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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

#111

Post by wolco »

ptero wrote: post #93
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…

Retirement plans at the time of your grandfathers started in a good state: low unfunded liabilities, high population growth and lower life expectancy after retirement than today. Thus such plans were generous. In fact, they now seem way too generous: paying such obligations accumulated large unfunded financial liabilities (6 trillion is an estimate I saw a few times), which shows them as unsustainable. This means tha…

Fixed percent of company income put into a shared fund.

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

#112

Post by evanpw »

madengr wrote: post #31
froindt wrote: post #12

Earlier quoted context omitted.

>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…

$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).

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

#113

Post by robrenaud »

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…

The point about individuals needing to guard against the "worst case" of long life, vs an pension de-risking it via large numbers is very interesting, and it's not something I've thought about before.

But pensions seems so ripe for abuse. It's too easy to make optimistic and unkeepable promises about future compensation.

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

#114

Post by gaius »

beastman82 wrote: post #97
gaius wrote: post #41

100% of the blame lies with Jack Welch and his short-term thinking, reckless cuts that hollowed out the company, well now those bills are due. Did you know his own retirement package included lifetime usage of the corporate jets?

So Jeff Immelt and his 16 year reign is 0%? C'mon.

Welch was responsible for the culture change at GE, so yes. Immelt just continued what his master started

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

#115

Post by lotsofpulp »

Frondo wrote: post #86
lotsofpulp wrote: post #58

Earlier quoted context omitted.

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.

If no one can predict what will happen 10, 20, 30+ years in to the future, why is it okay when we're subjecting individuals' retirements to that same inability to predict the future?

Theoretically, so they have skin in the game and that would prevent the endemic fraud in taxpayer funded pensions like we have. Realistically, you should be cultivating social capital by way of raising a family or networking with useful people if you really want a secure future.

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

#116

Post by presidentender »

ta76567656 wrote: post #105
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…

Don't forget that 1) the first world birth rate is below replacement, and 2) your retirement savings will be made worthless by inflation if there is no labor pool to support the economy when you are retired. Parent poster is arguably subsidising your retirement by putting in the work to raise the generation that will produce the goods and services you will wish to consume in your retirement.

I benefit just as much from parent's children (heh) as I would from yours, but less than I would from my own, because they'd entertain me.

Parent's enjoyment of those children is an appropriate benefit which both parent and parent's wife have purchased at the cost of parent's wife's career and their retirement savings.

Put another way, parent and I both receive an economic benefit, but parent receives an emotional benefit. You can argue that I should pay for the economic benefit I receive, but I do not think it appropriate that I should subsidize the price of his emotional benefit.

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

#117

Post by zokier »

mirceal wrote: post #37
overcast wrote: post #29

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.

this may be an unpopular opinion (especially if the stock is doing well) but I've also done the exact same thing (sell on vest + diversify).

> this may be an unpopular opinion

In what universe it is an unpopular opinion? I've always only heard the recommendation to diversify

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

#118

Post by ghaff »

dominotw wrote: post #77
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…

I have question regarding 'retirement plans' if you don't work for govt. 1. Do your retirement plans transfer between companies. 2. What happens to your retirement plan if the company goes down under.

Assuming you're asking about traditional defined benefit pensions (as someone else answered for 401(k)s).

1. Not generally (ever?). This is one reason why traditional pensions are less attractive these days. Pensions were really a product of a world where someone worked for GM for their whole career or at least a long period of time. (Pensions tend to be constructed so that they rewarded long stints at one or two companies rather than short stints at a bunch of companies.)

2. It's probably safe. There's various legislation around private pensions and, at least as a last resort, the pension of a bankrupt company could be taken over by the Pension Benefit Guaranty Corp.

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

#119

Post by sct202 »

gvb wrote: post #66
logfromblammo wrote: post #57

Earlier quoted context omitted.

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…

US pensions are a guaranteed benefit, insured by the US government. If GE defaults on the pension, the US government says they will step in as trustee and will pay him the full $85,000/year. Ref: https://www.pbgc.gov/

This isn't completely correct. The pension is insured but the maximum monthly benefit depends on a lot of factors. Zabroski is 61 and receives $7k per month, the PBGC won't pay that much unless GE's pension goes bankrupt when he is 67.

https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum...

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

#120

Post by logfromblammo »

astura wrote: post #75
logfromblammo wrote: post #64

Earlier quoted context omitted.

Conceptually, the company is no longer contributing anything towards employee retirement. They are a transparent entity, ticking off the minimum requirements to realize the benefits from section 401(k), and don't do anything beyond telling the payroll company to divert X amount from the employee's paycheck, managed by that company, to their retirement fund account, managed by yet another company. If there is no emplo…

Let me be clear: hallow retirement plans really grind my gears. So much so that I strongly believe they should be illegal, either offer a real retirement plan or don't offer one at all. Minimum employer contributions should absolutely be mandatory. I also think that IRA and 401(k) contribution limits should be combined, so none of this "$5,500 IRA limit and $18,500 401(k) limit," it should be "$24,000 combined 401(k)…

I think we're actually saying the same thing from two different directions.

My concern is that companies that offer a hollow 401(k) are actually getting some kind of kickback for forcing all of their employees to one company as their retirement benefits manager, or to a specific subset of portfolio options with that company, and the employees have no effective recourse, because of the separate contribution limits.

If the limits were combined, there would be no reason whatsoever to insert the no-contribution employer as middleman into retirement planning, or even to deposit more into the employer-sponsored plan than the maximum matching amount. Most of the companies are implicitly saying "you're on your own after you retire", but the law still says you have to invest through your employer to min/max your retirement plan. Given that many of them will dump employees long before retirement age anyway, it makes less and less sense for any retirement account to inexplicably have an employer's corporate logo pasted onto it.

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