independently run 401(k)'s are the best. I'm a trustee of the one for our company, and there's no way I could raid it.

Re: A preview of the U.S. without pensions

#133

Post by crdoconnor »

sschueller wrote: post #122
jo909 wrote: post #109

> The average life expectancy in 1950 was 68, meaning that a pension had to pay out only three years past the typical retirement age of 65. Today, average life expectancy is about 79, meaning that the same plan would have to pay out 13 years past typical retirement age. That's the wrong statistic to use and completely wrong conclusion. Life expectancy _for a 65 year old_ person in 1950 was another 13.9 years. That ro…

Life expectancy sadly is dropping at the moment. http://www.bbc.com/news/world-us-canada-42452733

It's not a coincidence. The same .1% on 99% class warfare caused retirement age to be raised and life expectancy to be lowered.

The "pension affordability crisis" was patently never actually about pension affordability. If GDP goes up 400% since the 1960s while dependency ratios go up a mere ~15%, there's clearly something else going on.

That thing was a politically directed wealth transfer from poor to rich.

Re: A preview of the U.S. without pensions

#134

Post by delecti »

wavefunction wrote: post #121
user5994461 wrote: post #59

Earlier quoted context omitted.

That's a ponzi scheme. That's what many countries in Europe do and that is currently collapsing. It takes something like 4 active workers to pay the pension of 1 current retiree. The proportion was fine after the baby boom, it's not anymore and it's getting worse.

A ponzi scheme is an illegal act of fraud whereas a Social Security type pension is something society has agreed upon. Not surprised you're using a throw-away username and I'm going to downvote it accordingly.

Currently the only criticism you've made of the comparison is the name and amount of social acceptance.

> A Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors

It's not a 100% perfect match, but there are certainly enough similarities between how Social Security systems work and the basics of a Ponzi scheme that you'll have to make an actual criticism of the comparison if you want to argue how they're not the same.

Re: A preview of the U.S. without pensions

#135

Post by konschubert »

RobertoG wrote: post #116
Joeri wrote: post #68

Earlier quoted context omitted.

It's not a ponzi scheme, it's a numbers game. Basically the formula is: X * Y = A * B, where X is the number of retirees, Y the number of years they live past retirement on average, A the number of people who work, and B the number of years an average career lasts. What is happening in europe is that the right-hand side of the equation is producing a lower number (due to later career starts and less actively working…

Don't you think that your formula needs a productivity term somewhere? How is that when we talk about this, nobody mentions that if the gross domestic product per capita goes up enough, there is not problem. The 'savings' perspective makes only sense in the personal sense. I mean, the problem is not money. If in 20 years we have robots, infrastructure, cheap energy, etc enough for feeding and taking care of everybody…

This whole thread is weird. People think that paying retirements through social security means that future generations have to shoulder the burden. But if they instead "save" the money, somehow they won't have to?

In the end, the bread that goes on the table in 50 years will be produced by a farmer of the future generation.

Savings and social security are just two different ways of writing the same contract.

Re: A preview of the U.S. without pensions

#136

Post by user5994461 »

RobertoG wrote: post #118
user5994461 wrote: post #103

Earlier quoted context omitted.

The base is a ponzi scheme. Promise to pay people over 65 a guaranteed sum per month and hope that the taxes on working people can fund it. You're right that it doesn't have to be a ponzi scheme. The government could increase the age of retirement and/or lower the pensions. However that's not possible in practice, it doesn't get you elected and it'd provoke massive strikes for months. The government would rather accu…

>"Then the next generation has to deal with unfunded pensions and trillions of debt" That doesn't make any sense. The next generation could have enough real resources or not. If they have they will be OK, if they don't they will have a problem. Real resources in the future come from investment now, not from "saving money". Saving money makes sense in a personal perspective, but not as a nation.

You can't save money personally. The nation takes 20% of your gross salary to pay retirees. You don't have a choice.

In exchange, the nation promises to give you 80% of your last average salaries as a monthly income after you retire (in half a century) until the end of your life.

These numbers are not linked to real resources and are not adjusted periodically.

Re: A preview of the U.S. without pensions

#137

Post by wils1245 »

Joky wrote: post #127
nunez wrote: post #24

Earlier quoted context omitted.

Yeah the only time it makes sense to have a 401k is if your company matches your contributions.

I'm using it to save taxes, because I'm not sure what are the alternatives. You're comment makes me feel I should be less ignorant: any good online reading to suggest?

Saving on taxes is a good reason to contribute to a 401K. Just be mindful of the fees.

Re: A preview of the U.S. without pensions

#138

Post by woobar »

ac29 wrote: post #123
advisedwang wrote: post #111

Earlier quoted context omitted.

It sounds like by closing the plant and stopping the employees reaching retirement age, they massively reduced the amount the employees were eligible to receive. Even if the pension fund was separate, by reducing eligibility this way they company had to pay less into it over the following years.

To add to that, this pension (and many others) was structured such that payouts are non-linear based on number of years worked, so for example, you might get: 0-5 years worked: no pension 5-10 years worked: 5% pension 10-20 years worked: 20% pension 30+ years worked: full pension By preventing workers from being able to work the full 30+ years, they never had to pay the full pension. One of the workers in the story m…

And this detail - someone working 27 year for the company and only getting 20% of the full benefit - doesn't make these pensions really attractive. And in the article they even call it a "more generous types of pensions".

I know most of the DB plans were structured in a similar way, i.e. earlier years with the company have less impact on the overal pension. But this one looks more like a lottery, where you bet to stay employed at the same company for 30 years no matter waht.

Re: A preview of the U.S. without pensions

#139

Post by rgbrenner »

skookum wrote: post #113
jo909 wrote: post #109

> The average life expectancy in 1950 was 68, meaning that a pension had to pay out only three years past the typical retirement age of 65. Today, average life expectancy is about 79, meaning that the same plan would have to pay out 13 years past typical retirement age. That's the wrong statistic to use and completely wrong conclusion. Life expectancy _for a 65 year old_ person in 1950 was another 13.9 years. That ro…

All the people dying before 65 absolutely do have a bearing on pension payment length: If an employer promises someone a pension at 35 and they don't live long enough to collect then the employer doesn't have to fund that commitment. Using life expectancy at 65 would only be valid if the pensions were being promised only to those who had already lived to 65 and at the time they were 65.

Both are good points. It would probably be more accurate to use life expectancy at 25... so it starts around the time people start their careers, and it excludes all children deaths (who never contributed). If we did that, it's an increase from 71.5 to 80 (more than doubling retirement years, from 6.5 years to 15).

Source is here, starting on page 53, there's a nice table of life expectancy by age and date: https://www.cdc.gov/nchs/data/nvsr/nvsr65/nvsr65_08.pdf

Re: A preview of the U.S. without pensions

#140

Post by avemg »

Joky wrote: post #127
nunez wrote: post #24

Earlier quoted context omitted.

Yeah the only time it makes sense to have a 401k is if your company matches your contributions.

I'm using it to save taxes, because I'm not sure what are the alternatives. You're comment makes me feel I should be less ignorant: any good online reading to suggest?

There isn’t a good tax-advantaged alternative if you’re an employee with access to a 401k. If you’re under the income limit, you can make deductible contributions to an traditional IRA but that’s capped at $5500 per year vs $18,000 for the 401k. Plus there’s no company match there. The best practice is to contribute to your 401k up to the employer match and then contribute the rest to an IRA. Once you’re at the IRA limit you comtribute the rest to the 401k.
Post reply on HN