Retirement Shock: Need to Find a Job After 40 Years at General Electric • Hacker News Board

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#51

Post by logfromblammo » Mon, Apr 23, 2018, 5:48 PM UTC

pc86 wrote: post #44

baldfat wrote: post #43

Earlier quoted context omitted.

I blame Corporations getting rid of Retirement Plans for the sake of profit. My father's side grandfather had 2 retirement plans, 1) Navy Seals (12 years) 2) NYC Handy man (25 years) My mom's side grandfather 1) Custodian in NYC 20 years + 2) Jazz Musician Union 10+ years. They both were able to live a decent life after retirement and didn't work a single day afterwards. This will not happen for me. I also have a pri…

Corporations have not gotten rid of retirement plans, they've gotten rid of unsustainable defined benefit retirement plans (pensions) in exchange for defined contribution retirement plans (401ks).

...And then gradually reduced their employer contributions to said plans to a pittance, or even zero.

At that point, you might as well do your own thing with Vanguard or Fidelity. The net result is the company got rid of the retirement plan, and started reselling other companies' commercial retirement plan products to their employees.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#52

Post by cortesoft » Mon, Apr 23, 2018, 5:48 PM UTC

ISL wrote: post #30

herodotus wrote: post #26

Earlier quoted context omitted.

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).

Decisions can only be judged in the context within which they were made. 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.

Right? If we judge every decision by the actual results instead of the information we had at the time, everyone made a stupid decision by not buying a lottery ticket that had the correct numbers on them yesterday.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#53

Post by astura » Mon, Apr 23, 2018, 5:54 PM UTC

logfromblammo wrote: post #51

pc86 wrote: post #44

Earlier quoted context omitted.

Corporations have not gotten rid of retirement plans, they've gotten rid of unsustainable defined benefit retirement plans (pensions) in exchange for defined contribution retirement plans (401ks).

...And then gradually reduced their employer contributions to said plans to a pittance, or even zero. At that point, you might as well do your own thing with Vanguard or Fidelity. The net result is the company got rid of the retirement plan, and started reselling other companies' commercial retirement plan products to their employees.

Even if your employer's contribution is zero there's significant tax benefits for contributing to a 401(k) vs "doing your own thing with Vanguard or Fidelity."

You can also "do your own thing with Vanguard or Fidelity" in an IRA, which has the tax benefits of a 401(k), however, the yearly contribution limits are unreasonably low, especially compared to a 401(k).

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#54

Post by aerotwelve » Mon, Apr 23, 2018, 5:58 PM UTC

monocasa wrote: post #9

madengr wrote: post #3

Got a non paywall link?

http://archive.is/RgZJi

This is cool, thanks for sharing this site (archive.is).

Does this work because your browser was logged into a paid WSJ account before you used archive.is to log the page? Or is it only because WSJ's paywall allows archiving sites to read full articles as a matter of policy?

Just curious to know how reliable this solution might be for other sites.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#55

Post by rossbmiller » Mon, Apr 23, 2018, 5:58 PM UTC

wlesieutre wrote: post #46

baldfat wrote: post #43

Earlier quoted context omitted.

I blame Corporations getting rid of Retirement Plans for the sake of profit. My father's side grandfather had 2 retirement plans, 1) Navy Seals (12 years) 2) NYC Handy man (25 years) My mom's side grandfather 1) Custodian in NYC 20 years + 2) Jazz Musician Union 10+ years. They both were able to live a decent life after retirement and didn't work a single day afterwards. This will not happen for me. I also have a pri…

Were those retirement plans fully funded over their years of employment, or were they kicking the can down the road with "We'll make big retirement promises and in 30 years when the $XXX,XXX,XXX bill comes due it'll be someone else's problem"?

I once saw an interesting research report comparing publicly traded companies based on their outstanding pension / retirement plan debt. The investment thesis was essentially advocating for shorting the companies with the largest under-funding of said plans, based on the assumption that a company that didn't give a crap about its employees probably wouldn't stand the test of time.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#56

Post by icebraining » Mon, Apr 23, 2018, 5:59 PM UTC

baldfat wrote: post #43

this_user wrote: post #22

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 blame Corporations getting rid of Retirement Plans for the sake of profit. My father's side grandfather had 2 retirement plans, 1) Navy Seals (12 years) 2) NYC Handy man (25 years) My mom's side grandfather 1) Custodian in NYC 20 years + 2) Jazz Musician Union 10+ years. They both were able to live a decent life after retirement and didn't work a single day afterwards. This will not happen for me. I also have a pri…

It's not clear it would help you; a company could move part of your salary to a pension, but then your current life would be even more difficult.

Essentially what you're saying is that you'd like to get a raise (more pension without a loss of salary). Well, wouldn't we all!

Now for people who spend frivolously, forced savings might be helpful, but it's not clear to me why the companies should take that role; seems like a role for the State (and, in fact, that seems to be the rule in many countries, with mandatory pension plans).

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#57

Post by logfromblammo » Mon, Apr 23, 2018, 6:00 PM UTC

virtuexru wrote: post #39

> He left GE with an annual pension of $85,000 and company stock valued at more than $280,000. > Retirement looked pretty good until GE shares collapsed. His shares are now worth about $110,000, prompting a late-life job hunt. I don't understand; it says he has an $85,000 pension. Isn't that more than enough to retire on? His stocks collapsed to about half their worth (roughly $110,000). This isn't exactly a crazy on…

The pension is 70% funded, so he can only count on $59500/year actually being there. The likely scenario would be that all pensioners take the same percentage of haircut as the pension obligation is transferred to another company.

If he cashed out of GE and went into index funds, the stock portfolio would be conservatively worth another $3300 a year.

That's still $62800/year. If he owns his home, that amount can fund his retirement, until his first major medical expense.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#58

Post by lotsofpulp » Mon, Apr 23, 2018, 6:02 PM UTC

cortesoft wrote: post #49

pc86 wrote: post #44

Earlier quoted context omitted.

Corporations have not gotten rid of retirement plans, they've gotten rid of unsustainable defined benefit retirement plans (pensions) in exchange for defined contribution retirement plans (401ks).

While I agree with you, I think it is important to note that defined benefit plans aren't INHERENTLY unsustainable. If you do the math right and are realistic, you can off them. You just can't underfund them or assume unrealistic stock market gains.

They're unsustainable because they require the ability to predict what will happen in the world 10,20,30+ years into the future, a feat that no one is capable of, hence the decline of defined benefit pensions. Except for those that can lean on taxpayers to make up for the miscalculations and erroneous assumptions.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#59

Post by notyourday » Mon, Apr 23, 2018, 6:02 PM UTC

baldfat wrote: post #43

this_user wrote: post #22

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 blame Corporations getting rid of Retirement Plans for the sake of profit. My father's side grandfather had 2 retirement plans, 1) Navy Seals (12 years) 2) NYC Handy man (25 years) My mom's side grandfather 1) Custodian in NYC 20 years + 2) Jazz Musician Union 10+ years. They both were able to live a decent life after retirement and didn't work a single day afterwards. This will not happen for me. I also have a pri…

It is about choices. Having 5 kids was a choice.

Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric

#60

Post by thoth » Mon, Apr 23, 2018, 6:03 PM UTC

z3t4 wrote: post #36

this_user wrote: post #22

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…

The whole reason stocks where invented was so that you could spread the risk. Instead of owning 100% in one ship, you owned stock in many ships, so if one ship sank you didn't loose it all.

Huh? Stocks (shares) were invented to raise capital for businesses.