Pension vs. 401k/403b

[Squall Leonhart]

Looking for a lil' retirement advice fellas.

My company has a pension plan (shocking, i know) and i began making the bottom 2% rate recently (top bracket is like 6%)

The thing is, we also have a 401k, but they don't match anything.

What i'm wondering is, should i be contributing to the 401k as well, or will fees probably make it pointless since they don't match my contributions? (Even with the tax benefits i'd be reaping on my own $$$)

Also, how sweet is the pension compared to a 401k/403b?

 

[Swiftie]

Yes, do both

Pension are awesome. Not many companies still offer them. IMO, a pension is better than a 401 especially since their not matching. I still say do both because you need to save for the future. Do they pay anything towards health care when you retire? Health insurance can be very expensive to pay for on your own.

 

[kenetics]

Yes, do both

Pension are awesome. Not many companies still offer them. IMO, a pension is better than a 401 especially since their not matching. I still say do both because you need to save for the future. Do they pay anything towards health care when you retire? Health insurance can be very expensive to pay for on your own.

Don't you lose pensions if the company goes under? I rather invest in IRA or stocks on my own.

 

[Squall Leonhart]

Don't you lose pensions if the company goes under? I rather invest in IRA or stocks on my own.

The company won't go under, it is the primary major hospital in my state

 

[kenetics]

The company won't go under, it is the primary major hospital in my state

Well ya every case is different, but I never put my eggs in one basket especially in a company.

 

[Squall Leonhart]

So i. Other words, even if the company doesn't match anything, the tax breaks and small interest will be worth it in the 401k even with possible fees

 

[WorldofWarcraft]

Learn a trade, join a union, retire in 20 years

 

[Squall Leonhart]

Learn a trade, join a union, retire in 20 years

I'm 29

 

[michal001]

Max both. Free money. Tax benefits. Easy way to discipline into saving.

The fact you haven't maxed both out is stunning and embarrassing.

 

[KILL KILL]

I've read that if a company does not match, it's better to go with a Roth IRA. Dont quote me on this though.

 

[Swiftie]

I'm not sure if this is allowed, but I'm going to recommend the following forum to everyone:

http://www.early-retirement.org/forums/

You can post all kinds of questions like this and many on this forum are already retired and willing to help.

 

[Squall Leonhart]

Max both. Free money. Tax benefits. Easy way to discipline into saving.

The fact you haven't maxed both out is stunning and embarrassing.

Pension is "maxed"

And like the other bro said, it's not that obvious when they don't contribute to it at all. I save my money on my own, but am unsure that the tax break on the small percentage i can put into the 401k is significant enough to look into if there are associated fees and/or the market might affect my money negatively

 

[GSP_37]

Some states give preferential tax treatment to pension income when you're retired and take pension income.

 

[BoogerDawson]

When are you eligible to collect on the pension? After 20 years of service? When you reach a certain age? Is it 90% of your max income of your last 3 years?

 

[michal001]

Pension is "maxed"

And like the other bro said, it's not that obvious when they don't contribute to it at all. I save my money on my own, but am unsure that the tax break on the small percentage i can put into the 401k is significant enough to look into if there are associated fees and/or the market might affect my money negatively

Sounds like standard excuse for bad money practices. It's not that hard to have done this at the beginning. Shameful. This is why most People are woefully unprepared for retirement.

 

[LogicalError]

So i. Other words, even if the company doesn't match anything, the tax breaks and small interest will be worth it in the 401k even with possible fees

Why would you have small interest in a 401K? Are you not able to adjust where the funds are going? If they offer like a 2050 fund it's a mutual fund focused on growth now and it'll taper off into bonds as it gets closer to the year 2050 (when you're close to 60ish presumably). Those funds will probably average 8-10% early on per year.

 

[DIABOLUS]

I've read that if a company does not match, it's better to go with a Roth IRA. Dont quote me on this though.

Depends on how much money you're looking to contribute annually toward retirement. Traditional IRAs and Roth IRAs have a total contribution limit of $5500 per year. As in, if you have both accounts, you can put the $5500 in one, and $0 in the other, or split the sum between both accounts. You can't do $5500 in each.

A 401k, on the other hand, has a contribution limit of $18,000 per year.

I was faced with this dilemma recently. Got too much money to invest that $5500 per year is not going to cut it. And my job doesn't offer a 401k plan. So I opened an individual taxable brokerage account and will be using it to invest in stocks. I also opened a Roth IRA that I will be using to invest in bonds. My asset allocation is 90% stocks, 10% bonds, so the $5500 annual limit on the bond side shouldn't be an issue.

 

[mb23100]

I'm 29

So? Most of the guys i went through my apprenticeship with were that age or older. A lot of them had different careers but joined the union strictly for the pension because they could see retirement coming

 

[Brofessor]

Pension:
- FIXED income for the rest of your life, no matter what happens.
- Liability is not on you. The liability is with the company (which is a good thing).
- Pensions are so beneficial to the retirees and are such a financial burden on the company/organization, this is why pensions are going extinct.

401(K):
- Unlimited potential upside if the markets (stocks, bonds, etc.) do well. You could retire rich as fuck.
- Double-edge sword: unlimited potential downside if the market crashes. You could retire poor as fuck. Remember what happened in 2008? People retiring that year were fuuuuuuucked.
- You take on the liability. If the market crashes and you lose all your retirement money, then too bad.
- Usually the company/organization matches a certain percentage of your contributions. This is free money. Sounds like your employer doesn't offer the match. They are shit.

 

[AznTrojan]

both.. but max roth IRA if you qualify before maxing out the 401k/403b.. just fill them up with low cost index funds and you're set..