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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

#71

Post by ztoben »

logfromblammo wrote: post #57
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…

In the article it says he's still paying a mortgage and his wife is disabled. So I would imagine there are quite a few medical expenses on top of that.

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

#72

Post by indemnity »

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).

Same. It’s the reason I own a house now (cash for 30% down payment in overheated market), and retirement savings are also pretty healthy due to cashing out company stock as soon as it vests.

Also means I can walk any time I want, most I’d lose out on was next year’s RSUs.

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

#73

Post by [deleted] »

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…

[deleted]

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

#74

Post by sandworm101 »

cortesoft wrote: post #62
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 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 health care today and in 1960.

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

#75

Post by astura »

logfromblammo wrote: post #64
astura wrote: post #53

Earlier quoted context omitted.

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).

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)/IRA limit."

I was just saying that if you are young and have $10,000 a year to save for retirement you are better off, from a tax perspective, saving $5,500 into an IRA and $4,500 in your hallow 401(k) rather than saving $5,500 into an IRA and $4,500 in your Fidelity brokerage account. That's it.

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

#76

Post by wnissen »

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).

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 your withdrawal rate at 4%, you probably could live forever, but that means you need 25 times your salary saved. Twenty five years salary! A pension does not need nearly the same level of assets.

2. A pension can ride out a "bad" market because some people are paying in while others are paying out. In a 401(k) if you retired in 2009, you took a lifetime hit, even with a balanced portfolio. And you can get hit by a bad market and a long life at the same time!

3. Individual investors are morons. They buy overpriced funds and do a lousy job managing them. I am a moron, but at least I know it and invest accordingly. Vanguard did a huge study of all their individual retirement accounts, and number of trades that produced the best return was: zero. Every trade you make (statistically) is buying high and selling low. Pension managers aren't perfect, but they pay attention to expenses and don't chase the latest hot stock. Therefore you need much less of a contribution to fund a pension.

It depends on how you assess these factors, but Joey Schmoe is going to have to save 15% or more of her salary to get the same retirement security as a pension contribution of 10%. A pension is only unaffordable if those contributions aren't made, and then a wave of retirements sets off an unsustainable withdrawal. But that's not a feature of defined benefit vs. defined contribution, rather it's governments who use shady accounting rather than making a small contribution annually.

When you add in the fact that almost everyone who contributes to 401(k)s is well-off (half the population doesn't even have access), it is hard to imagine a method that is less likely to lead to comfortable retirements.

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

#77

Post by dominotw »

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…

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.

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

#78

Post by dmoy »

thoth wrote: post #60
z3t4 wrote: post #36

Earlier quoted context omitted.

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.

I think GP was talking about the historical (1600s) perspective, in which stock was literally created for both raising capital and reducing risk in maritime stuff (specifically East India company).

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

#79

Post by z3t4 »

thoth wrote: post #60
z3t4 wrote: post #36

Earlier quoted context omitted.

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.

Yes, so that many people can invest in the business. And the investors invest in many businesses.

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

#80

Post by presidentender »

JaimeThompson wrote: post #70
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…

"hacker news becomes more interesting to people who want to have the sort of ideological conversations that eventually drown out the interesting stuff about tech and startups." Unless you are the one starting said ideological conversations?

Your criticism is, on the surface of it, very relevant. The superficial hypocrisy of my earlier statement would really serve to hurt my credibility if this were a willfully polarized ideological bubble.

The difference is that an on-topic reply to an on-topic comment on an on-topic post diverges as part of an ultimately topical and natural progression, whereas starting with a polarized and ideological post that has little to do with technology, startups, or spontaneous cleverness only serves as an opportunity to reinforce the poster's ideological outlook as the new normal; that is, to move the Overton window.

I myself have been guilty of this. I told a friend of mine that I'd gotten some traction with a blog post about not getting hired by dropbox, and he asked me to share a really juvenile idea he'd had for protesting the TSA. I did it; the post was poorly received, and the community spanking was enough to remind me of what effective participation in a pseudonymous social news link aggregator looks like.

That being said, neither did I start this conversation, nor was it the sort of ideological shouting that drowns out the interesting stuff. The grandparent has a good anecdote about the poster's experience with retirement planning and raising a lot of children, and it makes a point with which I happen to disagree. I voiced my disagreement without attacking the comment or the person who made it.

Ultimately, I disagree both with your implied disagreement with my original point and with the validity of your rhetorical question, but I don't disagree with the topicality of your attack and therefore I don't think your comment deserves the downvote it has at present.

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