It seems to me that the employer will fund it either way. Maybe I’m misremembering stories of pensions being mismanaged and lost. I think the most important thing is that the employer actually does something to fund a retirement, in my way of thinking the 401k approach puts me in control of the money so I don’t rely on someone else to not fail.
Whether it’s promised bonuses, stocks, or retirement funds, my motto is always “show me the money”, and I’ll believe it when it’s in my hands.
I’m personally with you. I prefer to manage my own money rather than hope my employer is solvent 40 years from now to pay a pension.
Some people don’t want to to think about investing in their own retirement, and they see the pension as a more stable and safe solution.
401ks have way too much fluctuation and uncertainty. I’ll take the stable pension any day. But IMO the stock market is unethical and should be destroyed.
I put a good chunk of my 401k in CDs.
Edit:
It’s less than an 8th of my fund, just because I don’t like where the market is sitting right now, I’m keeping something secure in case something bad happens to me while something bad happens to the world.
My point was to respond to someone who is morally opposed to stocks. There are other ways to go about it (irrespective of good advice).
That’s a terrible strategy. You are going to cost yourself years of retirement.
Feel free to elaborate.
4.5% vs 15%. CDs in particular have been garbage for the past 3 years even more than usual with the unstable rates.
Even if you were retirement age that’s a bad idea
CDs nuts! Ha got him!
Please give this another read over
Unless you are retiring in the next decade, it is highly advisable to invest a 401k in the stock market. You get significantly higher returns over the long run. And any losses due to a recession are more than made up for by the significantly higher returns every other year.
When you are nearing retirement (5-10 years out), that is when you want to put the money into something safe and stable like bonds or CDs. That way if there is a recession as you retire, it won’t affect your fund.
30 and out. Work for a single company for 30 years and you can retire by 50 with full pension. Doesn’t exist anymore, but it used too.
Wow. All my life, 65 has been retirement age. I didn’t know that it had been even earlier. I expect to work until death.
Military and government can retire after 20 years. So if you’re 18 when you start college, 22 when you finish, and you get a commission as an officer, you can easily hit Major by retirement age at 42, and receive like $6000-$7000 per month, plus benefits, for the rest of your life.
are you a recruiter?
No, I just know someone who did this. Then he got a cushy job as a trans-pacific airline pilot making double his pension. He’s made of money now.
Even before, people would often work later into life. Many people are fucking terrible with money and if spent poorly, you may need a job even with the pension.
Plus there are a bunch of weirdos that don’t have any purpose outside of work, so they voluntarily keep working for some company.
Immune to market fluctuations. Based on years working and salary so if you worked a long time then retired and lived for a long time you may get more money than if you had a bag of cash in the market. It lasts until you die and your spouse can inherit it so it provides stability for you and your partner for the rest of your lives instead of having to guess how many more years you’re going to live and dividing your savings by number of years left. Removes that stress of outliving your guess and running out of cash.
It isn’t going to be one or the other (if they don’t offer a 401k, then you can use IRAs), unless you just make a bad choice. An employer can contribute to a 401k and also provide a pension (mine used to but I’ve been around long enough that I get both the pension and 401k with matching) but if I had a choice, I could pick a pension for example but also put money into an IRA for retirement that would normally go to a 401k.
If you absolutely had to pick one, it isn’t going to be the same answer for everyone. Amounts, what you’re able to contribute, matching, risks and tax situations are going to vary from person to person and their employer.
As far as controlling your money, some 401k’s allow some extra control, some don’t but most have a middle ground except for their company stock which you can usually directly buy. If you’re 401k allows general different ‘markets’ and/or ‘lifecycle’ buckets (they get more conservative on investment risk the closer you get to your retirement age) is, at the end of the day, all controlled by a broker and they are making the actual decision as to what to invest and how. Some plans may allow you to invest into individual stocks through the 401k’s brokerage though.
At the end of the day though, if all you had was a pension offered which you aren’t going to be contributing your income to, then you should invest in some sort of retirement plan yourself, be it an IRA, money market, bonds, CDs or whatever.
I remember there were some cases of pensions disappearing about 20 years ago so you’re not imagining it. I can’t find any stories on it but yeah there were people who went to retire their pensions were just gone.
I found this on investopia while I was looking:
“A number of situations could put your pension at risk, including underfunding, mismanagement, bankruptcy, and legal exemptions. Laws exist to protect you in such circumstances, but some laws provide better protection than others.”
So maybe they all sued the out of those companies and tapped into past insurance policies to get paid and that’s why it’s not really talked about.
Bottom line is that if someone else has your money, it’s in their control. If you have the money in your 401k, you can watch it and control it.
At one point I got offered a choice to stay with the company pension or convert it to a special 401k that had a higher contribution percentage. I said nope to the change, as I figured the only reason they’re looking to get the tenured people over to what the new people can only get is because it’s better for the company.
Generally true but people should be doing their own math on these tbh
Better for the company doesn’t necessarily mean it’s worse for you.
Likely better for the company officers if you switch so they make it better for you too
lol
Bro you’re on Lemmy lol
Pensions are for life so even if you like to 120 you get something. However they are generally limitited to poor rates of return so if you like a more reasonable life time you had much less money to live on.
I think you meant desire not desite
And on lemmy, you can edit titles!
I can edit tities!??
edit: titles
Well, OP can.
Almost exactly as cool as if I could.
Thanks. The android keyboard ruins my life.
I hear ya
The old plan was that you’d have three things in retirement: Social Security, a corporate pension, and a 401k. Each of these has problems, but if any one of them fails, then the other two are still there to provide enough.
Problem is, pensions have all but disappeared, Social Security gets fucked with, and 401k’s are highly dependent on market conditions at the time you retire.
By the time I’m ready to retire, social security is going to have a minimum age of 142.
By the time you retire you should be out of volatile market investments.
The stock portion is reduced, yes, but there’s almost always some kind of mix of stocks in the portfolio. That’s not necessarily the main issue.
First, you may not get to choose the timing. A lot of older people got trapped in the 2008 downturn. They were planning on retiring a few years out, but they lost their jobs and never got them back. Not only was their portfolio unprepared just based on when they planned to retire, but also the stock crash killed a chunk of what they had. Double wammy of losing their job and destroying their portfolio.
Second, inflation hits hard. If there’s a period of high inflation right when you retire, that can really hurt your savings regardless of how it’s distributed. One of the things those forced 2008 retirees had going for them was that we had a period of relatively low inflation for the next decade. If you took out housing (older people often own their home outright), inflation was sometimes negative.
Capitalism, even when it generally makes line go up, does so in a spiky way. Those spikes cause problems that tend to hit the working class the hardest. Sometimes in ways that cannot be recovered.
There are some liberal economists, particularly of a Modern Monetary Theory bent, who do argue for policies that would flatten growth in return for predictability. Capitalism always goes for the sugar rush of high gains, though. For example, the Fed left rates at rock bottom for far too long, thus letting the market continue extremely high gains (over 20% per year of the sp500, when 7% is a typical long term average). Likewise, you have corps chasing high profits and assuming post pandemic pent up demand would continue indefinitely. Which is now leading to layoffs while major stockholders continue to sweep it in. Both of these lead to the recent high inflation.
I think the efforts to flatten it out are doomed. Capitalism can’t solve its own problems.
In an ideal situation you want both assets and income in your retirement. 401k is one type of asset. Pension is one type of income. It’s certainly possible to plan for retirement with just assets or just income, but having both is better.
In theory a pension is stable, guaranteed income. The employer promises a monthly or annual payment for life, and they manage a pool of money to make sure you get that payment regardless of whether the market goes up or down. People like stability.
With a 401k you take on the market risk yourself. If the market tanks (2000 and 2008 come to mind) then your retirement funds are suddenly worth less and your payments to yourself (distributions) go down. Of course, if the market is hot you can also direct your investments to try and ride the wave. Greater risk means greater (potential) reward.
401k’s also have required minimum distributions that kick in as you get older. If you live long enough you will reach a point where you have been forced to drain the whole thing into your regular bank account. Then it’s time for another plan.
Yeah, I remember my parents talking about how badly they were hit in the late 00s. They were considering retirement just as the recession struck, and they lost a huge chunk of what they’d hoped to retire on.
They still haven’t retired fifteen years later despite declining health.
Stocks are 293% higher today than they were at the peak of 2007. Even if they bought all of their stock at that peak right before the 2008 recession, the market had fully recovered by 2012. It isn’t the market keeping them from retiring…
I’ve never asked, but I believe medical issues cropped up and their reduced retirement funds wouldn’t have been enough, forcing them to keep working, and the situation spiraled from there.
Next plan: robot legs
It’s income rather than assets, so if you fall into debt due to medical issues or whatever you can declare bankruptcy and still have your pension.
401Ks are protected from bankruptcy
I genuinely did not know that.
Finances b crazy
On that note, it makes a ton of sense to take full advantage of 401k plans. At least put it enough for the company match to max out, and preferably put more in to cap out the annual limit for it. That isn’t possible for everyone, but it’s both tax advantaged and pre-tax money, so an extra $500/mo into the 401k is NOT $500 removed from your post-tax pay.
Diversity, my friend. What will you do if the 401k doesn’t come through like you want? Bear in mind that the ultra rich and the big banks employ people who are really good at investing money. They have more experience and information than you. They’ll bail themselves, but not you, out in case of disaster.
“Show me the money” is not a good motto for long term savings. Inflation or poor investment can make that money disappear easily enough. Of course you don’t want to get scammed, so oversight is a good idea.
