Are you set for retirement without a pension?
Used to be, pension plans were the ticket to a less-stressful retirement. You work for a company for years and in return the company continues to provide a regular check for your golden years. Not so much anymore.
According to the Employee Research Institute, over the last three decades the share of private-sector workers in pension plans dropped from 28 percent to only 3 percent in 2008. During the same period, the share or workers enrolling in 401 (k)-type plans was up to 31 percent from 7 percent. Twelve percent were able to take advantage of both plans in 2008.
With a pension plan, known as defined benefit plan, the company promises you a certain income for the rest of your life based on the number of years you put in. With a 401(k) plan, known as a defined contribution plan, both you and your employer contribute to a tax-deferred savings account designed to supplement Social Security and a pension, if you have one.
As the AJC reports today, SunTrust Banks will freeze its employee pension plan at year’s end, following the examples of other companies trying to cut their costs. The freeze doesn’t mean SunTrust is getting rid of its pension plan, but the company no longer will take into account compensation earned after the end of the year in determining future checks.
How are you set for retirement? Will you be able to rely on a pension, 401(k) and/or Social Security without taking on another job? Are you looking at a life of toil?
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71 comments Add your comment
Prof
November 19th, 2011
1:42 pm
@ Political Mongrel. Yes, you’re probably right about Georgia state income taxes and the age of PS retirees…I was over 65 when I retired. Sorry for the misinformation.
I agree with your second paragraph here—although sometimes the blame also lies with the retirement foundations that made risky, huge investments and then lost a lot in 2008 and after. Many state university retirement funds are in that situation, though not Georgia’s.
bill
November 19th, 2011
1:48 pm
JC, For your information Bush did try 12 seperate times to reign in Freddie Mae and Fredddie Mac.
All 12 times demcorats shut it down. Even Clinton claimed he wanted to do it as well but he knew democrats would block it.
The housing bubble is almost entirely a demcorat failed program. Bush inherited the mess from demcoratas just like he inherited a recession from Clinton.
Look which side even now infests and protects Fannie Mae and Freddie Mac. Hell Obama even used one of their guys as one of his advisers.
Barney Frank and Chris Dodd were up to their eyes with Fannine and Freddie.
In fact you look at who benfited from both those companies and all democrats.
Obama even INCREASED how many mortages now go through Fannie and Feddie while they still get ever more bail outs.
Now also take a look at which side fought against privitizing retirement plans so you would not have to worry about companies or the goverment raiding the funds. DEMOCRATS did!
Which party benifits from poor needy people needing more and more from the government and then ask yourself why their programs seem to always just create more and more needy people.
Lisa
November 19th, 2011
2:35 pm
As usual, the AJC doesn’t seem to check their facts very thoroughly.
Pension plans can either be defined-contribution or defined-benefit plans. Defined contribution plans are far more common today, as they are typically much cheaper than the other option. With this plan, the Company would define their contribution to the plan (i.e. 3% of an employee’s salary) and the future value is up in the air, depending on how funds are invested, how long, the rate of distributions, etc.
With a defined benefit plan, the Company defines the future benefit (i.e. 75% of a retired employee’s salary) and then it is up to them, with the help of an actuary, to fund the plan annually in accordance with numerous regulations. Generally when the markets fall, companies must make up the shortfall with increased contributions to ensure that adequate funds are available to provide the promised defined benefit.
atlanta banker
November 19th, 2011
2:36 pm
i used to work for another atlanta based bank that used to treat employees like family. Now they terminate postions right when employees about about to be fully vested so they do not have to pay retirement benefits, freeze employee pay while the top execs still collect HUGE benefits and 6 figure saleries, 7 figure golden parashutes and are only concerned with protecting thier own interests at the expense of employees who have work 25+ years. It is typical of the corporate greed in this country and in the end will be the demise of this once great nation. I am glad I retired and took my lump sum before they could get this dirty hands on it.
Tychus Findlay
November 19th, 2011
2:56 pm
Where’s the outrage at government employees’ outrageous pensions at the taxpayers’ expense?
TCS
November 19th, 2011
3:20 pm
CJ, Joe is right right on with his comments. Bush tried to stop Barney Frank and Maxine Waters, but it was derailed Get your facts straight. Dem or Repub facts or facts!!
Retired Government Worker
November 19th, 2011
3:29 pm
Where’s the outrage at government employees’ outrageous pensions at the taxpayers’ expense?
You’re severely misinformed, Tychus. Unless a government worker was under the old program, the pension of a federal worker amounts to 1% per year of service of the average of the top 3 years’ salary. Work 30 years and your annual pension amounts to 30% of your average salary. Work 40 years and your pension is 40%. Most private employees who are covered by pension plans would scoff at such a pension benefit.
GetAGrip
November 19th, 2011
3:56 pm
@TCS
Right on. As the late Patrick Moynihan once said, everyone is entitled to his own opinion, but not his own facts.
GetAGrip
November 19th, 2011
3:58 pm
Of course, the same ignorance repeated long enough BECOMES fact – e.g., the Democratic party as the party of civil rights and racial equality.
Prof
November 19th, 2011
4:09 pm
@ Tychus Findlay, “Where’s the outrage at government employees’ outrageous pensions at the taxpayers’ expense?”
Said the grasshopper that had sung and fiddled all summer long, to the ant that had labored all spring and summer to gather and store grain for the winter.
The traditional payoff for the modest salaries of government workers–especially public servants such as teachers and police/ fire officers–are their benefits, that include retirement benefits. Don’t begrudge us what we’ve put in our years (and our own contributions) to get just because YOUR employers have treated you so shabbily.
Ripped off Boomer
November 19th, 2011
4:11 pm
“How are you set for retirement? Will you be able to rely on a pension, 401(k) and/or Social Security without taking on another job? Are you looking at a life of toil?
I was doing well towards retirement until an employer who directed where my 401k was invested (in their stock) went bankrupt and lost $750K. After the Enron fiasco Congress made changes that do not allow companies to direct your 401k plan. I can not afford to retire till max age for SS now. I will be working forever.
Thought about running for Congress but I have morals and could not lower myself to that level.
no cash
November 19th, 2011
7:08 pm
my company dropped our pension plan 4 years ago and switched everyone to a bad 401k plan—the benefits went way down! I need a better job.
Already Done
November 20th, 2011
9:21 am
Obama! NOT!
Lies, hipocrocies abound. Says “white”, does “black”.
RJ
November 20th, 2011
11:20 am
We can spend years pointing at each other placing blame.If democrats and republicans cant find common ground this country is going under.We have no one to blame but ourselves we have to vote and be more pro active in every aspect of our lives.
atlmom
November 20th, 2011
11:33 am
Be careful about amassing too much in a 401k too…the congress looks at that money and drools, but doesn’t quite know how to get at it. It’s amazingly annoyingly terrible, given all the things I have given up over the years, while others have gone on spending sprees. Those people don’t have so much in their retirement accounts, and they’re probably going to look at mine and tell congress how ‘fortunate’ I was. When I went without cable, without a smart phone, without flat screens, without upgrading my computers, without nice vacations, etc etc etc to amass that money. Oh, it’s so tough being a person who earns money and goes on spending sprees.
but i’m not bitter.
bob lilly
November 20th, 2011
12:57 pm
I am set. I have a good pension plan, nice 401 (since 1983) avoided being too risky when all said I was nuts and theirs dropped out the bottom. I have bought 4 rental homes for next to nothing the last 2 years and borrowed only 50%. I van rent for far less than those that bought at the peak. You just have to be money savvy and spend your time away from Dancing with the Stars. I feel sorry for those who’s pension were stolen….like the union members.
bob lilly
November 20th, 2011
1:06 pm
Start to move toward gold. Inflation will cause the dollar to disappear. Do not let the “experts” lie to you. They have been wrong every step of the way. BUY GOLD. I saw the housing market bubble in 2002 when I moved and saw the exact home selling for 40% more than from where I moved. In come rose just 2% in 7 years while houses rose 80%. Only an idiot could not see the housing collapse coming, yet the experts said nothing. How could they. They had to keep the lies going.
Brent Walker
November 20th, 2011
1:18 pm
Blame it on the rain has it. The blame is Washington DC period. If they; are in vote them out.
Yup, your right
November 20th, 2011
1:30 pm
CJ, you are so wrong about Bush. Bush did try to stop the housing bubble and so did McCain. They put a bill fourth to the house and the house hid it, Your democratic house did not think there was anything wrong with Freddie and Fannie. I love the posters who think that democrats want whats best for you. All they care about is keeping you down and keeping your vote.
If you want the real facts, all you have to do is go into the archives of the house and look under McCain’s speeches and you will find where McCain and a lot of other republicans tried to put the halts on Fannie and Freddie and how the democrats opposed it. Get your facts right before you post ok.
flat broke
November 21st, 2011
5:09 pm
the country’s broke–get rid of all government pensions, asap. No more free rides for government loafers.
Gmoney
November 25th, 2011
4:35 pm
Lowe’s was the same way when I started in 1999. They had stock options for employees that were Ast. Mgrs and up. A company profit sharing plan and 401K with match. They used the Enron scandal to eliminate options for everyone but Store Mgrs and Directors and above. Next to go was the profit sharing plan. Then went the company cars. Then insurance went from 100% coverage to 80% with a greater cost, etc, etc etc. Left in 2008 and took one very important lesson with me. Loyalty means NOTHING!!!!!!!