What's the number?

[Benny Profane]

Pretty hard to get a job these days. Much harder with a felony on your record and no driver's license.

[iceman]

I felt like I was living like a king in my $100,000 house in a bad neighborhood in Salt Lake making about 28,000 a year.

J, man I seriously thought you had it pretty dialed there. I couldn't figure out why you were so unhappy with it, but you WERE unhappy, so props to you for making a change at least. I say go back, but then I don't know shit. That neighborhood was pretty mild, all you had to do was steer clear of the Tongans. But yeah you feisty. I get that. Story of my life too.

[4matic]

How does the cash double like that?

Defined Pension Plan.

[Benny Profane]

Defined Pension Plan.

Yeah, I thought so, (pretty amazing how steep that curve gets in the fifties in most) but, there's two figures there - a cash value and an annuity. Which is it? Both?

[GeezerSteve]

The risk of defined benefit plans these days is that they often get redefined. It's been happening in the USA over the past few years and there's a good chance it will spread to our neighbors to the north. See http://www.cga-canada.org/en-ca/Rese...ons_index.aspx

[XXX-er]

yeah I just ran into this, the DB pension for IBM canada is only worth 92% of what they need so IBM wanted to take 10yrs instead of 5 yrs as mandated to fix the shortfall but the retiree's voted them down ...fix this sooner than later

IBM is making lots of money the stock price is way high and they can afford it

[Toadman]

The risk of defined benefit plans these days is that they often get redefined. It's been happening in the USA over the past few years and there's a good chance it will spread to our neighbors to the north. See http://www.cga-canada.org/en-ca/Rese...ons_index.aspx

Yep. Just ask any retired airline employees from [Insert your favorite merged/defunct airline here.] That guaranteed pension wasn't so guaranteed. Everything is negotiable.

[Benny Profane]

Well, that's because the airlines declared bankruptcy. They're still covered by the PBGC for a max of about 55,000. Or, should I say, you, the taxpayer

[GeezerSteve]

AFAIK, PBGC has been funded by premiums charged to pension funds, not general revenue. So far.

Right, the airline defined benefit plans were rewritten in Chapter 11 plans. Expect more of that in other industries.

Some public sector defined benefit plans have been rewritten. Expect more of that.

[Benny Profane]

Like many illusions that are constructed for us in these underwater times, PBGC is very underfunded, and will probably have to be bailed out.

Public pensions are not covered by PBGC. Those are the real problem, especially the health care to the grave benefit.

[4matic]

Yeah, I thought so, (pretty amazing how steep that curve gets in the fifties in most) but, there's two figures there - a cash value and an annuity. Which is it? Both?

Both. I got a buddy that teaches Community College and the have defined pension and a cash value. It's a sweet deal. The guy makes $140k and works 20 hours a week. Your tax dollars at work.

[4matic]

Like many illusions that are constructed for us in these underwater times, PBGC is very underfunded, and will probably have to be bailed out.

Public pensions are not covered by PBGC. Those are the real problem, especially the health care to the grave benefit.

Again, as I've stated before, that is the reason we HAD to bail out AIG. The consequences of failed AIG pension plans would have been far greater than the loans made.

I was sitting at the Doctor yesterday with a retired retail worker (grocery clerks). Mgt is proposing a complete cancellation of sponsored health benefits to pensioners.

[Benny Profane]

Both. I got a buddy that teaches Community College and the have defined pension and a cash value. It's a sweet deal. The guy makes $140k and works 20 hours a week. Your tax dollars at work.

Waitaminute. Are you telling me, that, when he retires, he will receive BOTH a lump sum and a life annuity? First I've heard of this.

[Brock Landers]

Yeah, I thought so, (pretty amazing how steep that curve gets in the fifties in most) but, there's two figures there - a cash value and an annuity. Which is it? Both?

The cash value is as of that age- so at 55 its what $250,000 in the example? Thats a one time payment. The annuity is starting then, going until death. The curve is so steep in the 50s because the mortality table goes up (or down, depending on perspective) pretty quickly once you pass 55 and then each year after 60.

The point is that the longer you wait, the more theyll pay you per year because you arent expected to live as long. From a pure accounting standpoint- they dont mind this because youre cash value (the 500K) is discounted an extra 5 years, so its present value is a bit lower than youd otherwise think, though in the current interest environment it doesnt get discounted a whole lot).
At the same time, working until 60 rather than 55, you obviously work for 5 more years, which increases your benefit service time AND those 5 years are probably at a higher wage/salary. So when they multiply the benefit svc time by the Final Average Salary component (plus an interest component on it all, if applicable) it can jump pretty quick.

[4matic]

Waitaminute. Are you telling me, that, when he retires, he will receive BOTH a lump sum and a life annuity? First I've heard of this.

No, it's a cash value DBP vs. a guaranteed monthly payment plan. Best of both worlds.

[Benny Profane]

Again, as I've stated before, that is the reason we HAD to bail out AIG. The consequences of failed AIG pension plans would have been far greater than the loans made.

I was sitting at the Doctor yesterday with a retired retail worker (grocery clerks). Mgt is proposing a complete cancellation of sponsored health benefits to pensioners.

You sure we weren't just bailing out Goldman, too?

Yeah, pensions are very difficult to terminate, but promised private retiree health plans can be dropped in a flash. As I stated a few pages back, my retiree health plan has almost doubled in cost twice over in five years. If it continues at that pace, I consider it good as cancelled soon.

[Brock Landers]

Waitaminute. Are you telling me, that, when he retires, he will receive BOTH a lump sum and a life annuity? First I've heard of this.

Depends what kind of plan. You can have a regular pension (DB plan) and then something like an add- on plan for certain workers who are in a certain group (a frozen plan from a previous company, specific union, whatever) which could have a cash value aspect. The DB itself has a cash value as well, and you can take a lump sum or annuity in most plans.

Or you can have different payout options...where you get part in a lump sum and part in an annuity

[GeezerSteve]

Public pensions are not covered by PBGC. Those are the real problem, especially the health care to the grave benefit.

Correct that PBGC doesn't cover public sector PPs. I agree they are the bigger problem, but the vulnerability of private DB plans is a problem, one that is likely to have a profound ripple effect on the economy. I also agree that PBGC cannot forever rely on fundings via premiums unless legislation is passed under which private DB plans can be rewritten without the necessity of Chapter 11.

Retired military health care benefits are killing us and politically untouchable. We're fucked

[Benny Profane]

Depends what kind of plan. You can have a regular pension (DB plan) and then something like an add- on plan for certain workers who are in a certain group (a frozen plan from a previous company, specific union, whatever) which could have a cash value aspect. The DB itself has a cash value as well, and you can take a lump sum or annuity in most plans.

Or you can have different payout options...where you get part in a lump sum and part in an annuity

Well, I worked for a pretty good company, and my choice was one or the other.
Funny. I had that choice in '08. Saw it coming, and mulled it over for a few years, conferring with many. Thought I could do better than the boring annuity return. I was so smart. Thank the lord I was talked out of that. I would have lost at least a third in the market.

[Brock Landers]

Well, I worked for a pretty good company, and my choice was one or the other.
Funny. I had that choice in '08. Saw it coming, and mulled it over for a few years, conferring with many. Thought I could do better than the boring annuity return. I was so smart. Thank the lord I was talked out of that. I would have lost at least a third in the market.

At the time of payout, its all "actuarially" equivalent. Choosing one or the other versus having a mix is also equal, having no bearing on how pretty good your company is. Its just a matter of choice in the HR department...to a degree...though having a lump sum option is an aspect to take into account when assessing the health of the plan, as taking a lump sum especially in a low rate environment (like now) can affect the funding status harder than an annuity. Take 500K out now versus 4K a month...just a cash flow issue. But most companies offer lump sum so its not a big differentiator. The mix option is just a question of preference, though some of the plans Ive seen actually did offer it.

EDIT- however Im not sure if thats even the plan 4M is talking about...it may be a separate plan the guy is eligible for.

[Benny Profane]

Well then, if this hybrid payout is available to any public plan employees here(grrr?), I'd definitely take all cash if possible and invest very conservatively. Doubt that money will be around in ten years.

[Bobby Stainless]

I don't have a number.

I enjoy my work, and plan on doing it until I can't. IME, it seems that those who "retire", don't stay as sharp.

Inevitably ending up in front of the window, wondering who is driving up the street.

[4matic]

EDIT- however Im not sure if thats even the plan 4M is talking about...it may be a separate plan the guy is eligible for.

Honestly, I don't think my buddy knows exactly what he has.

[Todds]

Here's my take. Everyone I've told this to says I'm way too conservative with this but then after they think about it for a while usually end up agreeing.

I = amount you need to cover everything in a year.
N = number of years you plan on living.


You need I x N.

That's it. If inflation is zero (not likely) then with zero investment returns you'd just spend 1/N of your nest egg every year. With real inflation you'd need to invest so that your after tax return on the whole sum is equal to inflation. This is not that easy to do without risk that you don't want to take. Adjust the number up or down to match your perceived ability to meet/beat inflation after tax.

I've been thinking along the same lines. The only difference is that I hope that I can get low risk investments that keep up with inflation.

N is hard to calculate and what happens if you get to N-1 and say "holy shit I'm still alive and only have I in the bank?" Do you plan on living till 80, 90 or 100? There was a 106 year old guy on the news this morning that is still working on looking good.

[ill-advised strategy]

J, man I seriously thought you had it pretty dialed there. I couldn't figure out why you were so unhappy with it, but you WERE unhappy, so props to you for making a change at least. I say go back, but then I don't know shit. That neighborhood was pretty mild, all you had to do was steer clear of the Tongans. But yeah you feisty. I get that. Story of my life too.

It's a long story. The few times I explain it to people in detail they're always amazed at my string of awful luck and they usually then explain how they just figured I was a lazy asshole until they heard the whole story of my life. That phase of things involved a lot of grief over losing my longtime GF and kids and moving into a job I absolutely hated. I was lonely and pretty bummed out missing my friends and feeling like I'd made a big mistake moving. It took a lot of time to come to terms with moving to Utah, because I hated the politics of the place and, can't say this enough, had a rotten job. It's a long story and there's more to it than that. I liked the skiing, but working nights was challenging for my social life and my overall well-being. I would probably move back to Utah if my girlfriend would move, but she's dead-set on staying in Canada and I can't really argue with it b/c she had really good care for her cancer over the last year and a half and she's uncomfortable leaving that healthcare system. So, working on moving up there, which is quite the process for uneducated, poor Americans...let me tell you.


As for the neighborhood, there was a lot that went down in the 5 years I lived there. It's not a falling-apart nasty ghetto like on the east coast or the midwest, but there's a lot of crime in that part of the city and there was a lot of shit that went down next door with the meth dealing and the prostitution. I doubt if you had a meth dealer and prostitutes coming and going 20 yards from your front door you'd call that a good neighborhood. I had liberian refugees across the street. I had a SWAT standoff 100 yards away, there was an ATF raid 2 houses away. One of the houses up the block was condemned for being a meth lab. There was a place that exploded and left a huge crater and ruined several adjacent houses. etc etc etc. I had armed US marshalls in my back yard chasing a fugitive. We had some crazy neighborhood search for a little kid that got murdered. There were always new mexican gang tags in the alley behind my house.

on and on and on.

That said, If I didn't have to work 500 hours of overtime for it in a job I hated, that level of income and that kind of a living situation would be quite sufficient. Maybe I have a secret millionaire uncle waiting to leave me my million so I can kick it old school with SFB and McMannng in the sollilot and play endless games of drop in hockey at the cottonwood and murray. Downhill laps on UTA trax, midnight movies, living the good life.