Enron should have taught people not to keep all their investments in employer stock. My question about this article is he has an $85,000 annual pension with $280k in stock that sank to $110k in value. At 4%, the $280k would return an additional $11,200 per year. That would be reduced to $4,400, a drop of less than 10% of his annual income. For this he has to find a job?
Retirement Shock: Need to Find a Job After 40 Years at General Electric
81–90 of 144 posts
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#82Earlier 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?
They're just taking a break from shitting on EBT recipients for buying Doritos.
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#83Earlier 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).
Totally unrelated to the continually growing multiple of executive compensation over employees, I'm sure.
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#84Earlier 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…
I think you might be missing astura 's point: you are essentially doing your own thing, restricted to the investment choices your company made HOWEVER, the government gives you a tax break on it that is much bigger than the tax break they would offer if you just did an IRA at the company you picked.
I think it points out the dangers of government regulating too closely, but it IS a valid point.
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#85Earlier 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).
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.
What does the math look like to you? I mean, back when I was a teenager I realized that this century is different, I shouldn't expect to do what my dad did and end up (albeit through a series of acquisitions / mergers) at the same company for 30-something years with a payout plan at the end. Sometime in 2012 I saw this article[0] which starts off:
"The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today"
I doubt things look any rosier 6 years later. So what does the math look like when the firm lifespan of the most profitable companies is quite a bit less than the lifespan of someone's useful working period?
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#86Earlier quoted context omitted.
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.
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?
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#87Quote 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"…
> Perhaps I sound too harsh, but I simply fail to understand how all these people thought that holding 6 figure amounts in a single stock was a good idea?
Indeed. But yet people in this thread are advising moving it all to just a single index fund.
While index funds are somewhat diversified many suffer from over-investment into specific industries like tech. If the .COM bubble burst again tomorrow several of the most popular index funds with be hit hard...
For example, look at the popular Vanguard Total Stock Market Index Fund, 20% in Technology, and 20% in financial, but if you dig into the financial portfolio you'd realize that a pop in tech would also sink many of the investment companies in financial too.
I guess what I am saying is, an index fund is better than a single company holding, but it isn't a broadly diversified portfolio. If you want a diversified portfolio it will cost you, since many of the alternatives don't perform as well (e.g. international index funds, small-cap, etc).
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#88Earlier quoted context omitted.
http://archive.is/RgZJi
This is cool, thanks for sharing this site (archive.is). Does this work because your browser was logged into a paid WSJ account before you used archive.is to log the page? Or is it only because WSJ's paywall allows archiving sites to read full articles as a matter of policy? Just curious to know how reliable this solution might be for other sites.
I have no WSJ account. The service apparently does, since I use it to get around their paywall pretty often
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#89Quote 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"…
> Perhaps I sound too harsh, but I simply fail to understand how all these people thought that holding 6 figure amounts in a single stock was a good idea? Indeed. But yet people in this thread are advising moving it all to just a single index fund. While index funds are somewhat diversified many suffer from over-investment into specific industries like tech. If the .COM bubble burst again tomorrow several of the most…
That's why people close to retirement or who are in retirement need to change their asset allocation. Nobody is suggesting a retiree should hold 100% equities.
Re: Retirement Shock: Need to Find a Job After 40 Years at General Electric
#90Earlier 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…
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 died with that person, now there is this ongoing inter-generational transfer of wealth that otherwise wouldn't have occurred.