61–70 of 144 posts
I've always sold my company stocks soon as they were received. Then reinvested those funds in in either Vanguard index funds, or paying off school loans. Makes zero sense to tie up your entire income to one company. Your weekly paycheck, AND stocks are totally reliant on the same company performance.
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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.
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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).
Nearly every major industrialized nation's infrastructure was bombed to hell after WW2, except America. To the victor went the spoils, and so our economy boomed to a much much greater degree than it would have otherwise.
This lasted for a generation or two, and certain aspects of that capitalist feeding frenzy were enshrined as cultural values.
The idea that there was a social contract between employers and employees, and that an average hard working American wouldn't be tossed out on the street if they got sick, would have a house to live in and would not have to toil in their old age, was baked into America. If you work hard and you're loyal, you'll be ok.
However, where that was seen as a Governmental function after the Great Depression, in the boom years after WW2, the economy was simply flooded with money.
When there's that much money and opportunity around, it's easy to start thinking that the Government was the problem. That the social contract would always remain, and that we could trust our bosses who we knew and worked with every day far more than some politically motivated government bureaucrat.
Corporations bought the politicians. Then the politicians passed laws to make the bribery legal. Then slowly those post WW2 culturally enshrined easy answers became law.
Now we have people seriously talking about "trickle down" economics as if it were a real thing. Because it was kinda like that in the 50's when we were the only major industrial powerhouse in the world.
Now we've privatized nearly our entire healthcare system, because in the 50's hell, going to the doctor was cheap and how could that be anyone's problem but yours?
And now we have no retirement plans other than "we will let you put some of your own money into the stock market tax free, but hey if the market tanks you're on your own bruh! (even though you had zippy control over that)"
Again, because maybe that would have made sense in the 50's and 60's, and god knows if anything might have seemed true in that era it must be the word of God himself.
The problem of course, is that now that the winning team picks the referees, there's pretty much no way out of this. The government SHOULD be providing healthcare, and decent retirement so that business doesn't have this burden.
But then it'd be too easy to start new businesses. The referees picked by the last winning team aren't too keen on that.
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...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).
If there is no employer contribution, you essentially already are doing your own thing, except with whomever your company picked to be the retirement benefits manager, instead of it being your own choice. So you create your own IRA at the company you pick, and roll over everything from your employer's 401(k) into it every time you switch jobs.
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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.
I feel like framing your first sentence and put it a place where I can see/show it everyday !
> 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…
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…
You and your wife chose to have five children, and chose for her to work as a childcare provider, which we know is a low-paid gig.
I'm very impressed that you managed to do that without going into debt, but I have little sympathy for other people who in similar situations find themselves struggling: the rest of us derive a smaller benefit from the continuation of your genetic legacy than you do, so it is appropriate that society should pay a smaller part of the cost of that lifestyle choice.
People who fall into similar situations without your foresight might struggle more, but so too do people who buy expensive cars they can't afford or pursue careers they enjoy instead of careers that pay well.
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…
You choose to drain your retirement early, if you didn't have that option (in other words, your employer controlled your retirement instead of you) you wouldn't magically get extra money to pay for cancer treatments - your retirement portion of your salary would just be unavailable for you to use. Just because you didn't use your retirement account for its intended purpose, that doesn't mean that defined contribution retirement plans are "broken."
In general, its probably not a great idea to drain retirement accounts to pay for bills, as they have some protection from creditors... at least talk with a bankruptcy attorney beforehand. I would personally rather declare bankruptcy than drain my retirement accounts.
It might just be me but I'd prefer controlling my money over my employer doing so, my employer might not even be around in five years. You can't prevent your employer from "investing" your retirement fund into Bernie Madoff's pyramid scheme[4], but you can prevent yourself from doing that. In the past I've worked at places where I don't trust upper management to make the right financial decisions. I'm glad I have a 401(k) because I can collect significant tax benefits from maxing it out.
Your wife obviously isn't going to get a retirement saying home with the kids with or without employee controlled pension, so I don't understand what that complaint is about? Or how it relates to retirement accounts.
In my opinion, if your employer offers a 401(k) they should be legally required to a) be opt out rather than opt in and b) be legally required to contribute some amount. That would fix some issues with people not prioritizing saving for retirement, however, unless you make draining your retirement account illegal then you aren't going to prevent people from doing dumb stuff.[5]
[1] They have actually changed that recently, a few years ago they introduced a new defined TSP contribution option that you may opt into instead of the defined benefit option.
[2] Some exceptions apply for war vets living in poverty
[3] I'm so sorry to bring up that possibility, I don't want to be mean, but its a fact that most people who claim to be in the special forces are lying, its a common thing.
[4] The NY Mets lost a bunch of money in Bernie Madoff's pyramid scheme.
[5] Dumb stuff being the guy I know who cashed out his retirement account to buy furniture.
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…
> we had 5 kids and chose to have my wife stay at home for about 7 years You and your wife chose to have five children, and chose for her to work as a childcare provider, which we know is a low-paid gig. I'm very impressed that you managed to do that without going into debt, but I have little sympathy for other people who in similar situations find themselves struggling: the rest of us derive a smaller benefit from t…
Unless you are the one starting said ideological conversations?