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Good article but I question one statement. "lump sum not usually in the best interst of retiree" Depends on the company, the plan, and how well funded the pension is.

A friend faced this decision some years ago. He chose the lump sum and was very glad he did five years later. The company got into financial difficulty and was eventually bought out. The pension plan was under-funded. Retirees receiving monthly pension payments had their benefit significantly reduced but they couldn't clawback his lump sum. He had invested it wisely and always swore he was way ahead of the game compared to taking the monthly payout.
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A friend faced this decision some years ago. He chose the lump sum and was very glad he did five years later.

I took lump sum when I left TRW. I figured I could make better investment decisions for me than the plan manager could. (Got it into an IRA.)

Count No'Count
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"A friend faced this decision some years ago. He chose the lump sum and was very glad he did five years later. "

I worked for General Electric from 1971 to 1983. Got laid off by Neutron Jack. Had months to find a new job and did (at 40% pay increase, too)....

Did not cash out the pension.....wouldn't have been that much. I started collecting it at age 60. It's not inflation indexed. So far, they've paid me $5400 a year for the past nearly 8 years now and hope to collect till I reach 100. Well, that's the plan.

I also bought GE stock along the way through the company purchase plan. Think we got a little bit of a discount, not sure, but you could invest up to 15% or something like that. That pays me, now, over $12,000 in dividends...just sat on it...it split...and split....and I smile each month thanks to just 11 'pension years' at GE way back when. Heck, add that to my SS, and I got well over my 'survival level' income and the rest is gravy above that...

I worked for MCI.....sold most of that stock near the peak but got burned on some of it in one account that I couldn't get to....that was my pension money rolled over to a special account with MCI stock. Took a bath on that but when it takes six months to do anything with it after you leave the company and you take a 'voluntary layoff' before the bigger ones to come...well, you just take it in the shorts.....still came out way ahead.



t.
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<<The premium hike aims to address PBGC's chronic underfunding, which results from a mismatch between premiums - which it doesn't control independent of Congress - and the risks the agency manages. The agency reported a record deficit in fiscal 2013 of $35 billion.>>



I'm amused by an "insurance" plan that announces it has a $35 billion deficit.

To be an insurance plan --- you should have substantial assets IN EXCESS of your obligations.

This is yet another government "insurance" program that would closed and declared bankrupt were it isd the private sector.


This group would include Social Security and Medicare.


Seattle Pioneer
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The article really didn't address one of the other reasons companies have been dropping defined benefit plans for many years. They don't serve the needs of their employees any more. People used to stay in their jobs for many years and retire from that company. That stopped decades ago. Portable pension plans (401K's) seem to make more sense. I worked in HR for years and even trying to explain a defined benefit pension plan produced glazed eyes and total boredom from 80% of our employees and the plan cost us a fortune. Funding was based on silly assumptions or government silly requirements that changed routinely. Silly is perhaps not a good word to use, but funding these plans taking into account, turnover, age of the work force, future interest rates, future investment income, etc. was close to impossible. Defined contribution plans are tidier, portable and produce a value that any employee can SEE and take with them when they leave for greener pastures. More bang for the company's buck and while, ironically, maybe not as lucrative a benefit as a defined benefit plan, more employees will probably benefit from it due to job changes.
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but funding these plans taking into account, turnover, age of the work force, future interest rates, future investment income, etc. was close to impossible.

Always good to pass that buck on to someone that may be totally clueless about investing. :)

Defined contribution plans are tidier, portable and produce a value that any employee can SEE and take with them when they leave for greener pastures.

But something like the 401K plan can be vulnerable to those that manage them. There are a lot of horror stories out there about excessive management fees.

My company had a great 401K plan, of which I maximized my use.

But it was in addition to a defined benefit plan. I got a nice lump sum when I left, although it wasn't anywhere near the size of my 401K.
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My first job had a pension plan but you had to be there 10 years to 'vest' and have any pension. I left after 3 years (non -voluntary).

Second company had a pension plan. You needed 10 years at first to qualify...I had 12 years of service before I left. I left the pension money in..that was 1983. I also was buying stock at 15% discount and got all I could. did that for 12 years. Left in 1983...

Last job had a pension....you needed 10 years.....about 10 years in,the feds changed all the pension rules. It was unatrractive for companies and the funding could shift massively from year to year depending upon last years returns, stock gains, interest reates, etc. My company did away with pensions....for those who did not meet the 'formula' of years plus service equal to 55. I missed it by two years.....those who qualified stayed in the pension plan...otherwise, your pension money so far was dumped into your 401K.....as a special sub account you couldn't change - in company stock...at least not until age 55).....

when I left in 1999..took 'voluntary layoff' ..that got converted to $$$....and I had a fair chunk of company stock and a fair bit in the 401K from years of contributions at max level.


However......I haven't touched the 401K which I rolled over to IRA immediately after leaving the company.....but will have to in 2 years.....reaching 70 1/2 then.

From the second job...I get $5400 a year in pension.....not inflated adjusted and no COLA...and started that at age 60. I get twice that in dividends from the company stock I accumulated. Add that to the SS....and I'm meeting my basic needs......

The IRA has grown nicely.....


and my other stock accounts doing nicely.....spinning off interest and dividends.

But if folks aren't going to save for retirement, there won't be many pension plans around to provide them a 'living' in retirement. They've got to sock away money in 401Ks and IRAs and not be raiding it every job change. It ought to be near impossible to get at. Until you reach age 60 or 65, and then only less than 10% a year withdrawal.


t.
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When my husband died in 1987, I had Ernst and Whinny, at that time, do a study if it would be best to cash out his pension or keep it. I was advised to keep it. It is with big Oil Company...don't think they are going under in my time. Payments do have a rare increase sometimes which I appreciate. I took MDHs 401K and moved it into my own IRA. I appreciate having the pension and the supplemental insurance to Medicare + Vision with this company. Damn, I missed out on Dental by six months.

I have to say this company has always been most kind to me and I am very fortunate.

Birgit
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my dad died in 1991 at 72 from a bungled heart bypass surgery. . My mom got the Telco Pension (NY Tel later taken over by Bell Atlantic).....my dad had set up the pension so there was survivor benefits. Mom did OK with that and dividends from the AT&T /Baby Bell stocks she had.

She was covered by their Medicare supplement...don't think she got vision...not sure...or dental...

She got SS, too.....from my dad's work.....

she lived to 82.

They didn't have 401Ks back then.


Glad it worked out so nicely for you.

The oil companies will be around for another 10 years...they'll just be getting smaller and smaller each year (they are basically liquidating themselves, selling assets by the billions, raising cash) ...just to keep up 'cash flow' and be able to pay the dividends and spend on CAPEX.

There is no more growth for the oil majors. Their sun is setting.


t.


t.
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<<But something like the 401K plan can be vulnerable to those that manage them. There are a lot of horror stories out there about excessive management fees.
>>



Heck, defined benefit pension plans are a huge pot of money with few people watching it's management very much. They are ENORMOUSLY subject to being pillaged and mismanaged.

Just look at most public pension plans as examples. Look at Detroit for a terminal case of pension plan mismanagement.


Seattle Pioneer
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SeattlePioneer writes,

Just look at most public pension plans as examples. Look at Detroit for a terminal case of pension plan mismanagement.

</snip>


You see the same thing with for-profit companies.

How many good, Christian, middle-class workers did Mitt Romney screw out of their jobs, pensions and health insurance during his career as a corporate asset stripper and jobs outsourcer -- and he got tens of millions of dollars in tax breaks while doing it.

intercst
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Look no further than the pensions of Delphi employees.

they got NOTHING in the bankruptcy of GM......they were not union backed.

GM workers (unionized) got their full pensions.

Delphi workers with company pensions...got ZERO!...lost in bankruptcy.

And you thought your pension was 'safe'?

ha...


t.
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intercst:"How many good, Christian, middle-class workers did Mitt Romney screw out of their jobs, pensions and health insurance during his career as a corporate asset stripper and jobs outsourcer -- and he got tens of millions of dollars in tax breaks while doing it.

YOu mean like Baracki and his buddies did to Delphi workers who wound up with Zero in the government take over of GM? Where the GM union workers got their full pensions, but the non-union workers at Delphi got zero?

Talk about giving folks a screwing over! Way to go Baracki!

And, intercst, can you find ONE company that did not pay an owed pension that Romney affect?


t.
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telegraph misinforms,

YOu mean like Baracki and his buddies did to Delphi workers who wound up with Zero in the government take over of GM? Where the GM union workers got their full pensions, but the non-union workers at Delphi got zero?

</snip>


As usual tele you are woefully misinformed on these issues. Delphi's 70,000 workers had their pensions backstopped by the Federal Pension Benefit Guaranty Corp up to a limit of $59,320/yr in annual pension benefits for a 65-year-old. If you had a $100,000/yr pension, you lost $40,000/yr. But it's a complete lie to say that they got zero.

http://www.pbgc.gov/wr/large/delphi/delphifaq.html

intercst
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Guys,

In the interest of this not becoming another REHP/RECF catastrophe, please take the political crap off the board when as in this case it does nothing to improve the conversation.

IP
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<<SeattlePioneer writes,

Just look at most public pension plans as examples. Look at Detroit for a terminal case of pension plan mismanagement.

</snip>

You see the same thing with for-profit companies.

How many good, Christian, middle-class workers did Mitt Romney screw out of their jobs, pensions and health insurance during his career as a corporate asset stripper and jobs outsourcer -- and he got tens of millions of dollars in tax breaks while doing it.

intercst >>


I'm not an Xpert on Romney's business career.

But jobs didn't "belong" to employees, nor did health insurance or even pension rights that hadn't been accrued.

Restructuring a company, making cash payouts for accrued pension rights and such are business strategies provided for and allowed by law.


But if you have specific things that Romney did that were illegal, I'd be glad to hear about them.

As an employee of a private utility, I had my accumulated pension rights bought out for an IRA or whatever. Frankly, I had my doubts that the cash paid out into such a plan fairly reflected the value of the pension rights. But seat of the pants guesses about the present value of future benefits are really not worth guessing about.

Several major unions that represented employees could have raised objections to the valuations, or employee groups could have challenged the fairness of such a buy out. None did.

That being the case, I don't think it reasonable to claim that employees wer5e cheated in such a transaction.


Seattle Pioneer
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In the interest of this not becoming another REHP/RECF catastrophe, please take the political crap off the board when as in this case it does nothing to improve the conversation.



Considering the fact that this is a retirement board, it's completely appropriate to discuss pension plans.
If you don't like the conversation, you don't have to participate.
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Brooklyn1948: Considering the fact that this is a retirement board, it's completely appropriate to discuss pension plans.
If you don't like the conversation, you don't have to participate.


The two posters from RWCJ who pollute this board have nothing to offer wrt retirement or anything else, as far as I can tell. I have long since put them both in the pee box, and I urge anyone else who wants rational discussion to do the same.

I see you are a regular at RWCJ also. Is that what you would like for Retired Fools to become? A right wing echo chamber? The two RWCJ regulars here seem to have a mission to disrupt and annoy as much as to add meaningful content to a discussion.

Count No'Count
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<<Considering the fact that this is a retirement board, it's completely appropriate to discuss pension plans.
If you don't like the conversation, you don't have to participate. >>



We are discussing pension plans. If you don;t like the conversation, you don't have to participate.



Seattle Pioneer
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<<I see you are a regular at RWCJ also. Is that what you would like for Retired Fools to become? A right wing echo chamber? The two RWCJ regulars here seem to have a mission to disrupt and annoy as much as to add meaningful content to a discussion.

Count No'Count >>


You might want to go back and read intercsts's post. Do you want this board to be a left wing echo chamber?


You apparently don't want to hear any views but your own.



Seattle Pioneer
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Points were made on both sides.

Face it...the tax rule change around 1990 made pensions very difficult to fund and companies under varying yearly obligations to 'keep them whole' regardless of what the stock market did.

No one has a crystal ball, and some years companies had to pony up big bucks to 'top off' pension plans. They wanted to stop that.

the 401Ks came in...and for MOST people they were better. The average time on a job in the 1990s was well under five years....and almost no one starting a job in the 1980s or 1990s expected to work for the same company for life...and maybe not even 10 years where many pension plans vested so you even got a pension at all! and that ONLY if you stuck around for decades or if you left but didn't take the pension money and you reached retirement age - which could be 65.....

----

Yes, some companies wound up with big 'balances' in the pension fund and raiders took over the company and freed up the 'excess' pension money. So? Other companies got taken over because they had mineral rights or oil rights or something else. Or landing slots at airports. That is how business operates.

But pensions started to vanish in the 1990 era....almost 35 years ago.

Folks had then to save on their own. In many cases, they blew the 401K money when they got laid off....they should have not touched it.....but they could and often did.

So?

Most had no other saving, no rainy day fund, no 8 month emergency fund....just lived paycheck to paycheck, paying the minimum amount on their credit cards.....and blowing the rest on fun, cars, recreation, eating out, etc......

I saw loads of engineers, who made very good money, wind up unemployed and broke within a month......they never saved. No emergency fund. Up to their necks is 'stuff' ......but no assets other than maybe the 401K fund, which they now had to raid to live on while they went job hunting.

And the 'pundits' are telling us how sad it is they didn't save anything, they don't have a pension, and they'll be in 'poverty' trying to live on SS.


t.
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see you are a regular at RWCJ also.



what is rwcj?

forgive my typing as i broke my arm and typing with one finger
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Yes, some companies wound up with big 'balances' in the pension fund and raiders took over the company and freed up the 'excess' pension money. So? Other companies got taken over because they had mineral rights or oil rights or something else. Or landing slots at airports. That is how business operates.

But pensions started to vanish in the 1990 era....almost 35 years ago.

Folks had then to save on their own. In many cases, they blew the 401K money when they got laid off....they should have not touched it.....but they could and often did.

So?

Most had no other saving, no rainy day fund, no 8 month emergency fund....just lived paycheck to paycheck, paying the minimum amount on their credit cards.....and blowing the rest on fun, cars, recreation, eating out, etc......

I saw loads of engineers, who made very good money, wind up unemployed and broke within a month......they never saved. No emergency fund. Up to their necks is 'stuff' ......but no assets other than maybe the 401K fund, which they now had to raid to live on while they went job hunting.

And the 'pundits' are telling us how sad it is they didn't save anything, they don't have a pension, and they'll be in 'poverty' trying to live on SS.


t.



Actually, what I find interesting is that the original intent of the 401K was to be part of a "three legged stool" for retirement: social security, pension and 401K. When I was working back in the 70’s, at one time besides the pension I was entitled to, I was funding an IRA and a 401K provided by my employer. Unfortunately, industry (with lawmaker’s tacit if not full support) has essentially negated the pension and most Americans don't fund their 401Ks. This leaves social security as the only available retirement option for most. However, even if Americans fully funded their 401Ks, it likely wouldn't be enough for a comfortable retirement (about 80% of pre-retirement income) even if you waited for your full social security benefit.
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what is rwcj?

forgive my typing as i broke my arm and typing with one finger


I see your broken arm doesn't affect your FA finger. Wazza matter? didn't like the answer?

CNC
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However, even if Americans fully funded their 401Ks, it likely wouldn't be enough for a comfortable retirement (about 80% of pre-retirement income) even if you waited for your full social security benefit.


i imagine that most people want to retire and keep the same lifestyle they had before.
well, we retired a year ago with a tiny pension, social security and a draw down of 1200 a month from our 401K. we live better than we did on an almost $200,000 a year salary. we sold our apartment in one of the wealthiest neighborhoods in brooklyn, bought a small house in a coastal community in MA and we are living a wonderful life on an income that amounts to about $60,000 a year. Food here is much much cheaper as are utilities.
The big plus is that we moved closer to family and we are now able to watch our two grandkids grow up.
And, we feel grateful. My husband was laid off three times starting at the age of 52. Lost lots of money along the way as did a lot of others who worked in financial services and suffered layoffs.
We never imagined that it would even be possible to continue to live in our old neighborhood and since we had no family there, moving was the thing to do. We never looked back and have no regrets. We live in a great town and we walk to the ocean in under 10 minutes. And, the neighbors are lovely.
I am not great at math but I believe we retired on 30% of my husband's former salary and we are just fine.
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mendoman:"Actually, what I find interesting is that the original intent of the 401K was to be part of a "three legged stool" for retirement: social security, pension and 401K."

Actually, no. You had IRA's back in the 1970s.....usually separate from a company, and usually run by banks where you had to put CDs into them. Not great savings vehicles.

And in the 1970s, you could not easily invest in stocks....the era of Vanguard was yet to be for most.

The 401K basically replaced the pension in nearly half of the 'big companies' right around 1990s. that's when the tax laws and the gov't accounting standards for pensions meant ANNUAL top offs of the pension funds - which could be near zero (if stock returns were good) or sky high - (when the market went down that year).

Only those with so many years of service plus age = X, where X was determined by the company (in my case about 55).....got to keep their pension plan. Everyone else had their 'accumulated pension credits' stuffed into a separate category in their IRAs which they could not touch till they left the company or could move part only after age 55.

It was part of what was supposed to be 'your assets' other than SS and maybe a grandfathered pension.

--------


" When I was working back in the 70’s, at one time besides the pension I was entitled to, I was funding an IRA and a 401K provided by my employer."

I don't even think 401Ks existed back then. IRA's yes...but I think you were limited to 2000 bucks a year then. Piddling money..or maybe it was $1000/yr. Not a lot

My company 401K didn't start till 1990 or so.


--------


" Unfortunately, industry (with lawmaker’s tacit if not full support) has essentially negated the pension and most Americans don't fund their 401Ks."

The pension became a liability in two ways. One, the 'annual contributions' were unpredictable a year out. Companies could not do a budget and could get zinged with billions of dollars of 'expenditures' at the end of the year.

Second, if you had a fully paid up pension plan, raiders would eye that. If you had 'excess' pension money, the company couldn't touch it, but a raider could take over the company, and 'combine' that with its own plan....freeing it up. It made you a take over target.

---------


" This leaves social security as the only available retirement option for most. "

Only for the foolish. Many people still accumulate a 'paid for house' by the time they retire. Maybe bought some company stock? Maybe have some CDs?

And , what you do mean, most? SS is never going to provide you a luxurious retirement. But half of all retirees live on SS in FL so it can be done.

--------




"However, even if Americans fully funded their 401Ks, it likely wouldn't be enough for a comfortable retirement (about 80% of pre-retirement income) even if you waited for your full social security benefit. "

Says who? I only contributed to my 401K for 8 or so years...didn't start early enough. I could take out 20K/yr from it at a 'safe rate' or maybe even 25K a year.

For someone making a 'middle income' salary and contributing to 401K for every company they work for.....many should have a million bucks waiting for them at retirement with 'normal expected stock market growth'.

You just have to convince them to save.

it's not my job to provide them a 'living retirement' at the level they are accustomed to.

--------

Bklyn"I imagine that most people want to retire and keep the same lifestyle they had before"

Well, I'd like to retire with a yacht, houses around the world, and a million a year income to pay for it. So?

Yes, many would LIKE to .....that's a WANT...not a NEED.

---------

Brklyn:"we retired a year ago with a tiny pension, social security and a draw down of 1200 a month from our 401K. we live better than we did on an almost $200,000 a year salary. we sold our apartment in one of the wealthiest neighborhoods in brooklyn, bought a small house in a coastal community in MA and we are living a wonderful life on an income that amounts to about $60,000 a year. Food here is much much cheaper as are utilities."


I am not great at math but I believe we retired on 30% of my husband's former salary and we are just fine. "


Wow...I kept my house, and I have a hard time spending 60K a year. More like 40-50K and that's doing everything I want. Glad you are having fun. 60K is likely more than 80% of retirees so you are doing quite well. I could take more, but I don't enjoy spending more. I'm a sort of LBYM type.

When I first looked at retiring, I had 3 budgets. One was 'bare survival' - staying my my current house, but cutting back to the bone on travel, eating 99% of the time at home, getting rid of cable TV, etc. That was about 22K at the time (15 years ago). If I sold my house, maybe I could cut that to $18K/yr....renting a small apartment. Cut out magazine subscriptions, etc and the newspaper. Still health insurance which was a couple thousand a year.

the next was a middle budget. Stay in my house, do some fun travel and things, cable TV, newspaper, magazines, eating out at budget places 2-3 times a week...that came in at about 33K.

then there was the 'have lots of fun' budget....10-20K travel, international trips, etc.....new car every 5 or 7 years if I wanted it. That was 50K plus.

I retired early at 52.5. I had to make it to 62 to collect SS ($20K/yr), plus i got a $4500/yr pension from a former employer starting at age 60 - not inflation indexed. So....I had after that 2/3rds my survival budget satisfied and I would have to tap my portfolio for only a couple thousand worst case.

well, delightfully, the portfolio spins off some nice dividends....plus I got a few CDs.....and GNMA funds....so I'm not hurting.

I never made more than 90K salary (1998).....as an senior engineer. that was 15 years ago.....when I left the company....

Never looked back.....

Actually, never had to go to the middle level budget...the stock market and investments have been good to me.

---

But folks are going to have to stash money in private and 401K/IRA ....starting when they start working. And NOT TOUCH IT...if they expect to have a decent retirement now.

At least 10%.....every month...from the day of their first job till they retire.

Otherwise, they'll be joining the trailer, er, mobile home folks in FL....or in South TX......not bad living, but not living in NYC for sure! they'll be surviving on SS. Many couples do quite well, especially if both worked 25 or 30 years or more.





t.
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i imagine that most people want to retire and keep the same lifestyle they had before.

Guess we are not most people then. We live in a high COL area for work and good public schools for the kids. We will be leaving for rural, cheap and fabulous with our own 300' of frontage on a great kayaking river after Youngest graduates next year. No mortgage for the house that cost 1/5 of our current residence, taxes 1/8th what we pay now, no need to save half our salary, or commute long distances to work. Taxes close to nothing since income so much lower.

Considering dropping the land line, the tv and internet. Lots of dvds for free 7 miles away at the library, providing binge watching of series, where there is 24/7 internet as well. It's also a social visit for us. Hike the falls, bike the roads, fish, tube, garden, kayak. Pretty much all free.

IP
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i imagine that most people want to retire and keep the same lifestyle they had before.

I made this statement because it seems that having 80% of your former salary is what everyone is told is necessary in order to retire.
I, personally, had no illusions of retiring at 80% of 200,000.
We are just lucky that we are not living under the Brooklyn Bridge like trolls instead of having the luxury to walk over it on occasion.
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Guess we are not most people then. We live in a high COL area for work and good public schools for the kids. We will be leaving for rural, cheap and fabulous with our own 300' of frontage on a great kayaking river after Youngest graduates next year. No mortgage for the house that cost 1/5 of our current residence, taxes 1/8th what we pay now, no need to save half our salary, or commute long distances to work. Taxes close to nothing since income so much lower.

Considering dropping the land line, the tv and internet. Lots of dvds for free 7 miles away at the library, providing binge watching of series, where there is 24/7 internet as well. It's also a social visit for us. Hike the falls, bike the roads, fish, tube, garden, kayak. Pretty much all free.



Wow. Sounds fantastic. More like a permanent vacation.
Good for you!
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I retired early at 52.5.


Telegraph,
The only people in my family who retired early were those who worked union jobs and put in their 30-35 years and even then they were closer to 56-58 years old.
While you retired at 52 my husband's first layoff came at that same age. He had to work until he was 66 before he could quit a job that was killing him.
Did you not like working?
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what is rwcj?

forgive my typing as i broke my arm and typing with one finger

I see your broken arm doesn't affect your FA finger. Wazza matter? didn't like the answer?



Didn't think it was worth a reply
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BKLN:""i imagine that most people want to retire and keep the same lifestyle they had before.

I made this statement because it seems that having 80% of your former salary is what everyone is told is necessary in order to retire.
I, personally, had no illusions of retiring at 80% of 200,000."

---

when I was working, I was saving 30-40% of my income. My house was paid for. I had all the toys I wanted. My cars were always bought for cash and I kept my 1990 Honda for 17 years. it was bought in 1990 and it was 8 or 9 years old when I retired and still running fine.

I was making 90K plus of course, getting a nice return on my portfolio adding another 20-25K in income.

So...my lifestyle before I retired.....was that I was living on 35-50 of my salary.... (25-30% disappeared in taxes, SS, medicare naturally)


--------
- -----


BLKYN:"Telegraph,
The only people in my family who retired early were those who worked union jobs and put in their 30-35 years and even then they were closer to 56-58 years old.
While you retired at 52 my husband's first layoff came at that same age. He had to work until he was 66 before he could quit a job that was killing him.
Did you not like working? "

- - -


Factor 1 -
My dad had a heart attack at age 56....it slowed him down a bit....he worked 1/2 days till he retired at age 60. He lived to 72 and died during open heart bypass surgery suddenly.....

On my dad's side, everyone except one of the brothers died before 74...... so the medical history of my family isn't great.

On my mom's side...she developed major arthritis when she was 70, getting worse year by year.... lived to 82 and the second broken hip...she was active.....but it didn't help that much.....

------

Factor 2

I had polio when I was five. No vaccines back then...4 years before Salk came up with it.

The stastics say 1 in 3 people who were hospitalized with polio will wind up in a wheel chair by age 70. Hmmm....not good..... but I plan to be one of the 2 or 3.......but you never know...... post polio syndrome and problems slowly appear.

so....might as well enjoy 'retirement' .....just in case you get blindsided later.....right?

----

Factor 3 - the most important.....

I was working with a co-worker and we were using the on-line tools available back then on the internet to do financial planning and budgets for ourselves. You could put in actual or hypothetical portfolios, assumed rates of return, assumed interest rates, etc...and you could do your annual budgeting of expenses, taxes, housing costs, car costs, etc...in great detail. We both did that....he was a few years older than I.....maybe 10.....

You could put in things like getting SS at age 62.....and it would estimate your income...(then of course, you need less from the port)....or at age 66 or age 70...where you had to 'fund' your retirement solely out of your portfolio...until then.


I noted that I had more than sufficient assets at a 4% withdrawal rate to exceed my current salary....hmmmm....even at 3% withdrawal rate, I would be living above my current spending levels....hmmmm....

of course, that was 1999 or so....after 10 years of fantastic returns in the stock market. I had been investing 30-40% of my income, some in my own stock account, some in the company 401K......for 10 years. Had no debt and house was paid for.


Then...the big day came......

One day.....my co-worker said to me "Would you come to work if you didn't get paid?"......

Huh?

He rephrased the question "If you have enough income to live on, enough that you can spend as much or MORE than you currently have, then coming to work and earning MORE just means that you will accummulate even more in your accounts and Uncle Sam will take 55% of it....and your relatives will get the rest. You'll never get to spend it - your just working for the government'

Duh! He was right. I was essentially 'working for free'!......the longer I worked, the more in taxes (over a million if I worked another 10 or 15 years till age 66)...I would pay. Dumb! And my savings would grow to where I wouldn't even feel comfy spending that much.....I'd really have trouble spending 200K a year!.....

Now the last 2 years I worked - in the telecom industry, was a time or great turbulence.....the dot com bubble was about to completely bust.....MCI was suffering. It was trying to sell itself to anyone. Deals fell through with Brtish Tel..we wasted a year twiddling our thumbs. No money for projects. Go ahead an 'plan this' but there is no money in the budget to do it. Vendors knew it....nothing was happening other than not spending money or doing anything. We sat around doing useless stuff. Then WCOM 'bought' us. That turned into a complete disaster.

We had a 'small' company wide layoff.....3 people in our department of 150 were asked if anyone would take a 'voluntary layoff'......they'd give you 3 weeks per year separation pay, health insurance for a year.........and I jumped up and down with my hand up saying 'here! here!....and I was one of three that took the buyout deal.

that turned out to be best decision I could have made. I had 17 years....got a year's pay , year's dental, health, vision.... I was 52.5

Six months later, the company laid off half my department. Only gave up to six weeks separation pay and 30 days health insurance.

- - ---

and that year, and the year after, tele racked up 100, 000 miles of travel around the US, 4 major international trips to Asia and Europe and Central America.....

Never looked back. Never needed to have a 'job'......

Most of my friends did not do well.....WCOM went bankrupt. Later bought out for pennies on the dollar by Verizon. down to 1/3rd of size and in the Telecom Corridor where over 10,000 were employed, now it is likely under 2000...and the rest have gone on to other things.

Those that stayed behind faced lots of overtime and intense pressures just to 'keep their jobs'.....not a fun place to work and nothing like the old days.

My job stopped being fun 2 years before I left.....the industry cratered. I'm glad I left when I did.

Did I miss it? Well, it was nice to have a place to talk to friends and co-workers..... but.....in the end....I would have been working for free.....right? and the 'social club' part of the job was not worth the hassle part of 'deadlines and management nitwiss-ness and wannabee pointed haired bosses' and the like. IT got more like Office Space as the industry declined.

So why would you think I would want to 'work for free' once I was financially independent?

Been 15 years plus since I retired....and I'm having fun, few hassles......and so far...so good health wise.....

I've got my entire days to myself.....48 weeks a year of vacation...holidays aren't included since you have them off anyway.....
get to sleep in every morning. No status reports to write.

I feel Zero obligation to work and fuel the federal tax machine and inheritance taxes (since then, the limit was gone up from $550,000 exemption to ,what , 3 million today)...back then it was just about half a million before the 55% inheritance tax kicked it)....the more you piled up in assets, the more Uncle Sam would get, and of course, if I worked another 13 years till' normal retirement age of 66), I would have paid nearly the better part of a half to 3/4ths of a million more in income and SS taxes!.....why? I didn't 'need the money'!

Once you reach 'financial independence' you are set. No reason to continue to feed the government machine!


t
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Once you reach 'financial independence' you are set. No reason to continue to feed the government machine!

Thanks for sharing your story.

My husband landed a job at Bear Stearns at the age of 58 after having been laid off 3 times. We bought a cooperative apartment in Brooklyn because renting was ridiculously expensive in that area. By the way, my husband was able to walk to his job in about 15 minutes from our apartment and that was a big plus.
I remember the day that Bearn Stearns went under. I thought to myself, this cannot be happening to us again. I thought I'd have a nervous breakdown. Long story short, JPMorgan kept 2 1/2% of the BS employees and my husband was lucky enough to be one of them.
There are books written about what happened at Bear. I chuckle when old friends call to tell us to read the latest book on the downfall of Bear.
I tell them that we lived it. That my husband actually worked in the derivatives area. I secretly suspect that they were envious all along and were gleeful when it went under.
Living well is the best revenge. I can attest to that.
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I wound up unemployed in Lynchburg VA...after 13 years with GE....I had months to find a new job while still on the payroll.

Moved to Arlington VA..right outside DC....bought a townhouse in 1983.....I rode the subway to work.....for a couple years until transferred out to Reston (20 mile drive reverse commute).

Went to work for MCI.....

Stayed in the DC area for 7 years. Made a nice nearly 100K profit on the townhouse.....then got transferred to TX, all expenses paid......lucked out....housing market crashed right after I left.....MCI lost better part of 70K on the sale...they guaranteed me a price based upon 3 estimates....and I took their offer.....it took them nine months to sell it....and at a big loss..their problem not mine!....lucked out on that.....they had to replace the windows.....and put in new plywood on the roof....seems just after I left, the feds found the plywood they use decomposes.....the pressure treatment insect treatment or something..... their problem. Escaped that bullet.....


and been in same house I bought ever since......24 years now.....a 'normal' size house for my area....4 bedrooms...but I only use 2/3rds of my house..... could easily live in 1800 sq feet or less....but itis a 30K cost to relocate...between commissions, fees...and I'd have to spend another 20K to update kitchen.....and put in new carpets...etc.....no payback to moving....and everything is SO convenient...docs, gym, clubs.....eating places....good food shopping....

which reminds me...I need to walk down to the AA office for a new KY map for the trip next week.....1/2 mile away! Doesn't get any better!

t




t.
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<<While you retired at 52 my husband's first layoff came at that same age. He had to work until he was 66 before he could quit a job that was killing him.
Did you not like working?


>>



People like to suppose and imagine that they will be able to continue working as long as they wish. Just as you describe, often that's an illusion and self deception.

Perhaps the norm should be to plan for retirement at age fifty or fifty two, with spending plans to enable that.

That would probably cost a lot of people only the bigger house, kitchen remodel and a new car or two they really don't need. In exchange, they would be purchasing realistic financial security for themselves and what's probably a healthier lifestyle for many.



Seattle Pioneer
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<<I see your broken arm doesn't affect your FA finger. Wazza matter? didn't like the answer?


>>



Your post was obnoxiously obscene and subject to being deleted under Fool rules.



Seattle Pioneer
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I don't even think 401Ks existed back then. IRA's yes...but I think you were limited to 2000 bucks a year then. Piddling money..or maybe it was $1000/yr.

Like I said I had a 401k and an IRA with my employer. It was either the late 70's or early 80's. 401Ks were created by he Revenue Act of 1978.

See link:

http://www.ebri.org/pdf/publications/facts/0205fact.a.pdf
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Wow. Sounds fantastic. More like a permanent vacation.

Heh, at least for the first 20 years. We figure our kids will take it over when we are in our 70's and need a place that has better access to stores, medical and culture. Or we will simply turn it into a vacation rental and get income from it.

IP,
who would rather be kayaking
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"Heh, at least for the first 20 years. We figure our kids will take it over when we are in our 70's and need a place that has better access to stores, medical and culture. Or we will simply turn it into a vacation rental and get income from it."

My parents had a nice place they spent about 4-5 months a year on Lake George, NY.....

It had a million dollar view down the lake, a nice swimmable beach (rare for this lake which has usually very sharp drop offs at the shore)....and it was right on the lake front. You'd walk out the bathroom door and be at the water's edge in 70 feet or less.

Nice dock. My dad had a power boat...and later got a sail boat.

My mom and dad enjoyed it...they retired to there and spent the winters in FL in a mobile home in the smallest incorporated municipality in FL...between the intercoastal and Atlantic ocean. Lots going on....lots of clubs, activities....and you could literally walk everywhere other than the food store and doc offices. It was a big social club ......

Anyway, my dad liked getting 'away' from it all. Up north...the nearest decent food store was 17 miles.....and a better one was a 45 minute drive south 'over' the mountain....and it was 35 miles. They'd go buy groceries once a week and do other errands like Home depot..then back home....took a day to do it all.......

Nearest movie theater - one screen - 17 miles. 2 night s a week and usually a horror type flick...

Nearest restaurant - one - 9 miles.....

Nearest place to buy a newspaper - 3 miles or so......

After my dad died (13 years in retirement after moving there)....I'd take my mom up there for the summer....she'd do OK..but she would have to drive to get food, visit doc. She did OK....but she was in her 70s...she was reaching the point she couldn't take care of the place and drive well enough to stay there..

AFter my mom died, my sister got the house...as part of the inheritance. Naturally I was invited to visit, even when she wasn't there. She worked until she was 65 1/2.........she mainly got up there for a couple weeks of vacation and holidays.

Well...it bored the heck out of me. When you are in paradise....million dollar view....it doesn't take long to get your fill of view. Or go in the canoe by yourself. You don't run into people causally in most cases to 'do things'....and the nearest places to eat are mostly 17 miles away. It's real quiet at night...nice if you like that, but I get lots of quiet at home.

Well, about three days of being in paradise (no cable TV....3 stations....)......watching a few DVDs....reading a book or two.....it was time to move on .....you can only go swimming so many times a day and not really fun by yourself. If you are up there during the summer, there's some free music concerts in town (17 miles up to Ticonderoga)....or maybe something down in Saratoga Springs - 50 mile drive each way...... but.....it wasn't my thing.

My dad loved it. He'd putter around in the garage all day....maybe fix a few things....work in the yard/garden a bit...my mom had a garden.....

but after a while, the motor boat didn't get used unless visitors showed up....and they get a tour of the lake or go water skiing....

and with the sailboat..he used it a lot the first few years...then it got to be a hassle..an hour to get it set (uncovered, etc, sails up - it was a 24 foot one, self righting.....then you'd go sailing early morning or late afternoon..wind died in middle of day .....maybe be out an hour or two...then another 1-2 hours cleaning the boat, furling the sails and covering them, covering the boat....bringing in the life preservers to the garage...and taking it out to the mooring spot - you'd get wet...... and there was more work just getting set to go, and after sailing..than there was sailing...and you only had so many options on routes to go sailing....

After 7 years he sold the sailboat too.....


A lot of stuff is only fun if you have family NEARBY that will constantly use it....

My sis and family go hiking. She likes it there. My BIL likes it there..... but I think my sis gets restless there which is only reason she didn't retire sooner......she liked the social aspect of a job....the interaction.

I'm not sure how well she'll do there...and hubby came down with pancreatic cancer.... 95% faultily rate in 2 years....so she might be alone up there.....the kids and the one grandkid will visit...but they have their own life and its a 4 hour trip for them. We'll see how that goes. She loves the place...but I'm not sure how she'll do in the isloation

After summer (July 4th to Labor Day) all the summer people go home. It gets REAL quiet. Most of the activities cease. Folks begin to stash in the firewood for their wood stoves for the winter up there - the natives....it gets to 30 below with a foot of ice on the lake at times. 8 foot snow drifts around the house, too....

So we will see what transpires.

I'd never live that far in the boonies again. Did in VA....5 acres of land on a ridge crest, 2 miles in off a paved road on a gravel road....it was8 miles to the nearest convenience /gas store....30 minute trip .....and 17 miles to work...and 20 miles to the movies and most restaurants of any kind, including fast food. I liked it at the time, but even then I felt a bit isolated....you just didn't run out to visit a friend...that was the better part of 45 minutes to get there, unless it was right after work. Enjoyed it...and the view - 75 miles of Blue Ridge mountains.....but I was 40 at the time. I'd think real hard about doing that again. Real hard.....and probably not do it.

I'm not good at 'entertaining myself'. I like my clubs....I like the gym.....I like eating out a few times a week and breakfast with my friend John....and with the local radio group on Sat mornings ....and all the activities around...music clubs, radio clubs, etc....

Of course, I'm getting to be 68....I'm retired. I can go off an recreate all I want anywhere in the country.....mountains...ocean....and I do travel 30,000 miles a year.....my house is 'home base' at times.....

each to his/her own.


t.
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each to his/her own.

And thank goodness for that. I prefer not to share my river with others.

I am excellent at entertaining myself, and with DH there as well as great friends/neighbors on either side of me, I can't wait.

No, for us the main issue will be access to medical when it becomes more than a quarterly issue. Hopefully that won't be for at least 20 years down the road. Costs are so cheap there that a bit of extra gas money is not a biggie.

IP
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inparadise writes,

I prefer not to share my river with others.

How does that work? Is the river closed to navigation -- even for kayaks?

intercst
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I prefer not to share my river with others.

How does that work? Is the river closed to navigation -- even for kayaks?


No, of course not, or I would not be allowed to use it either...and that can be an issue on some rivers/creeks if someone owns both sides of the riverbed and it is not deemed "navigable" by an authority. By law it is considered trespassing and you can be arrested for floating past someone's property on one of those creeks, which tend to be the smaller ones that are kayakable only after a decent rain. If you want to buy a waterfront property with the intent to float it, it is important to research it and make sure you are allowed access. Some land owners will even string up barbed wire across a non-navigable creek, particularly in hotly contested prize fishing creeks.

And for the most part, I was being facetious. I don't mind and even enjoy other kayakers on the creek since there are few and we can swap info about the river. But one of the things I love about our river, (and I use that term loosely since it is actually a creek but so wide that it doesn't get the strainers you have to worry about when a tree falls across, not the skinny shallow rocky thing I think of as a creek,) is that I can kayak for hours without seeing another soul. There is very little public access, though lots on the James which our creek flows into. That is where the general public descends with the outfitters.

We first experienced the area by renting a place for vacation and instantly fell in love. Took us 4 years to find a place that was not too camp-y and prone to flooding, or frankly even available. For the most part, people just don't sell here, with properties being handed down from generation to generation, and frankly because of the precipitous nature of much of the creek as it goes through the "mountains," there is not a lot of build-able frontage. I am a little worried about the 200 acres across the creek that has been put up for sale. It would make a nice development with lots of waterfront lots. I rather like the view I have now, much preferring listening to nature and the creek than some teens stereo cranked high or other sounds of suburbia. Ah well, I guess most of them just use earbuds and their phones these days. If it gets more developed, that will just kick our resale price up higher when we decide we don't want to live there anymore. Right now it's a hidden gem.


IP
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