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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

#131

Post by wnissen »

robrenaud wrote: post #113
wnissen wrote: post #76

Earlier quoted context omitted.

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.

Yes, it is easier to screw with a pension than a 401(k), for sure. Countries that have national pension schemes certainly have their share of problems. But the median 401(k) balance for a senior is $65K. That's maybe 2 years living expenses at a median wage of $35K. And half the population doesn't have one at all, so the typical person has saved about 1 year's salary. (I'm not using averages because they are so skewed by the rich people who sock away most of the money.) That typical person would almost certainly be much better off having even a corrupt, inadequate pension plan.

A quick calculation shows that you'd have to save roughly 2.5% of your salary during your working life, earning only 3% over inflation, to accumulate the median 401(k) balance.

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

#132

Post by photojosh »

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.

Immigration is the answer. That's what's keeping quite a few developed countries in population increases even now. Yes, there are a lot of arguments about "who".

I went for replacement myself: 2 kids.

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

#133

Post by apercu »

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).

No, corporations shifted the risk to their workers.

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

#134

Post by photojosh »

RestlessMind wrote: post #91
plurgid wrote: post #63

Earlier quoted context omitted.

Sure, but the fuller picture is more like this. 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…

Thanks for the historical perspective. Now what about times before 1950's, when societies were typically /not/ flooded with money? You mention that "The government SHOULD be providing healthcare, and decent retirement". Was that the norm before 1950's anywhere? If yes, how did the math work out? I believe longer lifespans coupled with generous safety net provided by the government is a historical anomaly, propped up…

> Now what about times before 1950's, when societies were typically /not/ flooded with money?

Social welfare such as the old age pension and disability pensions were starting to be eased before that. In Britain and it's colonies it was just after the turn of the century. (Not idea re: the USA.) They were basic, but you wouldn't starve.

> Now that things are reverting back to historical norms, we should rethink the way society is structured.

Or should we fight against reverting to historical norms? I'm not so keen on seeing our quality of life and life expectancy decline.

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

#135

Post by ajmurmann »

pmiller2 wrote: post #32
pg_bot wrote: post #20

Earlier quoted context omitted.

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…

There's no need to divest entirely, assuming a reasonable portion (say, no more than 3-5%) of total holdings is in company stock. That said, I have heard someone in my company say they refuse to invest in tech stocks at all, because they're concerned about a sector-wide downturn taking out both their job and their investment gains. I think that's a bit of an extreme position, but I understand where it's coming from.

It seems extreme but if you don't have enough other savings to bridge 1-2 years of joblessness I think it's very reasonable. The tech sector might tank and come back but you need enough breath to wait for recovery.

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

#136

Post by baldfat »

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.

Parent poster here. I should have stated we took in 3 children in Foster Care (One was a kid at church that was abused and needed a home and from June to December we had three siblings)

So we certainly choose this for our lives and I am glad we did. Two of them graduated from college and one of them is serving in the Middle East in the National Guard.

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

#137

Post by astura »

thewopr wrote: post #128
Jach wrote: post #109

Earlier quoted context omitted.

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.

Apparently the numbers are from a wealth consultancy, so not exactly free of bias.

http://amp.timeinc.net/time/money/3925308/rich-families-lose...

>Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.

I love this "factoid" though:

>“It takes the average recipient of an inheritance 19 days until they buy a new car.”

Anecdotally, I personally have two friends who got inhertences, both immediately spent it on cosmetic surgery.

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

#138

Post by pc86 »

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…

Twenty five years retirement salary, not present salary. If you're retired it's extremely likely you have minimal expenses. Your house should be paid off. Your car, even if still financed is not going to have to commute you to work every day. Healthcare is covered by Medicare.

The maximum 401(k) contribution for 2018 is $18,500. It's gone up $500/yr pretty regularly, but even if you contribute that maximum (~$750 paycheck pre-tax so your take home goes down much less) without an employer match, you can retire on $40k/yr in 24 years. And that's at the conservative 4% figure you mentioned. That doesn't include employer match, which is free money that most people with 401(k) access have. That doesn't include supplemental Roth IRA savings (2018 max of $5,500/yr) which can give you more a favorable tax structure in retirement. And that doesn't include additional savings you can have in a regular brokerage account, on the same securities your 401(k) is on, just without the tax advantages.

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

#139

Post by pc86 »

thewopr wrote: post #90
wnissen wrote: post #76

Earlier quoted context omitted.

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…

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…

Inter-generational transfer of wealth is 100% a feature and not a bug. My money was earned through my work. I should be able to dictate to whom it goes when I die. It shouldn't be spread out to help pay for thousands of people I've never met.

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

#140

Post by amorphid »

solotronics wrote: post #40
mirceal wrote: post #37

Earlier quoted context omitted.

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).

if you think your company will outperform in the short term you could set up a stop loss limit to allow only a certain percentage of loss in your company stock that way you are only exposed to upside

>> if you think your company will outperform in the short term...

I believe no one can reliable predict which way a stock is likely to go. If there is a way to predict, only a few people know, and that prediction is soon baked into the stock price.

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