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

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

#121

Post by gascan »

wnissen wrote: post #76
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).

Pensions are cheaper than 401(k) accounts. I will say it again, this is simple actuarial math: Pensions are cheaper than 401(k)s. Three reasons: 1. Some people will die before they collect, others will live far longer. With a pension the former subsidize the latter, and everyone who needs income gets it. In a 401(k) everyone has to save like they're going to live forever, or risk running out of money. If you keep you…

Individual investors are morons

Speaking of individuals,

4. Individual investors can't sue and otherwise police the companies they hold very effectively. A large fund is in a better position to prosecute fraud and that kind of thing.

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

#122

Post by gascan »

pm90 wrote: post #35

Quote from the article: > “Employees need to think very carefully about investing their own money beyond 10% in company stock,” said Corey Rosen, founder of the National Center for Employee Ownership, a nonprofit that works with companies. “If you are looking at retirement, then diversification is a good thing.” The whole article seems to be "People trusted GE stock way too much; it went down and they lost massively"…

It's worth remembering that once upon a time, at least, there was no such thing as index investing or even low cost investing. Trades & brokers were expensive, and shares were frequently literally pieces of paper. My father still has paper shares from that age. They live in a bank vault. Buying stock directly from your employer skipped the broker & Wall Street.

We all know picking stocks is perilous- but what do you if it's 1970, six years before VFINX was even created? You pick your own stocks, hire a broker, or buy expensive mutual funds. Don't feel like a good stock picker? The safe play, of course, is to buy big reputable companies with a long history of stable stock- see, GE.

Anyway, I just wanted to point out it was something of a different world back then. I think it wasn't even that long ago that you typically still had to buy whole shares of things. Which, as I'm sure you can imagine, is a big part of why DRIP is another recent phenomenon.

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

#123

Post by pm90 »

gascan wrote: post #122
pm90 wrote: post #35

Quote from the article: > “Employees need to think very carefully about investing their own money beyond 10% in company stock,” said Corey Rosen, founder of the National Center for Employee Ownership, a nonprofit that works with companies. “If you are looking at retirement, then diversification is a good thing.” The whole article seems to be "People trusted GE stock way too much; it went down and they lost massively"…

It's worth remembering that once upon a time, at least, there was no such thing as index investing or even low cost investing. Trades & brokers were expensive, and shares were frequently literally pieces of paper. My father still has paper shares from that age. They live in a bank vault. Buying stock directly from your employer skipped the broker & Wall Street. We all know picking stocks is perilous- but what do you…

That's a great point and thanks for making it. Totally forgot that index funds and electronic trading are very recent phenomena.

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

#124

Post by rileymat2 »

sandworm101 wrote: post #74
cortesoft wrote: post #62

Earlier quoted context omitted.

If it was true that we can't predict the future well enough to provide a fixed income, then annuities wouldn't be a thing. We are certainly capable of predicting the future well enough to do it, the problem is that current management often has an incentive to be too optimistic about future returns when deciding how much to fund a pension. Annuity companies don't have those rose colored glasses, so they do a better jo…

>> then annuities wouldn't be a thing. Annuities are not pensions. They pay fixed amounts based on some interest rate. The difference is in the lifetime of the beneficiary. We all die eventually, normally befor hitting 100. Short of magic, that isn't going to change much. The difference with a defined benefit retirement plan is that the cost of benefits can rise drastically. Look at the difference in the cost of heal…

There are also inflation adjusted annuities. If you think this through, I don’t think you will see a dramatic difference.

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

#125

Post by s2g »

presidentender wrote: post #67
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…

> 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…

> 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.

They didn't choose to have their saving set back by however long because their child got sick.

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

#127

Post by presidentender »

s2g wrote: post #125
presidentender wrote: post #67

Earlier quoted context omitted.

> 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…

> 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. They didn't choose to have their saving set back by however long because their child got sick.

Nobody chooses to get fired or to crash a motorcycle either. Children are very sympathetic and charismatic spokespeople for the type of help we can render one another, but choosing to create them does not and should not absolve one of responsibility or provide some free insurance against catastrophes.

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

#128

Post by thewopr »

Jach wrote: post #109
thewopr wrote: post #90

Earlier quoted context omitted.

This is super interesting and something I've never thought about. One other issue I have noticed with 401k's. Do 401k's exacerbate inter-generational income inequality? I know a number of people who are going to, in the next few decades, inherit very sizable 401k accounts. This is great, in that their parents were very frugal, saved well, and had comfortable retirements. But on the flip side, a pension would have die…

Considering something like 70% of rich families already spend away their inherited wealth by the second generation (and I think ~90% by third generation) this seems like a small issue to be concerned about...

Hmmm, interesting. Any citation for that number? I've heard numbers like that thrown around, but I don't know where they come from.

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

#129

Post by cortesoft »

Jach wrote: post #102
cortesoft wrote: post #95

Earlier quoted context omitted.

It means we shouldn't tie retirements to the company you are working for.

Who is "we"? I'm curious how you propose to do the math right so that you, as an employer, can offer a plan that resembles a pension, and if it ends up being any different in practice than contributing to a 401k (which does transfer with jobs so is independent of your company).

'We' being society. I think we put too much responsibility onto companies, expecting them to provide health insurance and retirement benefits to employees. Both of those things should not be tied to your job.

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

#130

Post by fibbery »

evanpw wrote: post #112
madengr wrote: post #31

Earlier quoted context omitted.

$2.3k/year in reinvested dividends. $18.5k contribution + $10.5k employee match + $2.3k dividends. The dividends are like an additional 7% bump in contribution.

I've never understood why people care so much about dividends. The stock price drops by the amount of the dividend on the ex-date, so a stock with dividends that are always reinvested is equivalent to a stock that never pays any dividends. (Unless you're holding it in a taxable account, in which case you have to pay taxes on the dividend and actually come out behind).

I like dividend stocks because it is automatically increasing my number of shares in a stock I like, and thereby 'bakes in' the gains. A stock that doesn't have dividends must be sold in order to reap profits, and as a novice investor I never know when to sell.
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