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Earlier quoted context omitted.
No kidding, at a 4% safe withdrawal rate, that's the same as a $2+ million nest egg. That said, I think he's concerned that, given GE's trajectory, the pension will evaporate. What then?
It's already only about 70% funded, per the article.
> GE’s pension obligations, nearly $100 billion at the end of 2017, are underfunded by almost $30 billion.
Yikes.
One easy improvement your this particular case would have been to roll some of the money from GE stocks into bonds and do a classic 60:40 split. If he really wanted to stick with that company, he could have even bought GE bonds since their default risk is reasonably low.
Seems like an $85k/yr pension should be more than enough to retire on.
Roughly $140 billion in GE stock-market wealth was lost in the past year GE has lost a substantial percent of its market cap this year. I wouldn't count on that pension sticking around for 30 years without being 'restructured'. And in 30 years it'll be worth $40k a year anyway.
It was a stinking lie.
Earlier quoted context omitted.
It took a lawsuit for my employer (Honeywell) to allow moving (out of Honeywell stock) of matched contributions. I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago.
>I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago. I'm curious why you keep so much in Honeywell stock? For a very long time GE was a great company to have that would routinely give nice returns and dividends, and then things went downhill. Layoffs happened, and those people were faced with much lower portfolio valuations if t…
Seems like an $85k/yr pension should be more than enough to retire on.
This looks like a failure with portfolio construction to me. Keeping a lot of your net worth in the stock of one company is not a very good strategy for diversification. This is especially true when it is the stock of the company that you are working for, because if the company gets into trouble, you might not just lose your job, but also your savings. One easy improvement your this particular case would have been to…
Earlier quoted context omitted.
It took a lawsuit for my employer (Honeywell) to allow moving (out of Honeywell stock) of matched contributions. I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago.
If you are a rank and file employee, I would suggest divesting entirely from your company's stock. From a risk perspective it's extremely dangerous as you are already dependent on your employer for your source of income. In the case that they do poorly you have the potential to lose both your income and your savings. Unless you have the ability to seriously affect the stock price, you are putting too many eggs into a…
Earlier quoted context omitted.
It took a lawsuit for my employer (Honeywell) to allow moving (out of Honeywell stock) of matched contributions. I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago.
If you are a rank and file employee, I would suggest divesting entirely from your company's stock. From a risk perspective it's extremely dangerous as you are already dependent on your employer for your source of income. In the case that they do poorly you have the potential to lose both your income and your savings. Unless you have the ability to seriously affect the stock price, you are putting too many eggs into a…
But I certainly agree that your core nest egg and growth investment be kept totally decoupled.
This looks like a failure with portfolio construction to me. Keeping a lot of your net worth in the stock of one company is not a very good strategy for diversification. This is especially true when it is the stock of the company that you are working for, because if the company gets into trouble, you might not just lose your job, but also your savings. One easy improvement your this particular case would have been to…
I have to agree with you. I always took a very conservative approach and divested my company shares in order to diversify, even before I retired. In my case, the pain came not from stock losses, but from their gains. I "lost" so much by selling shares too soon. But now I am diversified and can survive a loss of my holding in my (former) companies shares (I still own some).
Diversifying is a wise move for strongly mitigating downside risk.
One of the wisest and thoughtful people I know was a long-time and early employee at a major tech company. That friend did exactly the same thing, diversifying early. It is difficult to overstate how successful he has become in life; success need not be measured in dollars.