Re @AttorneyMother post: try to spend your time, professionally and socially, around people who care about you and do the right thing as a matter of course. Had she worked in some offices, the assistant’s day might have ended very differently.
Wow! Your H must be relieved that he saved a life, @AttorneyMother.
dstark- I am not sure I am in favor for long term employees but for new employees I think it is fine. Whatever they do I can deal with it. No pay increase will come with the change.
Tempe- you miust not pay ss -correct?
hayden- I am okay with my salary. Just a slight salary compression issue but it is not the end of the world.
For one of the companies I worked for before, it gave us two choices at one time: lump sum payout, or annuity. I chose the latter. I still do not know whether I chose it wisely or not back then. (I have received some payout on a monthly basis. There is no COL adjustment like SS though.)
I think the company has been sold or split or merge or right-sized (who knows how good those short-term CEOs or executives have been “playing” with the investment community over the past 10 years!) at least two or three times, and I think even “our pooled retirement fund” has been sold to some investment company likely two times already.
“dstark- I am not sure I am in favor for long term employees but for new employees I think it is fine. Whatever they do I can deal with it. No pay increase will come with the change”
I don’t know how different it is in the public sector, but I am leery of having a two tier system for people working in the same company, same job. It’s kind of a, “I’ve got mine, too bad you don’t have the same good deal” mentality. While on one hand you can say, “Well, they knew what they got into before they were hired,” but on the other hand, when one group has a better deal than the other one (while working the same jobs at the same place), you’d better not need to count on unity in the future. It breeds resentment.
We already have a multiple systems The problem with the last tier is they are basically making these employees cover the funding for the years the State missed their payments. The problem with the pensions is really not the year to year cost since it is only about 1% of the budget(s) covering those employees. The problem is making up the missed payments plus the earnings lost on those contributions.
The employees in the last tier are overpaying for the benefit they earn.
AttorneyMother, thank your DH for saving his employee’s life. Women’s heart attack symptoms do not present like men’s and all too often things seems OK when in fact all kinds of cardiac & %$# is about to break loose. Indigestion/reflux is a symptom for women. BTDT, was lucky S2 was home to perform CPR after I collapsed with a full cardiac arrest (at age 51 and with a clean echocardiogram six weeks prior).
Notrichenough, the present value of $300/mo payable now is lower than what it will be at 65. If your spouse was 35, the lump sum value of $300/mo payable at 65 would be nowhere near $27k – more like $12k – because the plan assets would have another 30 years to appreciate before having to pay out.
She’s in a defined benefit pension plan – that means it’s the benefit that is guaranteed at retirement age, not the lump sum equivalent. The employer assumes the risk of the pension funds not earning enough to pay benefits when employees retire (and then they have to pony up add’l cash to fund them). This is why many employers have been discontinuing traditional pension plans.
When I have done DB lump sum calculations, there are a number of variables to calculating the lump sum equivalent – the employee’s age, mortality, interest rate assumed in the plan, normal form of payment (single life or joint and 50% survivor) ,etc.
In a 401(k) or other defined contribution plan, the employer determines how much cash is going to contributions, and the onus of investment risk is placed on the employee. There is no guarantee of a specific income at age 65.
For $300/mo, I’d take it as a rollover to an IRA, where she can wait til 70 to start drawing on it, and she’d have control over how it’s invested (and could make it grow beyond the equivalent of $300/mo).
– former pension administrator now taking off my hat
I like the quote from Maggie Smith’s character in The Best Exotic Marigold Hotel: “At my age, I don’t plan anything that far ahead. I don’t even buy green bananas!”
I just went to a city fair and the defined benefit guys said that I could put 6k a year into a Roth IRA (in a non-employee plan) AND put up to 24K a year in the deferred comp (employee plan) ROTH IRA! This is news to me! Does that agree with what you all know about ROTH IRAs?
I had been putting a small amount into deferred comp but in a pre-tax IRA. I am planning to increase my contribution and switch to putting it into the ROTH since I like the security of knowing all the growth is tax free.
S contributes the max possible to his Roth 401K with the feds & will do a backdoor Roth IRA (as he has too much income to do a regular Roth IRA). If his income was lower, he’d do a regular Roth IRA as well as the max possible Roth 401K.
The Fidelity annuity calculator lets you pick when you start to receive the income. So that is factored into the price. And their quoted price with no inflation protection, no survivor benefit, and no minimum payout is around $36, or 33% higher than the payout her former company is offering.
https://gie.fidelity.com/estimator/gie/gielanding
I bet my wife wishes she was 35! 
She is 53.
How much in the working world do people ‘ignore’ some of the physical signs going on - to major bad consequences? Kuddos to @attorneymother 's H who ‘saved the day’.
An office manager for a medical oncology group had her twenty-something son survive really horrible facial and brain cancer - he is now working in the hospital as a social worker. She was such a grateful person to the docs that saved her son. Lovely lady, now retired.
There are many of us that have survived a ‘brush with death’. It definitely changes your thinking about what is important and has you cherish every day as a gift. Had Dr. Dennis Slamon not been able to continue his research work thanks to donor money (Revlon was a major early donor), and develop Herceptin, he says it may not have been available until 2008 or even 2010. It came out of clinical trials in 1998 (I have a friend that benefited from the drug in 2002, and me from 2009 to 2011). He says it could have been developed 5 or 7 years earlier if the funding was available (Genentech didn’t believe it would work to the extent that it obviously did for 25 -33% of breast cancer women with the.HER2/neu oncogene that is amplified). A doctor mis-diagnosed me and in 10 weeks I went from stage I to stage IIIa breast cancer - the HER2 factor made the cancer spread like wildfire. That pushed me to 50-50 long term survival odds at age 53, with kids in 8th and 10th grades. Herceptin and Taxol, and two other chemo agents - 16 doses total, cleared all the cancer from my primary tumor (and probably anywhere else), and radiation cleared the rest that possibly could remain from the chest area and most importantly the medial lymph nodes. It was a long process (Herceptin IV every 3 weeks for two year protocol, with nuclear imaging of the heart every so often to make sure cardiac output is not affected, as there are HER2 receptors in cardiac muscle). The Herceptin story is the movie ‘Living Proof’ starring Harry Connick Jr, and the book by Robert Bazell “The Making of Herceptin”. I have a strong advocacy for biologic drug development because I have directly benefited. My family is very grateful. Women have your annual mammograms! I was fooled by my doc who would not move up my mammogram because his viewing of the ultrasound (on the breast lump that I found) was that it was a harmless cyst - he didn’t know what he was looking at. He did not use the medical procedures of rule out. He put my life in jeopardy; that won’t happen to me again.
Love Maggie Smith in all her work, especially as a senior!
In my thinking, I plan to live to 100, and outlive my darling H. He has a lot of family longevity, so time will tell. Our money looks like it will last if he stays employed the next seven years until retirement.
People are pretty good at denial. I had a freind who was a cardiac nurse who drove himself to his hospital and told them he thought he was having his 2nd heart attack (at age 40–slim, fit vegetarian). He was. They rushed him to ER, treated him, and he is OK. Another friend is a MD and was operating on a patient and stated calmly that he was finishing the operating while having a heart attack and could they please have everything prepared, since he needed to go to the ER immediately after the surgery. He barely made it, but both is patient and he did fine. He was in his 50s.
Just happened to come across the article tonight. Much has been discussed about taking lump sum pension payment vs annual pension payments.
Thank you, everyone, for your kind words. It was serendipitous that H stopped by the business office today. Neither of the other two people who work in the office could persuade her to go. H is rarely there. It is doubly scary in retrospect because the employee’s husband is out of town today and tomorrow and she would have gone home to an empty house. It has been a scary afternoon for her and she is still in surgery.
momsquad, everything Dame Maggie says as whatever character she plays is just perfect. I myself vacillate between not buying green bananas and stocking up on canned goods, metaphorically speaking. 
H’s aunt had all the signs of heart attack (pain, profuse sweating, pain down arm) - she was on the phone with MIL because she was scared but she had a doctor’s appointment later in the day and planned to walk the two blocks to the doctor’s office! MIL had to insist that she hang up and dial 911 for an ambulance. She did get prompt medical care and lived many more years.
Last month MIL had irregular heartbeat. Did she call 911, no. She drove herself to the hospital. They put her on a blood thinner and after a short couple nights’ stay, she has been seen again by regular MD and she is being seen in follow up with a cardiologist.
Dame Maggie is a highlight of watching Downton Abbey!
Interesting article in today’s NYT.
NPR had a hedge fund guy on who has not making the money. Didn’t catch enough of the story, but why go for that risk w/o the reward? They said the S & P 500 over the last 20 years outperformed the hedge fund.
They also talked about how stock brokers are supposed to be held to ‘fiduciary responsibility’ - i.e. the client’s best financial interest, but they talked about how they have been able to ‘sidestep’ the law.
Just have to evaluate very carefully.
“Pay Some Tuition in Cash, Get a $2,500 Tax Rebate”
This article landed in my inbox today and, though we are full pay with our D, I skimmed it and thought there might be someone here who may be interested. If you participate on the scholarships/financial aid threads, please sprinkle this there as well. Thanks.
http://news.morningstar.com/articlenet/article.aspx?id=685955
On the topic of Required Minimum Distributions:
Looking at the RMDs my ILs took over the past several years has raised a general question about in-year timing of RMDs. This question is pertinent to people who do not need the RMD as current-year income and who will, as my ILs did, invested the RMDs in taxable accounts.
Most financial writers recommend that you withdraw the RMD at the END of the calendar year so that the balance of your IRA (or 401(k)) account has the benefit of tax-deferred growth for the entire year before the funds are withdrawn. And the RMD = taxable ordinary income regardless of when it is taken.
It strikes me that this year-end strategy makes sense if market performance is generally up and (crystal ball) indications suggest that the upcoming year is likely to be a good year.
But, if the preceding year has been a bad market year (say 2008/2009), wouldn’t you want to take the RMD out early in 2009 and 2010 (and assuming you are planning to park the funds somewhere for the foreseeable future) so that you could invest the RMD into the market during a low. Any gains later realized in the taxable account = capital gains.
Does anybody have any thoughts on this?