In the coming decades, how much of retirement income will be completely DIY? (55, pensions)
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I'll be 32 next month. It's conceivable that I won't be retiring for another 30-35 years, and I've only been in the professional workforce for about eight years. With that said, I've seen some changes.
When I hired in at Northrop Grumman in 2010, the company had just done away with the pension for new hires. My dad hired in at the same facility a few years back and qualified for the pension. New hires just got a 401k.
Over time, they began to outsource work done at that site, with fewer full time employees, and a greater reliance on contractors. Most of the contracting firms offer no benefits of any kind.
I've changed jobs several times since then. No company offers a pension, and it seems that fewer seem to offer any retirement savings plan or company match at all. My current employer matches just 3% as an annual lump sum. Due to timing of when I was hired, I still haven't received any matching funds, and I've been here twenty months. The plan is completely DIY.
Who knows if, or what form, SS will take in another couple of decades. The political winds are currently shifting against SS and other government services seniors rely on. Medicare is in worse shape.
You will find your way AS things change by changing with them. Regardless of what happens 30-35 years from now (which will come much more quickly than you expect), you can rest assured that you will need a source of income. Retirement income has always been largely a DIY proposition.
Pensions have all but been phased-out in corporate America over the past 50-years. Since you probably can't depend on a pension (military, a government worker or teacher), you will need a DIY plan for other income sources. Plan for that by living within your means today and regularly saving towards retirement in 'hands-off' accounts.
I'll be 32 next month. It's conceivable that I won't be retiring for another 30-35 years, and I've only been in the professional workforce for about eight years. With that said, I've seen some changes.
When I hired in at Northrop Grumman in 2010, the company had just done away with the pension for new hires. My dad hired in at the same facility a few years back and qualified for the pension. New hires just got a 401k.
Over time, they began to outsource work done at that site, with fewer full time employees, and a greater reliance on contractors. Most of the contracting firms offer no benefits of any kind.
I've changed jobs several times since then. No company offers a pension, and it seems that fewer seem to offer any retirement savings plan or company match at all. My current employer matches just 3% as an annual lump sum. Due to timing of when I was hired, I still haven't received any matching funds, and I've been here twenty months. The plan is completely DIY.
Who knows if, or what form, SS will take in another couple of decades. The political winds are currently shifting against SS and other government services seniors rely on. Medicare is in worse shape.
How do you think the next few decades will go?
You are doing more than far too many American people, by thinking about it at this point in your life.
Yes, your "pension" will likely consist of your personal savings, asset equity, 401K and whatever SS has become in 35 years. Personally, I don't think SS will disappear, but it will get tweaked to some degree. Even the fed government is assessing pensions as they are currently designed.
My experience has been that corporate pensions have been eliminated only in the past 10 years or so, and these pensions may have actually hit their peak 50 years ago.
Regardless, the future is via personal savings with some level of matching by employer. The best scenario is to look for employers who make rational contributions to the 401(k) plans. The other companies will eventually learn that their lack or retirement assistance to employees is resulting in a dearth of high quality job applicants and retention problems with those they do hire.
My previous employer stopped all pensions for salaried employees in 2012 and froze existing pension balances at that time. My current employer provides a flat 4% to all 401(k) plans, matches 1-for-1 on the first 4% of employee contributions, and matches half for the next 4% of employee contributions.
My experience has been that corporate pensions have been eliminated only in the past 10 years or so, and these pensions may have actually hit their peak 50 years ago.
Regardless, the future is via personal savings with some level of matching by employer. The best scenario is to look for employers who make rational contributions to the 401(k) plans. The other companies will eventually learn that their lack or retirement assistance to employees is resulting in a dearth of high quality job applicants and retention problems with those they do hire.
My previous employer stopped all pensions for salaried employees in 2012 and froze existing pension balances at that time. My current employer provides a flat 4% to all 401(k) plans, matches 1-for-1 on the first 4% of employee contributions, and matches half for the next 4% of employee contributions.
Don't worry, while I've had up to 10% match in the past, the best I've seen in recent years is 3%.
At 32, if you can arrange your life so you can get ~$5k into a retirement vehicle that hits the very reasonable 10% average, you'll have a million dollars at 65. Given an option between paying in more Now and anything else, pay more now (compound).
$500/month shouldn't be Too hard to come by if you're able to keep a reign on your Needs vs Wants spending. If it seems tough, look towards how you can get into that position. Usually that's eliminating debt (school loans, car loans, not having a house mortgage that's more than 25% your income).
Oh, if it's not clear, we're counting on SSI to cover roughly one night a month of ordering Pizza... we're DIYing our entire retirement (and on track for 55).
SC. You just might have jump out of your comfort zone. Move to a coastal “elite” city. Live in a studio apartment instead of an updated condo. Meet and marry an intellectual equal. Get more education and certifications. Pay your dues by working more than 40 hrs a week (not posting on the internet) , going beyond what is expected. Save in after tax plans as well as 401 K type. Live beneath your means. Floss often-take care of your teeth and health in general- dental is expensive and will be even more in the future. Stop talking about being so stuck and do something about your future.
A good retirement is about choices and taking action. You have to go where the money is (even if your personal standard of living declines a bit at first)—it won’t come to you.
Retirement is DIY
Last edited by funisart; 03-01-2018 at 11:51 AM..
Reason: Add
No company offers a pension, and it seems that fewer seem to offer any retirement savings plan or company match at all. My current employer matches just 3% as an annual lump sum. Due to timing of when I was hired, I still haven't received any matching funds, and I've been here twenty months. The plan is completely DIY.
Then you'll just have to sally forth.
Quote:
Originally Posted by Serious Conversation
Who knows if, or what form, SS will take in another couple of decades. The political winds are currently shifting against SS and other government services seniors rely on. Medicare is in worse shape.
Political winds are not shifting against Social Security, and nothing will happen except that Congress will wait until the last possible minute to increase the FICA Payroll Tax to keep it solvent until the next crisis happens.
Quote:
Originally Posted by Serious Conversation
How do you think the next few decades will go?
Congress will either enact legislation creating incentives for employers to offer 401(k) plans or mandate them in some way.
Look how often people leave jobs, a pension wouldn't work with today's workforce, pensions are not portable
I feel there may be a direct causal affect between lack of pensions and high job turn-over. With no pensions or other benefits linked to longevity, there is really no incentive to stay with any employer past the 5 years necessary to not look like a 'Job Hopper' on your Resume.
And the five year limit may no longer apply. My experience is that an employee does not receive any increase in vacation time until year 6, so employees are not losing out on anything if they leave earlier than 5 years for a bigger pay check and negotiated time-off amounts.
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