Most American are worth nothing or less than nothing (New York, medical, salaries)
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[quote=griffon652;33867683]Your absolutely correct. Btw that's an enormous contribution your employer makes!!! Local politicians made sweetheart deals with unions back in the days with these outrageous pensions. The mentality was the same as it is now: "Let the future generations deal with the mess I'm making, as long as I get instant benefits from this deal with the unions in the present I don't care."
May I ask the details of your pension if you don't mind sharing? I love learning about the different pension systems for each state. For example: What state or city is your pension from. And what are the conditions. Meaning what percentage of your salary do you get after how many years of serviceq.[/uote]
Yes, that's exactly right on the sweetheart deals. It was a great deal for all those who retired from about 2002 to 2011. Pension enhancements in many parts of California were made around 2000-2001, at the top of the stock market bubble. Those folks paid in much lower percentages of their salaries and are now collecting the richest benefits. And you're right, these deals were signed by politicians, most of whom are now out of office.
Her are the pension benefit formulae for the City of San Jose, where I work:
I will say, the part time folks are not part of our pension system and we do have a fair number of those in certain departments (notably the Library & Parks departments).
All it means is your salary, less FICA tax, is $73k. As long as the employer is funding the benefit it's perfectly sustainable. Thing is, it usually isn't.
Um, right. You answered your own question. The pension benefit costs now consume 25% of my employer's revenue (and rising). Not sustainable.
.[/quote]They just used the generous benefits packages to entice labor when labor was in short supply and didn't fund them.[/quote]
Actually, it was more like the unions bribed politicians into it when the economy was good. The politicians made long term, high cost commitments to a labor market issue that was very short term in duration by comparison. The pols didn't care because they knew they would be out of office when the shyt hit the fan.
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Quote:
Originally Posted by Malloric
Whether $73k is overpaying or not is really a separate issue. Stuff changes. Seven years ago, my field was in very high demand. Now with the recession it hasn't fully recovered. The government could drop wages and still fill positions. Ten years ago, they couldn't find people to work for them since you could make more in the private sector working fewer hours.
I'm overpaid and I know it. There is no escaping it. IF there were no pension, then I would say it's about right or even a little above market, but not wildly so, esp. if you want a quality workforce.
They did drop wages by over 10% by declaring a fiiscal state of emergency, but the pension costs are still going up.
CEO America thanks you for drinking the Koolaid. You rail against these 'outrageous' public sector pensions, the vast majority of which are less than $30k per year. But nary a peep about executive pensions in the private sector, which still exist and are in fact thriving. What's more, they are exorbitantly funded by the same companies that told their common workers to go pound sand.
They're a lot more than that where I live. And the thing the unions don't tell people (and what people don't understand) is setting the retirement age at 50 or 55 makes them much more expensive than a retirement age of 65.
I agree with you on the executive pensions. My response to that is two wrongs don't make a right. The problem is we don't have a free market for high level executives. We actually don't have free market capitalism in the US (even though liberals keep saying we do). What we have is Corporate Crony-ism vs. Government Socialism. They are two sides of the same exact coin. Two different masks on the same face.
Anyone with an average net worth, say, 50k is beyond broke. They are in a situation that "bankrupt" cannot even begin to describe. A true personal balance sheet should include the present value of all future liabilities: rent/mortgage interest, car insurance, utilities, school fees, cable TV etc. Good luck funding a lifetime of that stuff with 50K. Sure your job is "your greatest asset", and the present value of your future wages exceeds your liabilities, but if you were thorough and risk-adjusted those cash flows you would realize that your liabilities are as certain as death and taxes, whereas your employment income can disappear in a flash. Essentially we are all highly leveraged speculative traders in goods and services, living day to day in constant fear of a margin call. Good luck everyone.
There will always be people who are optimists about money and think it will always come from somewhere. I tend to be a realist, and understand that I have to save and plan ahead for my future.
I had an aunt who retired at 50 to take care of an ailing sibling. They owned their home and vehicle outright, and she got a small nursing pension and social security later on. She did not take into account inflation, increasing gas prices, and rising food costs. They never ate out and barely ran their AC or heater. They had to grow their own food, and not in the i want to be hip and live of the land way. My parents would help them out, but they were too proud to take charity.this was eye opening for me growing up.
hard times can happen to anyone at any moment, so you need to be prepared.
The government will not take care of me in my old age.
The government will not take care of me in my old age.
Predicting the future is always risky, but I think the govt. will take care of you in your old age. That's the way our political thinking has tended over the past 50 years or so. Look at the extension of jobless benefits. Lots of people were still out of work, so they were taken care of. If any group in society needs anything, they are taken care of. I don't agree with that, but that's the way politics works. It's a form of vote buying.
If you don't want to take that chance, you get no quarrel from me. Or if you don't want to live on the modest level at which govt. will probably support you, you get no quarrel from me either. I agree, in fact, as I don't want to take those chances either.
I'll probably be dead before this all comes to a terrible crunch in about 10 years or so, but it will be very interesting for you younger people to see how it plays out.
Public sector pensions are not extravagant. Most are very modest. The average fed pension is $32k, so the median will be somewhat lower. The average of most state pensions are in the $20-27k range--again, the median will be lower. I recall you work in law enforcement, so those pensions are higher, and are atypical.
Agreed, on points regarding the typical pension for non high risk jobs. I should have been specific, I was referring to the pensions specifically for firefighters and police officers on a local and county level in FL. I can't speak for other states, but here our benefit is amazing. So great in fact, that as the study you linked stated an average of 14% employee contribution, we pay 3% and that's because they recently changed the system. We used to pay 0%. In fact, its still so good that I turned down an offer with the FBI because the federal pension system was terrible in comparison. That's the type of deal I was referring to. Most governments that made those deals are hurting because the pensions relied on the economies continued improvement with no major recession.
Surprisingly, currently our pension is over 90% funded (we were at around 88% in '10). But that has more to do with luck then proper management in my opinion.
Last edited by griffon652; 03-15-2014 at 02:58 AM..
I will say, the part time folks are not part of our pension system and we do have a fair number of those in certain departments (notably the Library & Parks departments).
Thanks, that was very informative. Its fascinating to learn of the similarities and differences between systems in each state.
Thanks, that was very informative. Its fascinating to learn of the similarities and differences between systems in each state.
Just to be clear, the pension system(s) I referred to were not at the statewide level, just for the City of San Jose...but the pension plans in California tend to be similar.
I will have a fed pension and will likely be at that average mark, but between TSP, Roth, SS, and taxable accounts, I should make out alright. Plus, I will likely retire overseas for at least a good part of each year, so hopefully the dollars will go even further. I'm fortunate in that I can max TSP and Roth. Also, I became a fed during the time when our contribution to the pension was almost negligible. I think new hires have to contribute something like 4.5%.
Quote:
Originally Posted by griffon652
Agreed, on points regarding the typical pension for non high risk jobs. I should have been specific, I was referring to the pensions specifically for firefighters and police officers on a local and county level in FL. I can't speak for other states, but here our benefit is amazing. So great in fact, that as the study you linked stated an average of 14% employee contribution, we pay 3% and that's because they recently changed the system. We used to pay 0%. In fact, its still so good that I turned down an offer with the FBI because the federal pension system was terrible in comparison. That's the type of deal I was referring to. Most governments that made those deals are hurting because the pensions relied on the economies continued improvement with no major recession.
Surprisingly, currently our pension is over 90% funded (we were at around 88% in '10). But that has more to do with luck then proper management in my opinion.
Quote:
Originally Posted by mysticaltyger
Just to be clear, the pension system(s) I referred to were not at the statewide level, just for the City of San Jose...but the pension plans in California tend to be similar.
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