The Thing About OT...

[Wally]

I don't understand where the anti-PVD mentality comes from. Please explain it to me.

We like to eat. Hard to do when out of a job.

 

[ThePackageDeli]

Another millionaire in the making
Although this one doesent seem to math very well

So, if the company contributed $2k per year for 30 years and you had an average return of 5% over that time span, you would have 150K. You continue to make 5% after you retire, but you take 40k per year. Your company match is gone in less than 5 years. There is a reason companies buy out pension funds and convert to 401k match.

Let's compare the two scenarios. In each scenario, a person is working for 30 years.

Pension: You have to work AND wait 30 years to begin receiving your benefit. Let's say you retire at 60 and live to be 85(25 years in retirement). Let's also say your pension is $50k per year... $50k/yr * 25 years = $1,250,000, nice! And you may factor annual increases into that total as well.

401k with match: You also have to work AND wait 30 years to begin drawing on your investment without penalty. The big difference between the two right off the bat however is that when you reach age 60 here, you have full access to ALL of your investment IMMEDIATELY. That's a HUGE deal. So, let's assume that with the company match you are able to max out your 401 contribution every year for 30 years. Current contribution maximum is $20,500 per year. And the historic returns on a simple S&P 500 Index fund over the last 80 years is around 10-12% (not 5% like you suggested). So let's be conservative and assume an 8% return for 30 years... $20,500/yr * 30 years factoring in 8% return annually (on average) = $2,500,000, very nice! And you can access all of that money at age 60.

Both scenarios have risk and make big assumptions that can greatly effect their efficacy. The pension route assumes you will live to be 85, and not die 5 years after retiring. And the 401k route assumes the stock market will continue to perform in the future as it has in the past. But all things equal, I'm favoring the 401k route in this scenario.

 

[Up In Smoke]

Let's compare the two scenarios. In each scenario, a person is working for 30 years.

Pension: You have to work AND wait 30 years to begin receiving your benefit. Let's say you retire at 60 and live to be 85(25 years in retirement). Let's also say your pension is $50k per year... $50k/yr * 25 years = $1,250,000, nice! And you may factor annual increases into that total as well.

401k with match: You also have to work AND wait 30 years to begin drawing on your investment without penalty. The big difference between the two right off the bat however is that when you reach age 60 here, you have full access to ALL of your investment IMMEDIATELY. That's a HUGE deal. So, let's assume that with the company match you are able to max out your 401 contribution every year for 30 years. Current contribution maximum is $20,500 per year. And the historic returns on a simple S&P 500 Index fund over the last 80 years is around 10-12% (not 5% like you suggested). So let's be conservative and assume an 8% return for 30 years... $20,500/yr * 30 years factoring in 8% return annually (on average) = $2,500,000, very nice! And you can access all of that money at age 60.

Both scenarios have risk and make big assumptions that can greatly effect their efficacy. The pension route assumes you will live to be 85, and not die 5 years after retiring. And the 401k route assumes the stock market will continue to perform in the future as it has in the past. But all things equal, I'm favoring the 401k route in this scenario.

In this example you contributed 625K of your income to make the 401k worth 2.5m and $0 dollars to make the pension worth 1.25m. I like the pension return on investment much better.

 

[thecamel]

FedEx, FedEx ground, and Amazon don't give a damn about the union or the pension either. But try this: recalculate your 401k contribution and match based on $17, $18, or if you're very good at your job $21 an hour. See where that leaves your age 60 total. No union, no $40 an hour, no joke.

 

[Wally]

In this example you contributed 625K of your income to make the 401k worth 2.5m and $0 dollars to make the pension worth 1.25m. I like the pension return on investment much better.

Also assuming that you are earning so much that you can afford to sock away 20k every year. Hard to do on $20 a hour or less non-union wages UPS would pay if they could.

 

[IVE GOTTA PACKAGE 4U]

Also assuming that you are earning so much that you can afford to sock away 20k every year. Hard to do on $20 a hour or less non-union wages UPS would pay if they could.

The big difference between the pension fund and the 401K is, the 401K is always your money

 

[ThePackageDeli]

In this example you contributed 625K of your income to make the 401k worth 2.5m and $0 dollars to make the pension worth 1.25m. I like the pension return on investment much better.

No, if the match is 6%, you've contributed around 450k

 

[ThePackageDeli]

FedEx, FedEx ground, and Amazon don't give a damn about the union or the pension either. But try this: recalculate your 401k contribution and match based on $17, $18, or if you're very good at your job $21 an hour. See where that leaves your age 60 total. No union, no $40 an hour, no joke.

You could still conceivably max out your contribution every year even making 50k per year with 0 company match and end up in the same place, it would just be more difficult. The bottom line is compound interest wins out over a pension benefit that you might not draw for many years.

 

[ThePackageDeli]

The big difference between the pension fund and the 401K is, the 401K is always your money

We've haven't even factored the annual returns of the 401k into this conversation yet. If you have 2.5 mil in your 401k at age 60, you're making $250k per year without even touching the 2.5! Are you kidding me?! The 401k is obviously the better route to focus on. You guys please don't under estimate the power of compound interest. The pension is great and fine but if you load up your 401k and other investments, you will have SO MUCH MORE money in the end. The pension would be as I said earlier, just a cherry on top.

 

[IVE GOTTA PACKAGE 4U]

We've haven't even factored the annual returns of the 401k into this conversation yet. If you have 2.5 mil in your 401k at age 60, you're making $250k per year without even touching the 2.5! Are you kidding me?! The 401k is obviously the better route to focus on. You guys please don't under estimate the power of compound interest. The pension is great and fine but if you load up your 401k and other investments, you will have SO MUCH MORE money in the end.

And how many people actually do that?

 

[ThePackageDeli]

And how many people actually do that?

Enough to prove it's do-able. Not the majority obviously, but thousands.. tens of thousands.. every year.

 

[Up In Smoke]

You could still conceivably max out your contribution every year even making 50k per year with 0 company match and end up in the same place, it would just be more difficult. The bottom line is compound interest wins out over a pension benefit that you might not draw for many year

No, if the match is 6%, you've contributed around 450k

The 20k per year from you adds up to 625k. The company's 6% would add about $38,000 or 18 months of pension contributions. 1.25 million without any personal contribution beats any compounding you can come up with. If your concern is the pension dies with you, a 2 million dollar term policy would run about 5k per year. The 625k that you didn't spend would pay 125 years of premiums.

 

[ThePackageDeli]

The 20k per year from you adds up to 625k. The company's 6% would add about $38,000 or 18 months of pension contributions. 1.25 million without any personal contribution beats any compounding you can come up with. If your concern is the pension dies with you, a 2 million dollar term policy would run about 5k per year. The 625k that you didn't spend would pay 125 years of premiums.

I'm not sure we're seeing it the same way. If I have to contribute 21% of my income in order to reach the $20,500 limit (which is actually the case in my situation), and the company matches 6%, that means I actually only need to contribute 15% of my own income which is around $15k per year... that's $450k...? Am I doing it wrong?

 

[MyTripisCut]

Let's compare the two scenarios. In each scenario, a person is working for 30 years.

Pension: You have to work AND wait 30 years to begin receiving your benefit. Let's say you retire at 60 and live to be 85(25 years in retirement). Let's also say your pension is $50k per year... $50k/yr * 25 years = $1,250,000, nice! And you may factor annual increases into that total as well.

401k with match: You also have to work AND wait 30 years to begin drawing on your investment without penalty. The big difference between the two right off the bat however is that when you reach age 60 here, you have full access to ALL of your investment IMMEDIATELY. That's a HUGE deal. So, let's assume that with the company match you are able to max out your 401 contribution every year for 30 years. Current contribution maximum is $20,500 per year. And the historic returns on a simple S&P 500 Index fund over the last 80 years is around 10-12% (not 5% like you suggested). So let's be conservative and assume an 8% return for 30 years... $20,500/yr * 30 years factoring in 8% return annually (on average) = $2,500,000, very nice! And you can access all of that money at age 60.

Both scenarios have risk and make big assumptions that can greatly effect their efficacy. The pension route assumes you will live to be 85, and not die 5 years after retiring. And the 401k route assumes the stock market will continue to perform in the future as it has in the past. But all things equal, I'm favoring the 401k route in this scenario.

You could still conceivably max out your contribution every year even making 50k per year with 0 company match and end up in the same place, it would just be more difficult. The bottom line is compound interest wins out over a pension benefit that you might not draw for many years.

We've haven't even factored the annual returns of the 401k into this conversation yet. If you have 2.5 mil in your 401k at age 60, you're making $250k per year without even touching the 2.5! Are you kidding me?! The 401k is obviously the better route to focus on. You guys please don't under estimate the power of compound interest. The pension is great and fine but if you load up your 401k and other investments, you will have SO MUCH MORE money in the end. The pension would be as I said earlier, just a cherry on top.

Why not just do and have both? Knock it off. We’re not giving up our pension so UPS can use PVD’s to reduce OT, which would restrict the amount you could put into a 401k. Just stop.

 

[ThePackageDeli]

Why not just do and have both? Knock it off. We’re not giving up our pension so UPS can use PVD’s to reduce OT, which would restrict the amount you could put into a 401k. Just stop.

That's fine. But there is value in making our lives easier and reducing workload, especially for those intending to stick it out for 30 years.

 

[Thebrownblob]

How about one of you naysayers add value to the conversation and explain why using PVD's is bad for us or for the company.

Is there an award for dumbest post in history on Brown Café?

 

[Thebrownblob]

I would cease to work for UPS.

 

[Thebrownblob]

And how many people actually do that?

The average 401(k) balance by age

What is the average 401(k) balance by age, and how do you stack up? Learn how much you can save if you max out your 401(k) every year.

www.personalcapital.com

Scary how low those 401k averages are. I’m personally destroying The average retirement savings, and I still want my pension.

 

[IVE GOTTA PACKAGE 4U]

The average 401(k) balance by age

What is the average 401(k) balance by age, and how do you stack up? Learn how much you can save if you max out your 401(k) every year.

www.personalcapital.com

Scary how low those 401k averages are. I’m personally destroying The average retirement savings, and I still want my pension.

I was surprised by that number myself

 

[sailfish]

The average 401(k) balance by age

What is the average 401(k) balance by age, and how do you stack up? Learn how much you can save if you max out your 401(k) every year.

www.personalcapital.com

Scary how low those 401k averages are. I’m personally destroying The average retirement savings, and I still want my pension.

I was surprised by that number myself

They also assumed a 23 year could add $20k for the year. I couldn't have done that in my wildest ing dreams.