Posted on 01/06/2006 8:36:36 AM PST by Libertarian444
I work for IBM and don't want a friggin' pension - I want to be able to control my own retirement dollars via my 401K. What's so hard to understand about that?
Prior to the 401 K plans there was a 401 A plan in existance, which I contributed to at a 10% clip. It was after tax and had a first in, first out concept. It was nice.
It is that massive labor shortage that the Chamber of Commerce keeps telling us about that is causing this. You know how supply and demand works. As the demand for labor goes up and the supply falls, the employers will offer their workers higher wages and better benefits to induce them .... hey wait a minute .... something doesn't smell right here ... wtf?
For the most part it is.
My employer ditched defined-benefit back in 2002 and is now defined contribution. I wasn't working here until '03 and wasn't vested in my plan until last year, so mine is defined contribution.
I'm not relying on it, although it'll be nice to have. Our 401(k)s and other investment vehicles will fund our retirement.
Then why aren't they in private industry?
There's lots of reasons. I took that job because I was being laid off, was a single parent and they were a client with a job opening. Besides, we NEED government workers, believe it or not, although I would agree with most Freepers that there are too many. I met a fair number of women who worked there whose husbands owned their own business but couldn't afford health care. They didn't get much salary, but primarily worked for the benefits. I don't have a problem with that. In fact, these women had a lot greater appreciation of business concerns than a lot of other government employees.
$hit....they (persons of Congress) should be put ON TRIAL!
Good bene's and job security. I work for a government contractor, IT. And in the past 5 years on the job have made about 10k less them many of my friends in IT in the private sector ut have great health benefits. But to a man all have been laid off for at least 4 months in those 5 years. Two have been laid off more then once. To a man thwey would trade with me.
Yea, I guess there are many people, for some it works great. My complaint is not about those you speak of, it's others who abuse the system.
Their stock price should shoot up. Looks as if they have found themselves in a hole, and have decided to stop digging.
Depends. If you have two or three million in financial assets at age 60, you should be OK.>>>>>>>>>>>
Actually, in the end it depends on how many young people are willing to work and how many retirees they can support regardless of how many millions you have. If you don't believe me just imagine yourself at age 60 living in a place where you are the only able bodied person alive. How much retirement would a mountain of money, gold, diamonds or whatever buy you? The only thing that can change this fact is technological advance (robotics) to replace human labor.
Hey, that's my theory. You must have swiped it from one of my previous posts.
But seriously, the demographic balance is not so out of whack in the US. In any case, many people older than 60 who do not have any money will still be working.
I still have 25 years or so but so many who were hoping for the pensions are going to be in such trouble.>>>>>>>>>
In 25 years 2 or 3 million may be only a start on what you will need. I remember when anyone who had 100 thousand would have thought that he was fixed for life. In fact, I still remember when there were ads on the back cover of Reader's Digest offering information on how to retire in just 15 years with an income of $300. a month. At the time that seemed quite plausible, there was even a picture in the ad of a smiling older couple walking the golf course. By the time 15 years had passed the idea already seemed far-fetched and by now most younger people don't even believe there ever was such a time.
In any case, many people older than 60 who do not have any money will still be working.>>>>>>>>>>>
Yeah, tell me all about it 8 0 )
You're missing the fact that younger workers entering 401(k) plans will be there to buy up the stock that's being sold. Also, the older workers who are retiring will gradually sell their assets over their projected lives to provide themselves lifetime income, meaning there won't be any sudden asset dump and an associated market drop.
The public sector is also making revisions to its pension systems, and has been for twenty years. It is clear even to the most bureaucratic functionaries that the old systems cannot continue. Even the unions can see this.
On the other hand some safeguards need to be in place. Profitable companies cannot easily ditch their pension plans, but profitable companies like Wal-Mart can talk about cutting their 401K matching. If a company goes this route then there should be some requirement that they continue contributing to 401K at the same level promised unless they're losing money. Also, most public companies make their 401K matching in company stock. And most companies I've worked for require that the matched amount remain in that stock. Over time that can make up a considerable percentage of your retirement savings and if the company tanks, like Enron or MCI or General Motors or United Airlines, then the retiree get's shafted. The employee should be able to diversify that company matching into other investment options, not be forced to leave it in company stock.
So, if you are correct (which you are not) then companies are changing from DB to DC because they are trying to give their employees a better deal! Nonsense. They are doing this because it saves THEM (ie the company) money. DB are better than DC for the retiree. DC are better than DB for the employer. Also, these wonderful companies are busily dumping their pension liabilities on the Federal Gov. Once everyone is in a DC system (it is comming to this eventually) what is to stop the employer from moving to a DC where all contributions are made by employers? Nothing.
My friend, I am now retired, but during my working years, my expertise included among other things pension plans of all stripes. The "old" db is totally inflexible, carries an inordinate amount of administration expenses, since it has to be re-evaluated annually according to mortality, interest return, administration, etc.
A DC has so many more advantages. I.E. portability, leaving your money for your family, great investment returns (By law each account must carry a guaranteed interest rate option)etc, etx.
When a DB is frozen, it doesn't mean that you lost your money. It is frozen at the value and payout at that time.
Feelings don't make your argument better.
I was licenced for Investments, all Insurance products, had my CFP designation and do know a little bit about the subject. My company had both plans. I would opt for a DC every time, given the choice.
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