Average retirement savings

[teller80]

@teller80 : have you figured out the best age to collect social security?

No, but I have a few years before I'll even have the choice. I happen to absolutely love my job and have no interest in retiring just yet, but my husband however wants to collect early and that's what led me to the rabbit hole of what the average amount a person has when they retire (which I still don't know, lol).

I hope you're able to have your sibling collect on your pension should you pass, if they don't wouldn't that be kind of discriminating against single people?

 

[tvguy]

The bolded could be a thread subject all on its own!

Yup. Public sector pensions in California. 60% of your final year's pay unless you are a first responder, then it's 90% of your final years pay. Truth be told, you have to work 30 years to get that and 30 years is the cap. Looks good to me with 41 years on the job. But truth be told the formula is 2% of your final years pay for each year worked in public sector, 3% if a first responder.

 

[MillauFr]

Agree -- and it is being taught in math classes, in Civics classes, etc. It doesn't "stick" for a couple reasons:
- 9th and 10th graders still have a fantasy that success is all about choosing a high-paying career. They spin stories about how they'll star in the NFL or be rappers with mansions in multiple cities.

The fantasy here among the Seattle High School students is getting into computer science at UW or Cal Poly so you get make 6 figures right out of college working at Amazon, Alphabet, Apple, or Facebook.

 

[starry_solo]

No, but I have a few years before I'll even have the choice. I happen to absolutely love my job and have no interest in retiring just yet, but my husband however wants to collect early and that's what led me to the rabbit hole of what the average amount a person has when they retire (which I still don't know, lol).

I hope you're able to have your sibling collect on your pension should you pass, if they don't wouldn't that be kind of discriminating against single people?

that’s what I think too..the whole discriminating against single people. Lol

 

[Frwinkley]

Teacher in PA. Our pension is based on the average of our last 3 years of salary. Your percentage of that average is than based on your years of service and a multiplier of 2.5 times. That means if you have 20 years of service (which will be my case because I made a career change mid-life), I will get 50% of my annual salary per year. I will reduce that amount because we will opt for a survivor benefit. Most teachers retire with 30 years of service.

In addition to that, I will get a lump sum (my contributions plus interest). In PA, we are mandated to contribute 7.5 percent of our salary which is matched by the school district. I roll this amount over to a 401k.

We will also have 401ks because we both worked in the private sector; my DH still does.

My plan is to live on our pension amount and cash savings until we reach full retirement age. I'll retire at 63; I still really enjoy my job, plus we have great medical insurance through my school district. This will continue until I reach 65. My DH is looking to get out soon; I'm ok with that.

My plan right now is to save, save, save outside of our retirement vehicles. We'll use that cash and pension money for living expenses (including supplemental health insurance) beyond Medicare. We have no debt, house is paid for. We have one car payment (financed because of 0% interest) so I feel we are in pretty good shape.

 

[DisneyHardin]

I have a pension from teacher retirement. Since 13% of my pay went towards that, I saved very little additional. My husband had no pension offered in his first 2 careers but eventually 401ks came along. Now he works for a place that has a defined benefit pension but it’s not very large anymore. He does however qualify for social security. I do not. I think being debt free is the best thing you can do for yourself. We aren’t there yet, but we are working on it

I always like your posts because we are both from KY, but I didn't know you were a teacher too. I'm not exactly how my DH's retirement/Pension/SS will play out because he worked in the private sector paying into SS until he was in his mid 30's when he took a job with the Sheriff Dept as a Deputy and now pays into KRS.

 

[barkley]

- Kids see that their parents are struggling with money, but they figure that it's because their parents made bad choices -- they seem to think that their parents chose assistant fast food manager as a career /not that circumstances pushed them into that low-salary position. They think that they will never be in that same circumstance because they're going to make better choices.

the flip side of this is kids see their parents/themselves experience living a certain lifestyle and have no clue that the parents were/are financially supplemented by THEIR parents, in hock up to their eyeballs and haven't a penny in savings let alone any retirement savings. this results in the kids making college/career/life choices that are totally unrealistic on a financial level and may put them in a precarious financial situation for the rest of lives.

case in point-i know a family where the kids went to private schools, dad always talked up the expensive private college he went to, they did vacations, had nice cars, kids got to go on multiple school trips out of the country.....so the kids think if mom and dad could do it in the line of work they are in-so can they! what they don't realize is-

while both mom and dad are in decent paying professional jobs-even combined it can't support the lifestyle they've lived

mom and dad are still, decades later owing on student loans,

grandma/grandpa helped with regular and emergency expenses for all their married lives,

when grandma/grandpa passed and that income stream dried up the credit card debt started piling up and they will never be able to pay it off.
.

so the kids go into the similar professions, rack up psychotic student debt, decide to have kids early on in life and still don't realize that there's no huge bump up in income that's magically going to happen in their line of work to garner the big payoff in lifestyle. they figure there has to be b/c mom and dad made it work, they successfully did so why can't they? they can't contribute to their retirement b/c they can't keep their heads above water and the careers they went into will never justify the insane amount of college loans they have hanging over their heads.

i don't think parents have to be entirely forthcoming about their incomes/expenses with kids but i think it's a disservice to the kids to raise them with a totally false sense of financial reality.

Yup. Public sector pensions in California. 60% of your final year's pay unless you are a first responder, then it's 90% of your final years pay. Truth be told, you have to work 30 years to get that and 30 years is the cap. Looks good to me with 41 years on the job. But truth be told the formula is 2% of your final years pay for each year worked in public sector, 3% if a first responder.

i'm retired out of california public service (though not a state agency). those benefits look good but there have been tweaks in recent years due to pension reform laws and budget cuts that would make me think twice about taking a public vs. private sector job. in the time since i retired, my public sector employer made these changes and i won't be surprised to see the state implement similar if/when another recession hits-

new hires, no matter how long employed will never receive retiree medical benefits (that was why we got tons of older new hires-they would work 5-15 years to vest so they could have medical coverage),

during the last recession in order to prevent job eliminations the unions agreed to across the board pay cuts, cancellations of previously agreed upon upcoming raises and higher share of costs for medical coverage. as a result i had former co-workers who were looking at 10% lower wages, hundreds and hundreds more per month in premiums-AND when they retired out as much as 10 years later, their pensions were lower b/c the amount they anticipated their final year's salary for computation was nowhere near what they were receiving (they were still playing catch up to get back to their pre recession salary rates which had been anticipated to hundreds of dollars per month lower than their final salaries).

it's a real balancing act these days on deciding if the retirement payoff in public sector is worth the lower pay of the course of a career.

 

[kymom99]

I always like your posts because we are both from KY, but I didn't know you were a teacher too. I'm not exactly how my DH's retirement/Pension/SS will play out because he worked in the private sector paying into SS until he was in his mid 30's when he took a job with the Sheriff Dept as a Deputy and now pays into KRS.

Your husband being a higher tier due to his hazardous job should help. I retired 4 years ago but can’t seem to actually stop working. This year I am teaching in a special education position because there just aren’t enough of those. I’m sure not complaining about the extra money but this back and forth between in person and virtual is exhausting.

 

[starry_solo]

Yup. Public sector pensions in California. 60% of your final year's pay unless you are a first responder, then it's 90% of your final years pay. Truth be told, you have to work 30 years to get that and 30 years is the cap. Looks good to me with 41 years on the job. But truth be told the formula is 2% of your final years pay for each year worked in public sector, 3% if a first responder.

Now, but before PEPRA, classic employees could get more than 100% of their final year's pay. I believe law enforcement was capped out at 90%. Post-PEPRA, it's 2% at 62 for regular employees and 2% at 50 for law enforcement (although if both regular employees and law enforcement worked til they were older, it could go up to 2.5% at 67 for regular employees and 2.5% or 2.7% at 57 for law enforcement.

Also, they have a cap for pensionable compensation of $126,291 for members who participate in Social Security and $151,549 for members who don't. Both limits are subject to increases in the Consumer Price Index.

Are you sure it's capped at 60% for new employees? If so, that sucks

 

[DisneyHardin]

This year I am teaching in a special education position because there just aren’t enough of those. I’m sure not complaining about the extra money but this back and forth between in person and virtual is exhausting.

I am in Jefferson County, so we have only been virtual, but teaching from home is definitely something I never imagined doing!!! I am a Librarian now, but taught Special Education for 6 years in Central KY before I moved to Louisville.

 

[tvguy]

Are you sure it's capped at 60% for new employees? If so, that sucks

I think it can vary from state agency to state agency. 60% of my son's CURRENT pay is more than I have every made in a year. So all perspective I guess.

 

[PollyannaMom]

As a teacher, I honestly hate that we get blamed for whatever ails us (Kinda like being a mom.)

In my opinion, personal finance cannot be effectively taught to 16-17 year olds in a classroom. It is difficult (possibly impossible) to concretely teach it. Teachers have students set up fictional budgets from fictional jobs where there are no rewards for good decisions nor consequences for poor ones. Add to that an age group who thinks, “wow! I could make 1K per week!? Easy street for sure!”

All that to say, personal finance needs to be taught in concrete ways at home.

I think it needs to come from both places, because there are kids in our schools whose parents just don't know this stuff themselves. We've got to try to teach it in classes, to at least give them a chance to pick it up, even if it doesn't reach all of them.

But I do agree that parents who can reinforce the lessons at home in a concrete way absolutely should! It means a lot more for a kid to see interest working firsthand and get to buy something with money they saved themselves.

 

[disneychrista]

Are you sure it's capped at 60% for new employees? If so, that sucks

This is for new (tier 4) employees.
If I am reading the chart correctly is capped at 60% for employees who have 30 years that retire at 62. It is 75% at 67, if one has 30 years. The chart shows up to 102.5% for 67yo at 41 years. Though I thought the cap was 30 years. I know employees only have to pay into it for 30 years.

 

[MrsPete]

social security-i'm interested to see if one of the proposals for changing the program is instituted. as you've experienced w/ your parents the social security income to a household can drop greatly upon the death of one spouse-the proposal is some kind of new formula that would take into consideration the benefits of both spouses to come up with a survivor's benefit amount (so instead of losing 100% of your late spouse's benefit it might be more like losing just a portion of it which would be added on to the surviving spouse's ss benefit).

I see the point ... for example, my parents are each drawing a SS check and a pension check. They have tons of money coming in and are living well (in spite of having only scant savings). However, my stepfather is quite ill and will probably not live much longer. When he dies, my mother will lose two of those four checks ... but her housing, utilities and car expenses will remain fairly stable.

I think most people plan their retirement as if both spouses will live the same life span ... but, yes, for the vast majority of couples, one of them will live to see the household budget slashed.

To make it worse, after the first spouse dies, the second spouse may (eventually) need more income than the first one did. Consider this: I'm younger and healthier than my husband, and if genetics are any indication, I will live more years. In our case, the likelihood is that when he reaches his declining years, he will have me to take care of him. That is, I'll be able to drive, take care of the house, provide meals and care ... and those things won't cost him money. When I myself reach those declining years, I won't have a spouse upon which to lean, so I'll need more money to pay for housekeeping, rides, etc. We have thought this through in our retirement planning.

The fantasy here among the Seattle High School students is getting into computer science at UW or Cal Poly so you get make 6 figures right out of college working at Amazon, Alphabet, Apple, or Facebook.

I assume the percentage of kids who get those dream jobs are about the same as those who get into the NBA or make it as singers?

that’s what I think too..the whole discriminating against single people. Lol

Eh, if you're a single parent who dies young, your income would still go to your young children.

On the other hand, if I died right now -- I'm in my early 50s -- my family would lose every penny of my SS. My children are past 18 years old, and since I'm not drawing a benefit yet, my husband would never get any of my benefits.

A number of things about Social Security are far from ideal, but I understand that we need it -- without it, a whole lot of elderly people would have literally nothing.

the flip side of this is kids see their parents/themselves experience living a certain lifestyle and have no clue that the parents were/are financially supplemented by THEIR parents, in hock up to their eyeballs and haven't a penny in savings let alone any retirement savings ...

Agree. With credit cards (or parental help), it's not easy to see who's really financially secure. (Which is the premise of the book The Millionaire Next Door.)

... I retired 4 years ago but can’t seem to actually stop working.

Next year will be my last, but I don't anticipate actually leaving to be a problem!

I think it needs to come from both places ...

Ideally, yes.

Parents who haven't handled money well /don't have information to share with their children can still serve as a cautionary tale. Mine did. In college I realized I could grow up to do better than my parents had, so I spent many long hours in the library inhaling all the books I could find on finance, frugal living, investments, etc. At that point in my life I was living hand-to-mouth, so I couldn't USE most of the information I gleaned, but I learned -- and once I started earning, I put my plans into action, and I have never been sorry.

 

[goofyernmost]

hahaha. I made $1.65 per hour when I started working in high school. That was the minimum wage. I had a summer job at the Chevy plant in Buffalo during my college days and I made $4.65/hour and that was big money.

$1.35 when I started working. I used to work random weekends unloading freight cars of 55 drums of oil and cases of motor oil and misc. petroleum products. One time I was the only one to show up so I had to do it by myself and I was paid $4.50 per hour and thought I was a Rockefeller.

 

[MillauFr]

I assume the percentage of kids who get those dream jobs are about the same as those who get into the NBA or make it as singers?

Not even close. Amazon alone has 50,000+ people working in the City of Seattle and they still have 7,000 job openings in the City. Prior to Covid it was 11,000 job openings. They can't hire people here fast enough. We are desperate for more workers. I work in government and even though many of our jobs are paying $50+ an hour we are still having problems with people leaving for the tech firms. Government can't compete because we don't offer stock options.

 

[georgina]

I assume the percentage of kids who get those dream jobs are about the same as those who get into the NBA or make it as singers?

Nope, I have 2 kids in computer science. DS stuck to his dream of working for a video game company so took a lower salary than his buddies who went to Microsoft out of college, he's getting close to a 6 figure salary after 6 years but is happy and has all he needs. DD went to a small tech firm in San Francisco and is the highest paid of my 3 kids although she is the youngest. Lots of hiring in the tech world still, though it may have slowed some due to covid.

 

[sasywtch]

Yup. Public sector pensions in California. 60% of your final year's pay unless you are a first responder, then it's 90% of your final years pay. Truth be told, you have to work 30 years to get that and 30 years is the cap. Looks good to me with 41 years on the job. But truth be told the formula is 2% of your final years pay for each year worked in public sector, 3% if a first responder.

yep but they just raised the retirement age. That is one of the main reasons why I went to work for the state. I could have gotten paid a little more in the private sector however, after working there for 25 years (took 10 years off to raise kids), I get 60% of my take home pay (the percentage is 50% 2%x25 years) but by the time you don't have to pay union dues, ss, workers comp etc (yes I know 50% of gross) plus I started pulling out my ss at 62 and now bring home $100 more than when I was working. The big one for me, after retirement,my medical monthly is free. Dr's appt $15, meds $5 n/c labs, xrays, hospital. for me, toughing it out making a little less was worth it later. You also have the option for 401Ks which some of my coworkers did but after my divorce, I honestly couldn't afford one more penny out of my check at the time.

 

[SteveH]

The fantasy here among the Seattle High School students is getting into computer science at UW or Cal Poly so you get make 6 figures right out of college working at Amazon, Alphabet, Apple, or Facebook.

My oldest made that happen, but now with one of those IT companies, but had a BS in CS and then MS in Machine Learning, landed a 6 figure job where we live. He planned his education very well and it's paying off.

 

[tex1989]

It is interesting that comments in this thread have ventured into Public Workers retirement and the rise in property taxes because basically one is causing the other. Numerous articles over the years have pointed to the fact that as Public Workers, Fireman Police, Teachers, State Workers and their unions have negotiated pay and benefit increases that the most expedient way to settle the negotiations have been to offer more benefits on the back end ie retirement benefits. As a result governments from County all the way to Federal have basically mortgaged the future for the present. I am not saying those workers who are so critical and needed in society are not entitled to them, but the level they are at is going to potentially bankrupt states forced to pay them.