They are. I'm only concerned about state laws allowing "freeriders" to opt out of dues. .
Dow 30,000
- Thread starter RonBurgundy
- Start date
I'm in the sprinklerfitters union. I wouldn't beat my body up everyday like I do if I didn't have a pension coming. It's really the main reason I got into the trade.
One of the main benefits of a pension is that most have a defined payment structure. So while the pension manager will have to invest in equities to keep up with others, pension payments may be insulated from market performance. Unless the manager or the market do so poorly that the pension becomes severely underfunded and benefits have to be cut.
There is a huge debate going on right now in California. The nation's largest pension fund (CALPERS) wants to invest private equity in even riskier startup companies to enhance returns. Bad idea, IMHO.
Find the next Amazon, great. Find the next Theranos, and pensioners will be at your doorstep with pitchforks.
Considering how well-funded most pension funds are relative to their notional obligations, you might not be coming out quite as far ahead as you seem to think.
If anything...
If your pension fund does better than expected... you get nothing extra.
If your pension fund does worse than expected... it is not like you magically get what you were promised from money that does not exist... you just take a haircut, like somebody in a defined-contributions plan, or hope somebody bails you out.
That is, your situation is all downside risk with no upsides.
At least a defined-contributions plan is honest with you either way. You are riding the market either way no matter what -- you might as well be aware of that.
As far as I know we are in really good shape. I thought I did hear something about the Teamsters pension fund being in big trouble.
Most government pension funds will get bailed out by Mr. & Mrs. Taxpayer (whether they like it or not) if the bottom falls out. There may be some corner cutting on the benefit but the vast majority of the deficit will be made up on the other end.
30k will happen if a trade deal with China happens but I think the Chinese will stall as long as they can hoping that Trump gets voted out and a more flexible administration takes over. Sorry to inject politics into the discussion.
The union has been there for 100 years and never had problems paying pensions. You are talking about an ultimate doomsday scenario. Nobody at my company had to put off retirement when the market tanked 10 years ago. The same can't be said for people who were gambling 100% of their retirement in 401ks.
I don't see an issue with it. You are predicting what will happen with a foreign country not taking the side of the left or right.
I think you call that an "off-the-books asset" in accounting terms.
You are still depending on your state or the federal government to bail you out, depending on which exact pension fund you are participating in. That could work out fine for you, but considering public finance in this country is awash in red ink and both parties are practically and ideologically committed to making it worse, there is going to be a reckoning at some point.
I do not know if I would want to be the one stuck holding the bag when that happens.
You have quite the damn system if it suffered ZERO financial hardship in 2008 or so.
They must have very little exposure to equities in that case.
Stable as all heck, but probably not much of a return.
Sounds like a collection of grandpas buying CDs and treasury notes.
As both an employee and a tax payer, I'm sure I am holding the bag either way. As already mentioned, if things get that bad, my 401K would be wiped out anyway and I would have zero chance that some white knight is going to come along and even partially bail me out.
A pension can over-promise and fail even in years of a good market.
CALPERS is like 30% underfunded despite the good market since 2010.
You do not need to imagine a Mad Max "civilization-just-ended-so-who-cares-I-need-guns-and-water-more-than-equities" situation to be at cross purposes here.
Does being a savvy investor make you rich, or does being rich make you a savvy investor?
The wealthy do have advantages but anyone can go to Scottrade and open an account.
It sounds like a pension. It's not set up to make anyone rich. We have that and our employer has to put $5/hr into an investment plan for us. And I have a Roth IRA. I'm going to be fine.You have quite the damn system if it suffered ZERO financial hardship in 2008 or so.
They must have very little exposure to equities in that case.
Stable as all heck, but probably not much of a return.
Sounds like a collection of grandpas buying CDs and treasury notes.
You're 401 getting wiped is a function of how you invest and your risk tolerance. Take chances, accept the risk. Balance your portfolio and play the long game. Nobody should be chasing high returns unless you like to live that way.
Full disclosure, I have a robust 401 I've contributed to from day one AND a defined benefit plan which I intend to cash-out when I retire next year. I'm lucky but I've made lots of that luck through consistent and (usually) disciplined investing.
I agree, if the Chinese can hold out another 18 months. I'm not sure they can. But your take is not injecting politics as I don't think anyone could rationally disagree with what you said.
You have to have some extra cash to invest first. Where does that cash come from when you live paycheck-to-paycheck?
