The OP is a public employee (from what he’s posted in the past) – the cushy pensions come from the tax-payers (not only that but they often get Cadillac-level private-health-insurance in retirement, again on the tax-payer’s dime) – it’d be ok if these public-employees were getting the *same* kinda retirement the tax-payers do, but the fact is the avg social-security payment is less than $20k/yr (https://money.usnews.com/money/retiremen… ) - so you have the tax-payer providing retirement pensions in the neighborhood of six-figures and the people paying that (tax-payers) get a fraction of that and a lower-quality health-insurance (MediCare) – there are cities that increase taxes and those taxes at times mostly go to cover these pension-obligations vs services or other-infrastructure that benefit the tax-payer – add to this than it’s not uncommon for these public-employees to be able to retire sometimes as early as 50-years-of-age, means the tax-payer can be on the hook for these cushy benefits for 2 or 3 decades - potentially these employees can make more in retirement than they did during their working-life (assuming they were in the system their whole career which is not that difficult to accomplish); all this on the tax-payer's dime – their pensions are often based, or weighted, based on the years they made the most-$$$ (although they’ve been adjusting this b/c it’s often unsustainable); and every year in retirement they get a COL adjustment – furthermore, I believe there are some that sorta “double-dip” – they retire in their early-50s, get their fat-pension the tax-payers pay for, then they continue to work sometimes even for the same entity they retired from (may not be as a full employee but maybe hired as a consultant or something) – I recall a while back an LA prosecutor’s office lawyer that retired in his 50s; got a 100% (of his salary) pension, then went back to work I believe for the same office while still getting his 100% pension.
Tax-payers shouldn’t be providing platinum pensions that they themselves don’t get – public-employees should have 401k-style retirement-plans like the avg tax-payer which is much more sustainable vs having the tax-payer paying ever higher taxes and not getting much in return except providing cushy benefits for a few.
Below is an ex-California city-mayor explaining some of the issues w/ these public-pension-programs (I'm not saying every place is as bad as California w.r.t. these issues; but most places are not too-far of):
^In Calif, teacher retirement is pretty good. But what's insane (and which Calif state and local economies cannot sustain) are law enforcement and firefighter retirement pensions. Across all agencies, most retire after 20 years at 100% of salary and very high percentage to 100% of health care premiums. And all other city, county, and state government employees are same as or close to LE and firefighter pensions on salary and lifetime health care. Very good friend of mine retired firefighter retired 15 years ago at age 50 @$95K annual salary and he wasn't even very high up in department. Totally unsustainable.
My mom was a public school teacher. She was a mean old bitch and complained about the job like it was slave labor. She had gotten her Master's degree in teaching, which was paid for by the taxpayers, and involved really hard stuff like designing puzzles for little kids to solve. Then she went on to get Master's "plus 30" which meant 30 credits toward a Doctorate degree. Teachers rarely went beyond that because the "plus 30" put you at the top of the pay scale, so a full Doctorate degree wasn't worth the effort.
Her retirement package was 40% of her salary for life, which was 100,000 when she retired, so she had $40,000 plus social security and plus her own savings (403-B). That was around 2009 I think. She also had the "Cadillac" health care plan, fully paid by the city for life. If my dad had lived longer (he died young in 2002) he would have been covered for free also, for the remainder of his life as the spouse on the plan, even if my mother had predeceased him.
What a fucking scam, and all she ever did was complain about how "tough" it was to be a teacher. 180 days a year babysitting snotnose little kids and getting paid like a boss. Holy shit.
I imagine if I had those benefits, then like most pension-holders, I likely wouldn’t be complaining – the jobs these folks do are necessary and often have their challenges – I’m not saying they shouldn’t receive *any* benefits nor less benefits than the avg-citizen, but receive benefits more-in-line w/ what the avg citizen/tax-payer gets instead of the tax-payer subsidizing often lavish-pensions – it’d be nice if we could all get such benefits, public-employees included, but it doesn’t seem like something sustainable in a free-market economy unless we become a European-style socialist-state; especially with the ever-longer life-expectancies of the modern-world.
Years back civil service and public sector jobs didn't pay so well but the health and retirement benefits, were the draw bringing people to fill those jobs, now the public sector employees unions have upped the pay for those lucky lottery winners that landed these types of jobs, as a result the taxpayers are subsidizing a standard of living for people that surpasses anything that they have actually earned, I mean damn man how is it a police officer not a management position just an ordinary patrolman can afford to live in a half million dollar home, and a sanitation worker picking up garbage starts in NYC at about 40 thousand dollars a year, this whole civil service system is completely out of sync with the intentions of the folks that created this system.
^ As an example of how out of sync the civil service system , look at the post office. A mail carrier earns damn close to 60K annually, a postal clerk is paid over $30. dollars per hour, yet the service that postal customers receive, is constantly poor by the postal service's own measures, and the retirement system is extraordinary average pensions for postal employees are 50-70% higher than social security benefits, and the postal retirement health care is cost free way exceeding any private sector Medicare benefits
Jes sayin
C-Dog, I recall you starting a thread in Oct. 2017 with the same title/ lead off question. You were wrestling with the dilemma of retiring soon for a $76K pension, or pressing on for 3 more years for $85K pension. Now that you chose curtain #2, I have 3 things to say right off the bat.
1) Congratulations on your retirement, I'm sure you'll learn to enjoy your retirement.
2) Thank you for your service as front line LEO. (Even though I'm not a resident of TAX-A- Chusetts
3) I hope you realize that you are one lucky SOB to get a pension like that at age 55.
As prior posters have stated, many companies (probably most) are moving away from DB pensions in favor of DC (defined contribution) plans, such as a 401K match. For those tuscl members who are better versed on financial matters than myself, I have 2 scenario based questions for you ?
1) How much would it cost to purchase an annuity that would $85K/yr for the rest of one's life, starting at age 55 ?
2) What should combined 401K/ IRA balance be for someone invested in, say, 60% stocks/ 40% bonds need to have at age 55 to be reasonably certain to have at last to age 95 at a withdrawal rate of $85K/yr ? (I think the common age model for mutual fund models is age 90 to 95)
My wag is that the number required in either case would be $3M or more.
@25
Don't worry. When the Democrats get this country to where they want it to be, postal workers, doctors, garbagemen and lawyers will all make the same. From each according to his ability, to each according to his needs.
The chain dog works in Massachusetts so he has contributed 8-11 percent of his salary to the pension system. If he is getting an 85k pension he has probably contributed 250 to 300k to the system. I worked 24 years and retired recently and collect 880 dollars a month. Is that a Hyundai pension?
M-moose, are MA state taxes really that high ? ( 8-11%). Unless we're on different pages, a pension is a DEFINED BENEFIT that doesn't require employee to pay anything into it. I guess as a state employee paying state income taxes, he's paying for it in a way, but not nearly as much as a private sector employee making same salary as C-dog, but not getting a red cent in pension benefits from the state.
Or am I misunderstanding C-dog in that his retirement benefit is a combination of pension, and whatever he put into 401K ? All pension beneficiaries that I'm aware of (private sector and military) didn't have a red cent taken out of their paycheck to specifically fund a pension.
Massachusetts you pay into the pension system. Every week they would deduct 8% of my pay to go into my fund. Interest would accrue at 1% or less. After 10 years you would be vested in the plan and would be able to draw on your pension at 55. At 20 years and 45 you could collect and I did as I was grandfathered. At 47 I would be able to collect 17% of my pay. At 47 it was .7 times years of service . So 24x .7 = 17. Chaindog is a prison officer so his pension is 1% higher for every year of service as are police and fireman . It’s definitely a good deal but most people don’t realize that in mass we contribute to the pension.
@minnow
I think you're right. Most people pay into a "defined contribution" plan, which means you get out of it what you put in, plus tax-deferred earnings. "Defined benefit" means it's company sponsored, and you're guaranteed a certain amount for life after retirement. Defined benefit plans mostly don't exist anymore outside of government jobs, or the mafia.
@Mikemoose
Is that everybody who lives in MA or just government employees? Not doubting what you're saying, it seems you know what you're talking about. I just never heard anything like that before.
Wrong mister orange we contribute in Massachusetts. New employees in Massachusetts pay 11% mandatory contributions into the pension. If you put that in a 401k day one at any job you would be all set for retirement.
Government workers only. It is way underfunded and I heard that before they took money out of the fund and spent it elsewhere and now the money is gone. It’s basically a Ponzi scheme as the people who are contributing are paying my pension sort of like social security.
"... The chain dog works in Massachusetts so he has contributed 8-11 percent of his salary to the pension system ..."
That really doesn't say much - if the pension-system was "self sustaining" via employee-dues, then have at it - but AFAIK most if not all of it in most cases is subsidized by the tax-payer by ever-increasing taxation due to increasing salaries; life-expentacies; increasing health-costs; etc; most of it on the tax-payer's dime.
I've never done a deep-dive into the subject, but from the outside-looking-in seems there is a good-amount of grifting going-on from cases I've heard over the years such as public-employees massively milking overtime pay/hours (often w/ the blessing of supervisors since they are often in it also) - they put in large-amounts of unnecessary overtime so they can jack-up their final years of salary and thus healthily-fatten-up their final pension - plus other cases I've heard of w/o me even looking into it.
@ Mikemoose
You're lucky they're still paying. Probably won't be for younger generations. Gradually they will increase the age requirement to collect, and decrease the benefit amount.
I work in Maine now and you contribute to your pension here as well. Don’t get me wrong the pension is good, but most don’t realize we put money into it. I was a school custodian and I probably put in 80k in the 24 years I worked .
Papi Massachusetts pension is on your base pay, not overtime. The contributions do not cover the expenses but I hate when people don’t realize that workers contribute to their pension.
You guys are forgetting the other side of that 11% buy in, the wages paid to government employees are approximately 15-20% higher than wages paid in the private sector and are that way because of the public employee unions and associations that they have negotiating on their behalf, and in the public sector efficiency is thrown out by the tenure system, that allows a worker to completely fuck up and cost more than they are worth yet still keep their salary and pension and health benefits. Could you ever imagine any private employer tolerating those inefficiencies. my point here is simple to pay these people in the fashion that they get compensated our systems should be ruthlessly efficient, yet so much of these government services are incompetent and inefficient it's a disgrace.
If I am paying top dollar I demand premium service but we never get that in any of our public sector services.
Our government is way too fucking big and unions and politicians are often joined at the hip - unions are among the highest, if not thee highest, political contributors, and leads to a closed-feedback-loop that keeps on growing the monster at the expense of the public-at-large
"... Could you ever imagine any private employer tolerating those inefficiencies ..."
That is how the government ends-up paying $150 a hammer; etc
Well if people who work in the private sector saved 11% of their pay they would be all set for retirement. I did a job most people would never do but bitch about the pension I or my father receive! Cleaning shit off of walls and bathroom stalls and picking up puke. Most people would never do it
M-moose- If I'm correctly understanding you, C-dogs YOS multiplier is !.7% for yrs of service. So, if he had 30 yrs of service at age 55, he'd get 51% of his salary in retirement. Follow up O's: Would that be based on his final year salary, or an average of multiple final years, like last 3 or 5 ? Also, would it include overtime pay, or just his base salary ? Either way, a good deal.
Of course they would - saying that the only way to get people to that job is to guarantee them a close to 6-figure-retirement for life is ill-informed at best, disingenuous at worst - plenty of people do those jobs in society (often as starter-jobs of for a while) in lieu of a fat-pension.
As I posted previously - I can def understand those that receive those pensions "making a case" as to why they deserve it, most of us would likely do the same if we were in that boat - but the reality seems to be that is unsustainable and usually only sustainable b/c they are government institutions being subsidized by the tax-payer and even then there are cities that have declared bankruptcy and many more seem to be in danger of following suit.
@Mikemoose
Cleaning toilets is a job requiring little skill and minimal training, it isn't worth $25 dollars an hour like your local government pays, tell me how many janitorial employees working for private sector employers earn enough money to contribute 11% of their salary so they can afford to be set for life, and before you tell us well the employers need to pay them more money, remember those janitorial contracts are almost exclusively awarded in a bidding process, where the lowest costing contractor is awarded the contract, even with government awarded contracts.
"... in the public sector efficiency is thrown out by the tenure system, that allows a worker to completely fuck up and cost more than they are worth yet still keep their salary and pension and health benefits ..."
A few weeks back I was hearing someone on TV talk about how hard it is to fire a bad teacher - the commentator mentioned there are school districts that have teachers on the payroll that don't teach b/c they are so bad but firing them would be a huge PITA (I imagine the union lawyers them up no matter what) and firing them is often a very-expensive endeavor - the commentator mentioned it can cost up to 2-million-dollars to fire a bad-teacher and why some districts rather keep certain bad teachers on the roll vs fighting the battle
As a prison guard at 55 he would get 2.5% x years of service. So if he had 30 years it would be 70% of pay, of the average top
5 years salary. No overtime pay. The .7 was my Hyundai pension as I left at 47. Don’t get me wrong it’s a good deal but most people never realize that we put money into it!
Moose, I understood it to be 1% more, which would be 1.7 multiplier. Maybe a higher multiplier thrown in for additional yrs of service beyond a certain amt., say beyond 25 YOS ? Moose your 0.7 multiplier is a frigging Ford Escort compared to C-dogs Ferrari 2.5% multiplier. Thanks for indulging my curiosity.
@ 25 I worked outside of Boston where the cost of living is expensive. Even part time office cleaners are getting 20 dollars an hour. Cities and towns who have gone commercial cleaning route almost always go back to hiring there own people. I agree the district I worked for was very inefficient! That’s one of the reasons I left because there were so many slackers.
@ papi when the economy was good we had a hard time getting good people to do the job.
I’m not saying that the pension isn’t good! I’m just pointing out that in Massachusetts it is a contributory pension!
Minnow the chart for the pension is in groups. Chain dogs group at 55 would get 2.5% x years of service.
Firefighters, police officers, and prison guards make up this group.
My group as a school custodian would get 1.5%x years of service at 55. Since I left 8 years before 55 I got.7 x years of service
@ papi no custodian gets a 6 figure pension! For me to get 80% of my pay I would have had to work until 61 and worked for 39 years. My pension would have been 50k? I would have contributed a good amount of money into it and as in mass we don’t contribute to Ssi we therefore don’t collect anything. Don’t get me wrong it’s good money but you are contributing to it also.
Chain dog is a prison guard so they get a better pension and better pay .
I have a friend who was a health care worker with the Illinois prison system. Their pension is based on final year’s pay. They load up retiring workers with massive overtime in their final year. He knew a married couple of guards who retired with $500,000 per year pension when they retired.
Haha I’m content where I am ! He earned it being a prison guard ! My brother did it for 10 years and described it like being in prison! Since it runs 7 days a week if your replacement doesn’t show up you are forced to work overtime. He used to get forced to work all the time and his phone rang all the time to see if he wanted to work.
Mark your friend is bullshitting you, yes it's true that there are some egregious abuses of the state pension systems, but half a million a year for a pair of prison guards ain't true.
This is a little off topic, but seems appropriate for this thread.
I used to be a bank manager. I knew a guy (customer) who had a small account. He was a janitor at the Budweiser brewery in Newark NJ. His account was so small, I wouldn't have even paid attention to him, except he was a nice guy, used to bring thoughtful little gifts for the tellers, or a cup of coffee for me sometimes. He gave me a not fancy but decent bottle of scotch for Christmas every year. His account never had any real money in it, but he was responsible and never overdrafted or anything like that.
He comes in one day and asked to meet me privately in my office. I was busy so he had to wait a little while, and he was very cordial and patient. I wasn't really looking forward to whatever he wanted to talk about, but I always made time for a nice customer, regardless of their financial worth.
He tells me (in broken English) "I retire." I smiled, shook his hand and congratulated him. I could have re-gifted one of the scotch bottles back to him because they were still in my desk drawer, a little dusty. Honestly, I thought he would want to get a CD or savings account with his shitty little retirement money. Then he pulls out a statement from Anheuser Busch Company. Turns out the dude had about $1,000,000 worth of stock in Anheuser Busch (now AB Inbev). Over like 45 years, he had religiously put a tiny percentage of his small salary into BUD stock.
Holy shit. I introduced him to an investment advisor. Actually, I set him up with an investment advisor from a different branch because I trusted him more than my own IA, even though it meant I wouldn't get the revenue for my branch. Dude diversified his holdings and got into some conservative mutual funds. When the crash happened in 2008, he called me. I couldn't believe he still had my phone number, because I had left that bank years ago and was working somewhere else. He was a little scared and I told him to hold on and put his money in more aggressive funds, which is what I did with my own savings. A year later we both had all our money back and then some. He had a lot more than me though. Lol.
"... Mark your friend is bullshitting you, yes it's true that there are some egregious abuses of the state pension systems, but half a million a year for a pair of prison guards ain't true ..."
Sound unbelievable but I wouldn't be shocked if it was true ($250k each) - like all gov programs there is a lot of corruption going-on and "most people trying to get their$" and helping each other out (you scratch my back (pension) and I scratch your back (pension))
"... Turns out the dude had about $1,000,000 worth of stock in Anheuser Busch (now AB Inbev). Over like 45 years, he had religiously put a tiny percentage of his small salary into BUD stock ..."
"... Mark your friend is bullshitting you, yes it's true that there are some egregious abuses of the state pension systems, but half a million a year for a pair of prison guards ain't true ..."
The pension liability time bomb will fuck us. Unfortunately many that made these promises won't be on this planet anymore when future generations have to clean up they're mess.
When it's time to vote on local school budgets, you'll hear "Oh don't you want better schools? What about the children?" All it is a giving in to powerful teacher unions salary demands. It's a scam.
And you have half the fucking city take the FDNY test. But we keep having to up their salaries because nobody has the balls to stand up and say NO! We cannot afford that. We do not need to increase wages for firefighters when there are so many candidates. They hit back with 9/11, your ungrateful etc. Nobody can stand up to that. It's one of the best jobs in the city and a lot of people would still do that job for significantly less.
Another thing, government jobs have so much more security than the private sector. They should be paid less. But in some cases the government job pays more! So I don't blame the frontline workers at all, you'd be an idiot not to get into something like that. I do blame the corrupt politicians that are in bed with these unions though and put us all in that situation.
Technically you asked a question you don't even answer yourself. Also what your make is irrelevant to your question. But I will play along and narrowly range myself somewhere above $1.00 and less than $1 Billion.
@Papi there are enough examples of legitimate abuse without getting bogged down in in conspiracy type stories which send everyone down a rabbit hole chasing fictional wrongs when that energy should be used to fix genuine problems
Making up stupid stories brings us to story of the boy who cried wolf, and will result in the same outcome
For those who doubt the pension story from Illinois, here’s an article describing how supervisors in southern Illinois prisons can make $200,000 per year with overtime. Since their pension is based on final total pay ( including up to a year of accumulated sick days ), it’s not impossible for a married couple of prison guard supervisors to have $500,000 in combined pension.
^ Meanwhile your article explains where it is theoretically possible, it doesn't actually cite any real examples
Again I request that you refrain from wasting energy, chasing mythical creatures, when there are real life dragons needing to be slayed
About 10 years ago I told myself if I get my net worth above $1million I could retire, however not realizing the effects of inflation once I got there I have figured out that now I need $2 million to retire. Considering I’m only in my 40’s I’m too young anyway, and with children they’re always a drain on the
pocketbook. Who knows, in another 10-15 years I may adjust my net worth needs to be even higher than $2 million, but at least I’m closer. Once the stock market takes a correction, I’ll employ more of my cash into equities, and that should put me over the top in the next decade.
Agree calling BS on the pension benefits of prison guards, even though theoretically it could happen, but since the annual cap for pension benefits is set at $230k, it is likely a person who would hit the cap would either need to have worked a 35-40 year career or else have an extremely large salary. In either case if that person did, they deserve it. Most governmental workers started their career in the 80’s or 90’s if they are retired now, and if anyone remembers how things were back then the private sector paid much more than the public sector, so government workers made a commitment to work that career in exchange for their retirement benefit
Package. Most government workers were cash poor and benefit rich, so I can’t side with anyone arguing against the benefits they receive through their pension.
I’m not sure. I think I might be worth about $8000. That is the amount of each 2 week paycheck. Not including royalty payments from the textbook I wrote. I don’t hold any confidence in bonuses, 401ks, stocks held, inheritances forthcoming, or potential lottery payouts. Until the money is in my hands, it didn’t happen. When it is in my hands, I’m a sucker for puffy nipples boobies. Korean is the best because they are absolutely fucking playful! They expect nothing other than fair pay for fair play and this fat fuck is all about fair play!
I keep telling myself that homemade booze could not possibly be as potent as store bought shit. However, every time I partake in my stovetop shit, I get shit faced !
BTW @misterorange, I actually heard the exact same story about the janitor except that he was a UPS delivery driver and he accumulated over a million dollars in stock by buying UPS stocks that's a bullshit story just like Mark's straw man stories, tell me @misterorange are you CC or winex because you sound exactly the same as that bullshit artist.
To OP. SORRY for derailing your thread, but I’ve decided that this skill that I have decided to learn will make my net worth at approximately 1 billion fucks should Shit ever truly hit the fan. Women will want my junk just so they can drink from my never ending fountain of pure bliss !
Calculating how much savings you need in order to retire is pretty simple. The most conservative estimate is you can draw 4% each year. That would have worked at any point in the last century. During normal times ( which means a depression doesn’t hit just after you retire ), a 7% draw down will likely work.
Mark, I remember when the estimate was 5% per year. You have to take the estimates with a grain of salt, especially the ones from the financial companies websites. I have ran the estimates at various sites such as Vanguard, Fidelity, Charles Schwab and they are all far too conservative going for the 60 percent or less estimate, and the low end of the value for Social Security, which is about $4000 per year less than what the Social Security website's retirement estimate is. So guess what they all show you aren't saving enough and suggest contributing more.
I have done my own calculations, using the standard formula's and historic growth and inflation estimates and even at the 80 percent of expected growth I am contributing more than enough to retire by age 62, at five percent per year and will not have to reduce withdrawals until age 98. My companies retirement plan's website says if I retire at age 67, at 4% per year withdrawal I'll last until age 88, and if I work till age 70, will run out at age 94. Switching the estimate to the 80% of current growth, it gets slightly better with retirement at age 67 lasting to age 93 at 4% per year, but still less than my estimates.
I have twenty seven dollars and thirty two cents to my name. Used to be twenty one dollars and fifty two cents, but I have done some extreme savings during the pandemic.
M-moose, does the state match the 8-11% the state employee puts in ? Either way, it's a darn good ROI. Based on your provided numbers, a MA policeman or firefighter with 30 yrs service at age 55 would collect 75% of his final ( 1?, 5 ? ) year average earnings FOR THE REST OF HIS LIFE after turning 55.
Contrast this with Social Security taking 6.2% of your earnings (up to a certain maximum) with employer kicking in another 6.2%. For SS pension benefit calculation, they look at your highest 33 year average to calculate your benefit. In 2020, the maximum income subject to SS withholding was $137700, in 1987 that figure was $43800, I think. That probably works out to a 33 year average income of ~ $90K/yr for someone making the exact maximum income subject to SS withholding. That's over $350K put in by employer and employee, plus whatever was put in during the other years outside the 33 year look.
Sooo.., someone retiring at age 62 today who made max income for at least 33 years would get a whopping $2324/mo, or $27888/yr. That's for someone making $133700 in 2020, and a 33 yr. average of $90K/yr since the late 80's. The ~21% of final year salary pales in comparison to the MA LEO getting 3/4 or more of average salary, and getting it SEVEN YEARS YOUNGER. Follow up question: Do state pensions get inflation adjustments each year like Social Security ? Even if they don't, still not a shabby deal.
^^ many state their us a COLA, but it’s not really a true cost of living like social security. Must pension cola’s are tied to investment performances and levels of fundable satisfaction for future needs, so you can guess that most aren’t giving out cola’s. With pension reforms this past decade, placing strict parameters on allowing cost of living increases is one way to keep government pensions fundable for the future and just about every state pension will inform their participants to have outside savings for the purpose of offsetting inflation, because their pension won’t.
@minnow the state doesn’t add money to your individual account. They just pick up the unfunded part I guess? It’s a much better deal than social security! My statement is people think that you didn’t put money into it.
One time on a radio program the host was complaining about the pension people were getting and then said years ago the state spent money from the pension fund on something else and that’s why it was underfunded!
COst of living adjustments have averaged 3% for the pension every year since 1996 when my father retired.
I know a lot of people who have bachelors degrees who became fireman after going to college for other careers. The city I worked for 279 people made more than 100k dollars a year. But a normal 1200 square foot home is 600k dollars!
The main reason that government pensions have such generous benefit levels, and are horribly funded, is that politicians get the credit for raising benefits immediately but the bill for those benefits doesn’t come due for 10 or 20 years, when the politician is long gone.
Here’s how the game is played. Government unions provide support, in a variety of ways, to local and state politicians, with the understanding that they will increase the benefit levels. Once in office, they increase the benefit formula, often in ways that aren’t obvious to the public. Standard Joint and Survivor payouts. Generous early retirement provisions. Including overtime and sick pay in the formula. That sort of thing.
Funding for pensions is required over the life of the workers, much like a mortgage. But, unlike a mortgage, if a funding contribution is missed, it just rolls forward to the next year. There is no real incentive for a politician to fund the pension. So, the underfunding grows until it reaches crisis stage. For most public pensions, that crisis is now.
91 comments
The OP is a public employee (from what he’s posted in the past) – the cushy pensions come from the tax-payers (not only that but they often get Cadillac-level private-health-insurance in retirement, again on the tax-payer’s dime) – it’d be ok if these public-employees were getting the *same* kinda retirement the tax-payers do, but the fact is the avg social-security payment is less than $20k/yr (https://money.usnews.com/money/retiremen… ) - so you have the tax-payer providing retirement pensions in the neighborhood of six-figures and the people paying that (tax-payers) get a fraction of that and a lower-quality health-insurance (MediCare) – there are cities that increase taxes and those taxes at times mostly go to cover these pension-obligations vs services or other-infrastructure that benefit the tax-payer – add to this than it’s not uncommon for these public-employees to be able to retire sometimes as early as 50-years-of-age, means the tax-payer can be on the hook for these cushy benefits for 2 or 3 decades - potentially these employees can make more in retirement than they did during their working-life (assuming they were in the system their whole career which is not that difficult to accomplish); all this on the tax-payer's dime – their pensions are often based, or weighted, based on the years they made the most-$$$ (although they’ve been adjusting this b/c it’s often unsustainable); and every year in retirement they get a COL adjustment – furthermore, I believe there are some that sorta “double-dip” – they retire in their early-50s, get their fat-pension the tax-payers pay for, then they continue to work sometimes even for the same entity they retired from (may not be as a full employee but maybe hired as a consultant or something) – I recall a while back an LA prosecutor’s office lawyer that retired in his 50s; got a 100% (of his salary) pension, then went back to work I believe for the same office while still getting his 100% pension.
Tax-payers shouldn’t be providing platinum pensions that they themselves don’t get – public-employees should have 401k-style retirement-plans like the avg tax-payer which is much more sustainable vs having the tax-payer paying ever higher taxes and not getting much in return except providing cushy benefits for a few.
https://www.youtube.com/watch?v=A-DPuvI6…
My mom was a public school teacher. She was a mean old bitch and complained about the job like it was slave labor. She had gotten her Master's degree in teaching, which was paid for by the taxpayers, and involved really hard stuff like designing puzzles for little kids to solve. Then she went on to get Master's "plus 30" which meant 30 credits toward a Doctorate degree. Teachers rarely went beyond that because the "plus 30" put you at the top of the pay scale, so a full Doctorate degree wasn't worth the effort.
Her retirement package was 40% of her salary for life, which was 100,000 when she retired, so she had $40,000 plus social security and plus her own savings (403-B). That was around 2009 I think. She also had the "Cadillac" health care plan, fully paid by the city for life. If my dad had lived longer (he died young in 2002) he would have been covered for free also, for the remainder of his life as the spouse on the plan, even if my mother had predeceased him.
What a fucking scam, and all she ever did was complain about how "tough" it was to be a teacher. 180 days a year babysitting snotnose little kids and getting paid like a boss. Holy shit.
Not surprised - I recall a while back a painter for a school-system (painting the walls, etc) was making over a $100K
Jes sayin
1) Congratulations on your retirement, I'm sure you'll learn to enjoy your retirement.
2) Thank you for your service as front line LEO. (Even though I'm not a resident of TAX-A- Chusetts
3) I hope you realize that you are one lucky SOB to get a pension like that at age 55.
As prior posters have stated, many companies (probably most) are moving away from DB pensions in favor of DC (defined contribution) plans, such as a 401K match. For those tuscl members who are better versed on financial matters than myself, I have 2 scenario based questions for you ?
1) How much would it cost to purchase an annuity that would $85K/yr for the rest of one's life, starting at age 55 ?
2) What should combined 401K/ IRA balance be for someone invested in, say, 60% stocks/ 40% bonds need to have at age 55 to be reasonably certain to have at last to age 95 at a withdrawal rate of $85K/yr ? (I think the common age model for mutual fund models is age 90 to 95)
My wag is that the number required in either case would be $3M or more.
Don't worry. When the Democrats get this country to where they want it to be, postal workers, doctors, garbagemen and lawyers will all make the same. From each according to his ability, to each according to his needs.
Or am I misunderstanding C-dog in that his retirement benefit is a combination of pension, and whatever he put into 401K ? All pension beneficiaries that I'm aware of (private sector and military) didn't have a red cent taken out of their paycheck to specifically fund a pension.
I think you're right. Most people pay into a "defined contribution" plan, which means you get out of it what you put in, plus tax-deferred earnings. "Defined benefit" means it's company sponsored, and you're guaranteed a certain amount for life after retirement. Defined benefit plans mostly don't exist anymore outside of government jobs, or the mafia.
Is that everybody who lives in MA or just government employees? Not doubting what you're saying, it seems you know what you're talking about. I just never heard anything like that before.
That really doesn't say much - if the pension-system was "self sustaining" via employee-dues, then have at it - but AFAIK most if not all of it in most cases is subsidized by the tax-payer by ever-increasing taxation due to increasing salaries; life-expentacies; increasing health-costs; etc; most of it on the tax-payer's dime.
I've never done a deep-dive into the subject, but from the outside-looking-in seems there is a good-amount of grifting going-on from cases I've heard over the years such as public-employees massively milking overtime pay/hours (often w/ the blessing of supervisors since they are often in it also) - they put in large-amounts of unnecessary overtime so they can jack-up their final years of salary and thus healthily-fatten-up their final pension - plus other cases I've heard of w/o me even looking into it.
You're lucky they're still paying. Probably won't be for younger generations. Gradually they will increase the age requirement to collect, and decrease the benefit amount.
If I am paying top dollar I demand premium service but we never get that in any of our public sector services.
Is that for all public-workers, or just certain segments?
"... Could you ever imagine any private employer tolerating those inefficiencies ..."
That is how the government ends-up paying $150 a hammer; etc
Meant to to type shouldn't, not should
Of course they would - saying that the only way to get people to that job is to guarantee them a close to 6-figure-retirement for life is ill-informed at best, disingenuous at worst - plenty of people do those jobs in society (often as starter-jobs of for a while) in lieu of a fat-pension.
As I posted previously - I can def understand those that receive those pensions "making a case" as to why they deserve it, most of us would likely do the same if we were in that boat - but the reality seems to be that is unsustainable and usually only sustainable b/c they are government institutions being subsidized by the tax-payer and even then there are cities that have declared bankruptcy and many more seem to be in danger of following suit.
Cleaning toilets is a job requiring little skill and minimal training, it isn't worth $25 dollars an hour like your local government pays, tell me how many janitorial employees working for private sector employers earn enough money to contribute 11% of their salary so they can afford to be set for life, and before you tell us well the employers need to pay them more money, remember those janitorial contracts are almost exclusively awarded in a bidding process, where the lowest costing contractor is awarded the contract, even with government awarded contracts.
A few weeks back I was hearing someone on TV talk about how hard it is to fire a bad teacher - the commentator mentioned there are school districts that have teachers on the payroll that don't teach b/c they are so bad but firing them would be a huge PITA (I imagine the union lawyers them up no matter what) and firing them is often a very-expensive endeavor - the commentator mentioned it can cost up to 2-million-dollars to fire a bad-teacher and why some districts rather keep certain bad teachers on the roll vs fighting the battle
5 years salary. No overtime pay. The .7 was my Hyundai pension as I left at 47. Don’t get me wrong it’s a good deal but most people never realize that we put money into it!
@ papi when the economy was good we had a hard time getting good people to do the job.
I’m not saying that the pension isn’t good! I’m just pointing out that in Massachusetts it is a contributory pension!
Firefighters, police officers, and prison guards make up this group.
My group as a school custodian would get 1.5%x years of service at 55. Since I left 8 years before 55 I got.7 x years of service
Chain dog is a prison guard so they get a better pension and better pay .
I used to be a bank manager. I knew a guy (customer) who had a small account. He was a janitor at the Budweiser brewery in Newark NJ. His account was so small, I wouldn't have even paid attention to him, except he was a nice guy, used to bring thoughtful little gifts for the tellers, or a cup of coffee for me sometimes. He gave me a not fancy but decent bottle of scotch for Christmas every year. His account never had any real money in it, but he was responsible and never overdrafted or anything like that.
He comes in one day and asked to meet me privately in my office. I was busy so he had to wait a little while, and he was very cordial and patient. I wasn't really looking forward to whatever he wanted to talk about, but I always made time for a nice customer, regardless of their financial worth.
He tells me (in broken English) "I retire." I smiled, shook his hand and congratulated him. I could have re-gifted one of the scotch bottles back to him because they were still in my desk drawer, a little dusty. Honestly, I thought he would want to get a CD or savings account with his shitty little retirement money. Then he pulls out a statement from Anheuser Busch Company. Turns out the dude had about $1,000,000 worth of stock in Anheuser Busch (now AB Inbev). Over like 45 years, he had religiously put a tiny percentage of his small salary into BUD stock.
Holy shit. I introduced him to an investment advisor. Actually, I set him up with an investment advisor from a different branch because I trusted him more than my own IA, even though it meant I wouldn't get the revenue for my branch. Dude diversified his holdings and got into some conservative mutual funds. When the crash happened in 2008, he called me. I couldn't believe he still had my phone number, because I had left that bank years ago and was working somewhere else. He was a little scared and I told him to hold on and put his money in more aggressive funds, which is what I did with my own savings. A year later we both had all our money back and then some. He had a lot more than me though. Lol.
Sound unbelievable but I wouldn't be shocked if it was true ($250k each) - like all gov programs there is a lot of corruption going-on and "most people trying to get their$" and helping each other out (you scratch my back (pension) and I scratch your back (pension))
As Don King would say - "Only In America"
@Mark *did* say it was Illinois
When it's time to vote on local school budgets, you'll hear "Oh don't you want better schools? What about the children?" All it is a giving in to powerful teacher unions salary demands. It's a scam.
And you have half the fucking city take the FDNY test. But we keep having to up their salaries because nobody has the balls to stand up and say NO! We cannot afford that. We do not need to increase wages for firefighters when there are so many candidates. They hit back with 9/11, your ungrateful etc. Nobody can stand up to that. It's one of the best jobs in the city and a lot of people would still do that job for significantly less.
Another thing, government jobs have so much more security than the private sector. They should be paid less. But in some cases the government job pays more! So I don't blame the frontline workers at all, you'd be an idiot not to get into something like that. I do blame the corrupt politicians that are in bed with these unions though and put us all in that situation.
Making up stupid stories brings us to story of the boy who cried wolf, and will result in the same outcome
https://www.google.com/amp/s/thesouthern…
Again I request that you refrain from wasting energy, chasing mythical creatures, when there are real life dragons needing to be slayed
pocketbook. Who knows, in another 10-15 years I may adjust my net worth needs to be even higher than $2 million, but at least I’m closer. Once the stock market takes a correction, I’ll employ more of my cash into equities, and that should put me over the top in the next decade.
Package. Most government workers were cash poor and benefit rich, so I can’t side with anyone arguing against the benefits they receive through their pension.
I have done my own calculations, using the standard formula's and historic growth and inflation estimates and even at the 80 percent of expected growth I am contributing more than enough to retire by age 62, at five percent per year and will not have to reduce withdrawals until age 98. My companies retirement plan's website says if I retire at age 67, at 4% per year withdrawal I'll last until age 88, and if I work till age 70, will run out at age 94. Switching the estimate to the 80% of current growth, it gets slightly better with retirement at age 67 lasting to age 93 at 4% per year, but still less than my estimates.
Contrast this with Social Security taking 6.2% of your earnings (up to a certain maximum) with employer kicking in another 6.2%. For SS pension benefit calculation, they look at your highest 33 year average to calculate your benefit. In 2020, the maximum income subject to SS withholding was $137700, in 1987 that figure was $43800, I think. That probably works out to a 33 year average income of ~ $90K/yr for someone making the exact maximum income subject to SS withholding. That's over $350K put in by employer and employee, plus whatever was put in during the other years outside the 33 year look.
Sooo.., someone retiring at age 62 today who made max income for at least 33 years would get a whopping $2324/mo, or $27888/yr. That's for someone making $133700 in 2020, and a 33 yr. average of $90K/yr since the late 80's. The ~21% of final year salary pales in comparison to the MA LEO getting 3/4 or more of average salary, and getting it SEVEN YEARS YOUNGER. Follow up question: Do state pensions get inflation adjustments each year like Social Security ? Even if they don't, still not a shabby deal.
One time on a radio program the host was complaining about the pension people were getting and then said years ago the state spent money from the pension fund on something else and that’s why it was underfunded!
COst of living adjustments have averaged 3% for the pension every year since 1996 when my father retired.
I know a lot of people who have bachelors degrees who became fireman after going to college for other careers. The city I worked for 279 people made more than 100k dollars a year. But a normal 1200 square foot home is 600k dollars!
Here’s how the game is played. Government unions provide support, in a variety of ways, to local and state politicians, with the understanding that they will increase the benefit levels. Once in office, they increase the benefit formula, often in ways that aren’t obvious to the public. Standard Joint and Survivor payouts. Generous early retirement provisions. Including overtime and sick pay in the formula. That sort of thing.
Funding for pensions is required over the life of the workers, much like a mortgage. But, unlike a mortgage, if a funding contribution is missed, it just rolls forward to the next year. There is no real incentive for a politician to fund the pension. So, the underfunding grows until it reaches crisis stage. For most public pensions, that crisis is now.