<p>The killer in the pension plan bankruptcy was for all the folks who’d retired early. Some of them took HUGE cuts in their pensions – you don’t even get the PBGC max if you retired early, even if your early retirement pension was way over the max. There was also some kind of deduction for folks who’d take a partial lump-sum settlement (which was an option) at the time of retirement. It was a mess. Much less of a problem for the much older guys like my dad. The bankruptcy court even allowed United to retroactively cancel some pension benefits, which really messed up some folks. </p>
<p>dstark we have 9 different options. If I retired in January my max pension would be $64,000 but if I die my spouse gets zero. I will take the plan (when I retire) that leaves my wife 100% of the benefit that reduces the $64,000 to $56,000. They do have a modified lump sum option that would place $630,000 in an account and pay a monthly benefit of $5000. Each monthly payment reduces the lump sum dollar for dollar. It would continue until I died and any balance would be paid to my beneficiary. </p>
<p>I do not plan to retire for at least 6-8 years from now.</p>
<p>Yes, pensions are great if you will have one.
One thing that we did with DHs 401k the last few years is to front-load the contributions as much as possible. The pay checks in the spring were smaller, but we managed. This year we had our max annual contribution in by May (we are done paying tuition and have an adequate emergency fund). If H is laid off, company goes under, or he just decides he has had enough, we have collected the year’s worth of a very generous company match already.<br>
Some companies might not match this way, but if yours will, it’s worth pushing the numbers around. </p>
<p>For those of you with a 401k what type of match are you getting? My brother is with IBM and he has a fantastic match. I believe he is in the set of employees that get 10% from the company if he contributes 6%. </p>
<p>Last company - no match.</p>
<p>Current company - 100% of the first 3%, 50% of the next 2%.</p>
<p>DS works for a biotech and gets 100% of the first 6%. He gets more vacation than I do, too.</p>
<p>Jym626 brought up something interesting. </p>
<p>Tom1944, what happens if you got hit by a bus and died tomorrow? </p>
<p>Does your wife get something from your employer?</p>
<p>I love the biotech industry. </p>
<p>We would like to buy something less expensive than the current value of our 48 yo house (which is on the lower end of what single family homes go for in this area) when we get to that point. That will be very difficult in our area’s RE market and would probably represent a downgrade in the quality of what we could get. (I’ve been looking at local listings. Net proceeds from our house would get a a 2 BR condo that has not been upgraded.) </p>
<p>Would love to get a single level courtyard home – 2 BR and den (or 3BR – I want my craft area), 2 baths, 1600-1900 sq ft, 2 car garage, minimal yard. Land here is so expensive that noone builds these. </p>
<p>DH does not plan on retiring, so we are pretty much bound to this area. I would be willing to move elsewhere if I can get excellent medical care.</p>
<p>If we were able to downsize and have money left over, I’d probably throw it into bonds or an index fund. We will have enough cash flow from pension, IRA and SS that we could let any profit with the hope that it will beat inflation for expenses down the road. I am one who likes to sleep at night without worrying about investment risk, though.</p>
<p>Does anyone think throwing money into an index fund (right now, I mean) is a good idea? I have a fair amount of cash on the sidelines right now, the market just seems so overpriced right now…</p>
<p>@tom1944, H’s current company 401-k match is full match up to 6% of salary, subject to annual IRS match caps. Each of us has always contributed enough to get the maximum company match – however, I left corporate life decades ago.</p>
<p>@intparent, did the market seem overpriced when you first got hold of that cash? I assume so, since otherwise you would have it in the market. Markets go up and markets go down. Timing the market is, IMO, impossible for mere mortals to do well. The market might be a bit frothy from a P/E perspective, but cash is just guaranteed to lose money. </p>
<p>Working part time?</p>
<p><a href=“Learning to Make Work More Like Summer Camp - The New York Times”>Learning to Make Work More Like Summer Camp - The New York Times;
<p>dstark- we have the option after 25 years to submit our retirement application yearly. So if I die my application is in and my wife can collect my pension. If I did not my wife would receive 1.5 times my salary in life insurance and a return of my pension contributions with interest. I could also have purchased an additional 1.5 times my salary but I opted to forgo that and purchase an outside insurance policy.</p>
<p>Tom1944, ok. Sounds good. I think the choices you made are good. The money manager I mentioned earlier took lower monthly payments to make sure her husband was included in the pension and he would be ok if she died. Otherwise, the husband would have been in trouble if his wife died first.</p>
<p>Some people dont have to do this because their spouses are covered elsewhere. </p>
<p>The cash is pretty recent – my business is feast or famine, and it is “feast” at the moment 
Of course timing the market is tough, but it seems dumb to buy when it seems artificially high, as it does to me right now.</p>
<p>There was a thread a few years back about “where would you put $20,000 today?”
I’m sure the answers would be different today, so let’s throw it out there…assuming one has adequate emergency reserves, where would you put it?
I’m conservative, Vanguard Wellington (Admiral shares). </p>
<p>For H, he had the option of having me get 55% survival benefit down to 5% survival benefit of his pension, with decreases in his current pension payout, based on which he chose. We opted for the 55% survival benefit because that is the bulk of our income in retirement (tho we do get some RMDs from IRA, plus odds & ends). His pension has a COLA and since it exceeds our expenses in retirement, we sleep well at night and are comfortable helping our kids as we can.</p>
<p>H had no option for a lump sum payment in lieu of his pension. He did have the option of rolling his voluntary contribution account over into a Roth IRA or getting an annuity; we opted for the Roth, where we have more control over when (and if) we withdraw.</p>
<p>Since our pension is with the federal government, we are pretty confident they won’t default on it, fortunately. We know others who did take the lump sum and invest it because they were concerned about potential bankruptcies or reduction in pension or benefits.</p>
<p>When you take a lump sum many companies make you sign documents that you understand the risk. Exxon was sued because some people took the lump sum and lost it. They came back and wanted Exxon to make them whole in retirement.
I know someone that took a lump sum, a very large amount and has not invested well. She is now bitter at those with government pensions. Her lump sum was a significant sum. Her yearly pension was going to be higher than any pension I was aware of but she wanted the lump sum so she “could leave something to her heirs”.</p>
<p>@intparent, a lot of investing (and IMO life in general) is the avoidance of regret. It sounds as though the pain of losing money if you invested today would be more than the pain of losing some money by not investing. In this case, your “I knew the market was high” would trump the opportunity cost. As long as it’s not a habitual analysis paralysis, go with it. </p>
<p>Congratulations on being in a feast right now; as problems go, it’s a nice one :-). If feast and famine is the way your business goes, there’s something to be said for having a larger than normal emergency fund. </p>
<p>My wife gets a lot of her compensation in the form of a bonus in the early part of the year. Additionally, previously (mandatory) deferred comp vests at the same time. So, this having a lot of cash problem is one we have annually. For me personally, investing it over the space of a few months (after setting aside a chunk for the taxes that will shortly be due) works. YMMV. </p>
<p>Yes, I always keep a beefy emergency fund, that is taken care of. And live fairly frugally to start with so no cuts are needed when there is a famine. </p>
<p>
Ahh. Wonder if DH’s former employer would allow that too. Thanks.</p>