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Mon Oct 19, 2015, 02:14 PM

GummyBearz (2,931 posts)

Pensions are a negligible source of income for the younger generation

401(k)s have largely displaced traditional defined benefit pensions among private-sector workers, and they will be the a major source of retirement income when the young generation becomes seniors. New data show that in 2014, pension plans are not even offered to persons aged 35 and younger. On the other hand, company matches from 401(k) plans boost retirement savings annually on average. Pension benefits and retirement account distributions are both concentrated among upper income seniors, and currently failing across the board. Therefore far more youngsters rely on contributing a good amount of tax deferred income to a 401(k) as a future source of retirement income.

401(k) and IRA distributions will grow in importance in coming years, and the amounts saved will be enough to replace bygone pensions for future retirees, who will also rely on Social Security, which they have paid into, as part of their incomes.

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23 replies	Author	Time	Post
Pensions are a negligible source of income for the younger generation (Original post)	GummyBearz	Oct 2015	OP
My now 26 year old	Go Vols	Oct 2015	#1
When he is 66	GummyBearz	Oct 2015	#2
when markets crash so does your 401	saturnsring	Oct 2015	#3
Yea	GummyBearz	Oct 2015	#6
When he's 52	Go Vols	Oct 2015	#5
My husband and I haven't contributed to our 401(k) in 4 years but I guess that is our fault right?	liberal_at_heart	Oct 2015	#4
My Take on 401K Is. . .	ProfessorGAC	Oct 2015	#8
I agree. 401(k)s are fine for those who can afford to contribute to them and who also have	liberal_at_heart	Oct 2015	#19
pretty much	Johonny	Oct 2015	#22
I'm the younger generation	GummyBearz	Oct 2015	#9
Well I'm sure the world is just fine and dandy as long as you got yours.	liberal_at_heart	Oct 2015	#18
Yes	GummyBearz	Oct 2015	#20
My younger Union brothers and sisters are vested into a thriving Pension and Health Plan...	Bluenorthwest	Oct 2015	#7
And I am vested into a pension that is scaling back	GummyBearz	Oct 2015	#10
They will, without a doubt. Sorry to disappoint. Nothing stopping a person with a pension from	Bluenorthwest	Oct 2015	#12
+1	Go Vols	Oct 2015	#13
I hope social security still exists	GummyBearz	Oct 2015	#14
My uncle's union pension just...	meaculpa2011	Oct 2015	#11
Yes, this is the thing	GummyBearz	Oct 2015	#16
Many studies have shown people aren't saving	daredtowork	Oct 2015	#15
Preaching to the choir	GummyBearz	Oct 2015	#17
401ks aren't necessarily a bad thing.	Massacure	Oct 2015	#21
Agreed	GummyBearz	Oct 2015	#23

Response to GummyBearz (Original post)

Mon Oct 19, 2015, 02:25 PM

Go Vols (5,902 posts)

1. My now 26 year old

was offered nothing but a pension and the company pays $10.37 an hour toward it and $5.50 toward an annuity.

Edit: Union Ironworker

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Response to Go Vols (Reply #1)

Mon Oct 19, 2015, 02:29 PM

GummyBearz (2,931 posts)

2. When he is 66

And the pension goes bankrupt and can't pay what they promised him, I assume he would rather have just got an extra $10.37 paid directly to him

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Response to GummyBearz (Reply #2)

Mon Oct 19, 2015, 02:32 PM

saturnsring (1,832 posts)

3. when markets crash so does your 401

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Response to saturnsring (Reply #3)

Mon Oct 19, 2015, 02:34 PM

GummyBearz (2,931 posts)

6. Yea

My 401 is up about 80% since 2006. That crash in 2008 was just terrible for it. Meanwhile I read story after story of pensions going bankrupt during the same time period. huh.

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Response to GummyBearz (Reply #2)

Mon Oct 19, 2015, 02:34 PM

Go Vols (5,902 posts)

5. When he's 52

Work 30 years and retire,only had to work 20 years when I was in.

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Response to GummyBearz (Original post)

Mon Oct 19, 2015, 02:32 PM

liberal_at_heart (12,081 posts)

4. My husband and I haven't contributed to our 401(k) in 4 years but I guess that is our fault right?

We're just lazy and bad savers right? And what about the younger generation that has $100,000 in college debt, living with their parents and not contributing to a 401(k)? Are they just lazy and bad savers too? Give it up. 401(k) is a failure.

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Response to liberal_at_heart (Reply #4)

Mon Oct 19, 2015, 02:37 PM

ProfessorGAC (53,302 posts)

8. My Take on 401K Is. . .

. . .that it is nice supplement for those lucky enough to have a reasonable pension, too.

I think it's way harder to save 15 or 20% of income, even though it's pre-tax, than the commercials would have us believe.

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Response to ProfessorGAC (Reply #8)

Mon Oct 19, 2015, 04:00 PM

liberal_at_heart (12,081 posts)

19. I agree. 401(k)s are fine for those who can afford to contribute to them and who also have

other retirement accounts such as a pension. The problem is the majority of Americans cannot afford to contribute to them in the current economic environment. Maybe if we can get wages up and pay for college the way we pay for K-12 education more people will be able to afford to contribute to them. We also need strong pension plans. We need to be fighting for all of it. We need pensions. We need tax supported college education. We need higher wages, and yes if someone can afford to pay into a 401(k) then good for them go ahead and pay into a 401(k).

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Response to ProfessorGAC (Reply #8)

Mon Oct 19, 2015, 07:10 PM

Johonny (17,828 posts)

22. pretty much

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Response to liberal_at_heart (Reply #4)

Mon Oct 19, 2015, 02:38 PM

GummyBearz (2,931 posts)

9. I'm the younger generation

My wife has 100,000 in college debt for a comparative literature degree. She teaches junior college for peanuts. I'm well within the realm of what you are talking about, and yes I do put in 6% to my 401k, and get it matched at a 50% rate, which means 9% total of my paycheck, and yes it accumulates. Yes it went down in 2009, and yes it came right back up again. My former employers pension kept getting scaled back during the same time period. Next question please

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Response to GummyBearz (Reply #9)

Mon Oct 19, 2015, 03:56 PM

liberal_at_heart (12,081 posts)

18. Well I'm sure the world is just fine and dandy as long as you got yours.

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Response to liberal_at_heart (Reply #18)

Mon Oct 19, 2015, 05:15 PM

GummyBearz (2,931 posts)

20. Yes

I got my 100K in debt, and I save my 6%(+3%), and I will not get any pension money. Woopideedoo... you have a pension? Then you got yours! I have a 401k and I am fine with that.

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Response to GummyBearz (Original post)

Mon Oct 19, 2015, 02:36 PM

Bluenorthwest (45,319 posts)

7. My younger Union brothers and sisters are vested into a thriving Pension and Health Plan...

just like the older ones.

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Response to Bluenorthwest (Reply #7)

Mon Oct 19, 2015, 02:41 PM

GummyBearz (2,931 posts)

10. And I am vested into a pension that is scaling back

I am still 30 years away from retirement. I wont see anything from that pension. If your brother and sister do they are lucky as hell. At least I have control of a 401k though.

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Response to GummyBearz (Reply #10)

Mon Oct 19, 2015, 02:47 PM

Bluenorthwest (45,319 posts)

12. They will, without a doubt. Sorry to disappoint. Nothing stopping a person with a pension from

having a 401K as well, if that's the thing they want to do with their money. 30 years is a long time. You have no idea what the future will bring but I do know that conservatives have always claimed that any sort of collective benefit would not exist in the future, they said it about Social Security while debating the act and never stopped. So pessimism and reason are not the same things.
If it makes you feel secure, that's the whole point. No one can control or predict the future but everyone wants to think they have done it. Control. Whatever.

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Response to Bluenorthwest (Reply #12)

Mon Oct 19, 2015, 02:55 PM

Go Vols (5,902 posts)

13. +1

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Response to Bluenorthwest (Reply #12)

Mon Oct 19, 2015, 02:55 PM

GummyBearz (2,931 posts)

14. I hope social security still exists

After paying into it for 50 years. I think it will. A companies pension is a totally different thing. That money is invested in stocks, it requires increasing amounts of young employees to prop up the retired employees, and it is not backed up by the federal government. I wont put another cent into a pension. Its 401k and social security for me. If about a dozen companies ranging from google to chevron all go bankrupt, my 401k is screwed. Unless I pay attention and sell the stocks before they go bankrupt... huh. I'll take that route.

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Response to GummyBearz (Original post)

Mon Oct 19, 2015, 02:44 PM

meaculpa2011 (918 posts)

11. My uncle's union pension just...

went bankrupt.

His benefit is now at the ERISA limit of about $1,200 per month.

He's 75 with virtually no savings. Trying to make ends meet on SS plus $1,200 here in New York is a challenge.

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Response to meaculpa2011 (Reply #11)

Mon Oct 19, 2015, 03:04 PM

GummyBearz (2,931 posts)

16. Yes, this is the thing

I feel really bad for people like your uncle who were promised retirement funding for life by a pension plan, and then got screwed out of it. Pensions were the best options for the older generation, and they worked for a good amount of time. Now, they aren't working (other than state/federal government pensions). I just don't want to find myself in your uncles shoes. I definitely don't blame him for believing in pensions, as they had always worked before. But now that the younger generation are aware that pensions can, and DO, go bankrupt, we need to take that into consideration.

When I hit 60, I will know the exact status of my 401k. Whereas my pension is this black box that I don't know will exist in 1 year, 5 years, 10 years, 100 years... and I like to have control of my own fate.

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Response to GummyBearz (Original post)

Mon Oct 19, 2015, 03:03 PM

daredtowork (3,732 posts)

15. Many studies have shown people aren't saving

With epic student loans, skyrocketing rents, and ongoing employment problems, who even has the discretionary income for saving?

The "every person for themselves" approach isn't working. Social Security is what needs to be increased: seniors need reliable sources of income.

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Response to daredtowork (Reply #15)

Mon Oct 19, 2015, 03:09 PM

GummyBearz (2,931 posts)

17. Preaching to the choir

Epic student loans (check)
Super high rent (check)
Shitty employment rates (check) ... even though supposedly obama fixed that. The consensus seems to depend what argument is trying to be made.

"every person for themselves", seems to be the only thing I can count on, so far...

Social security getting increased would be awsome.

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Response to GummyBearz (Original post)

Mon Oct 19, 2015, 07:08 PM

Massacure (7,082 posts)

21. 401ks aren't necessarily a bad thing.

For example if an employer offers a dollar for dollar match on 4% of pay, a person making $30,000 a year will have a little over a half a million dollars assuming a 7% rate of return, a person will have a little over half a million dollars after 40 years. If an employer offers 50 cents per dollar match on 6% of pay, a person making $30,000 a year will have about $575,000.

If you withdraw that money equally over 30 years, it works out to about $17,000 and 19,000 respectively. Throw in a $1,300 monthly income from social security, and you end up with about $32,000-$34,000 in income at retirement.

That being said, too many people are underemployed in part time positions that pay $8-9 an hour and don't offer 401ks. That's a different issue in my mind.

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Response to Massacure (Reply #21)

Mon Oct 19, 2015, 07:56 PM

GummyBearz (2,931 posts)

23. Agreed

Thanks talking sanely on this topic.

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