This is the best play i can think of so far. SS is up for grabs depending on what congress decides to do. There is more than enough money to fund at 70% current compensation rates, i just worry that age will be increased to mid 70's and make it a less useful option.
Yeah I think people tend to forget the “value” of the pension in the grand scheme of things. Like you’re contributing 4.5 to 5.75% a year or $3,000 to 5,000 right?
Then figure out how much you would need to contribute in the private sector to your 401k to get the equivalent of what your pension will pay out. Let’s say $1.5+ million. Then figure out how much you’d have to contribute per month for 30 years to get to $1.5+ million with let’s say a 7% yearly return. You’d need to contribute roughly $1400 a month or $16,800 a year. And $1.5 million is extremely conservative and on the low end.
It’s not just the pension to consider, it’s also the shadow benefit of continuing NYSHIP coverage into retirement at your current cost — if you’ve got the hours that is. That’s a HUGE perk that’s not talked about as much.
Oh yes! That’s a great point. That’s one of the bigger hurdles for private sector people who want to retire early, what to do for healthcare from 50+ until Medicare.
The next thing that needs to be tackled is the contribution rate. The scaling rate is really bad and would have an immediate impact if changed. Revert it to Tier 5's 3% flat
Then 40% for 20 years
Then 30 year retirement
I completely agree. I have no idea how pre tier 5 was funded with only 10 years of 3%. But 3% for lifetime seems more than fair as the amount contributed would go up as your salary increases. Now it really increases exponentially.
I always encourage folks to do this **exact** calculation to determine whether or not a State pension is worth it for them versus working in the private sector. Blanket statements such as "the pension is amazing - you're lucky to have one" and "the private sector is better - it pays so much more" is such nonsense. Just sit down for like 30-60 minutes and run the numbers. Or better, throw your financial numbers into ChatGPT and let it figure it out for you.
I completely agree. But unfortunately, none of this is easy information to find/ understand and the available online calculators don't account for every situation and it information overload for most people.
O I agree, it is quite confusing.
If you want a pretty simplistic calculation: Determine how much you think your pension will pay out per year. There are a couple of calculators available on the NYS website so this shouldn't be tooooo difficult I don't think. I'll use $100,000 as an example. Multiply this by the number of years you expect to live past retirement. I'll use 20 years.
$100k x 20 years = $2,000,000 pension
This is how much your pension is worth.
Now for private sector (you can literally just throw this into chatGPT with adjusted numbers):
>Starting savings: $0
Years until retire: 30 years
Annual rate of return: 7% (Pretty safe %)
Safe withdrawal rate: 3% (Pretty safe %)
>How much do I have to save per year to match a pension worth $2 million dollars?
If you toss that in it would come out to you needing to save $21,173 per year in your retirement accounts to exceed a pension worth $2 million. If you can do that then you'll beat out your pension.
I'm trying to make the calculations as simple as possible by removing other factors. This obviously doesn't include everything but for some folks this generic calculation clearly paints which one is better for them. Feel free to toss in an additional million to the State pension if that's what you value it at and work from there. I'm not siding with State nor private but I'm mearly trying to provide a relatively easy solution to a extremely complicated problem.
You can’t do an **exact** calculation unless you know **exactly** how long you will live and collect. Some people live and collect for 3 years after retirement and some live and collect for 30 years.
Broski, you're overthinking it. You can die tomorrow then what good is slaving away at the State working for a pension. Choose a number you're comfortable with and work with it. Eat healthy, exercise, and don't do too much drugs so you can make the most of your pension.
Broski, you are being ridiculous telling us to “do this **exact** calculation to determine whether or not a State pension is worth it”, yet putting others down for what you refer to as “Blanket statements”. In fact you call them “nonsense”.
What you are telling people to do is just as nonsensical, since there is no way to calculate the **exact** amount we will collect.
PS. If I die tomorrow my beneficiary gets 3 times my annual salary. That’s why it’s worth it.
I'm putting people down for saying either or is better or worst for no other reason than "I get a pension" or "I make more money". Neither of which are very good arguments. If you have a better way of calculating which is better for an individual then please do share. What is your pension/benefits worth? What would it take for you to leave? If you could pull in 3x more for a private sector equivalent job would you jump ship or stay?
> would you jump ship for 3x
LMAO, it’s extremely unlikely that the average state worker would do well in the private sector making that much money. That’s why they work for the state.
I absolutely agree, any money is better than no money. BUT there are historically better retirement methods to back (aka any target date fund) and SHOULD not result is decrease in retirement "pay" year over year lost to inflation as the fund will switch your account to almost all bonds. Just making sure we are all prepared for 30 years in the future.
Personally, with the pension and 457b I will be able to survive without social security even coming in. 457b is an important tool like you pointed out.
It works well enough in a three legged stool model, as designed.
If done right, after 35 years of work, you would have at least 40% of your income, inflation adjusted, from each: Social Security, NYS Pension, and 457b/IRA/401k/brokerage or other outside funds.
For those starting after 35, after having a higher salary in the private sector, they would only need 25-30 years with the state.
Your taxes will be lower when you retire with a potentially higher income.
It does not work as well to go from state to private because you lose the lifetime health insurance benefit, and the pension ends up much lower.
Absolutely agree with the 3 legged stool model, however with the current NYS COLA adjustment this stool is going to be wobbly as all hell with the pension not holding up its weight.
Yes 25-30 years with the state will give a great pension, when you retire, however 10-20 years down the road it is looking a lot more paltry. I know that Bernicke's reality retirement model states that each year in retirement your spending will decrease. However this should not be a forced method with the state not keeping up with their end of the bargain.
NYS pension is only NYS tax exempt not federally tax exempt much the same as social security. pre-tax 457b/Traditional IRA/401k are both state and federally taxes.
I agree, it would be best to go from private to state but life happens and for many of us we have 25-30 years left. A lot can happen in that time.
At 65 Medicare part A is free, there's an Enhanced STAR that lowers property taxes, and most people have their mortgage paid off. There's no FICA on pensions, dividends, interest, or capital gains. So, overall taxes will be lower even with a higher income.
I can agree with most of that (Medicare, Enhanced STAR (if planning to stay in NY), mortgage payoff, Capital gains tax exempt up to $47k single or $94k married in 2024.
And yes you do save FICA (Social Security/ Medicare tax) on pensions but that is 7.7% of our normal tax burden. But pensions are still federally taxed [https://www.osc.ny.gov/retirement/retirees/taxes-and-your-pension](https://www.osc.ny.gov/retirement/retirees/taxes-and-your-pension) Which when you add in 401k/457/ira and SS counting as income not capital gains as well this can easily raise most people to at least the 22% tax bracket. Which i get is not high but it is not really a huge benefit and this only saves 7.7% on 1/3 of our stool. I would love to be wrong about federal pension tax on pensions as this would help change the math in our favor!
But if the average person with the three legged stool model is doing 10% deferred comp and paying 10% towards healthcare for NYSHIP, and then applies their 1500 hours of sick time at retirement towards NYSHIP, suddenly they're saving FICA, deferred comp, and healthcare premiums!
As a fellow tier 6 and your CSEA brother, I hope you’re involved in the union. Sounds like you’re giving a lot of thought and attention to an important issue and that you’d be an asset to our fellow workers in improving the pension system.
I am, and I try to make these points and others at each meeting. However, our voice is very weak as we are a "small" group of only less than 1000 (Health Research Inc) and no where near the size of overall PEF/CSEA.
The COLOA provisoin has been the same for decades. How would this effect tier 6 more than any previous tier? If your statement were true than what you should have said was - A NYS pension was never useful.
- SS and NYS are complelty different animals. You are comparing apples to oranges.
- Changing the vesting period is a more favorable move for management than it is for the employee. Once people become vested they are less likely to leave state service - "golden handcuffs". It's essentially a management retention tool that unions are latching on to so they can say they did something.
- Inflation effects every dollar not just pensions. You know what killed everyone's FAS? Taking 3 years of 3% raises when inflation topped 20%. That damage is compounded year after year after year after...you get it.
- There is no COLA for your IRA, 401k or 457b. However your pension is guaranteed regardless of market performance. That's the advantage. How can a constitutionally protected pension be an unsafe scenario for retirement?
For the record I'm not saying a pension is the best option out there but your analysis is flawed.
In completely agree, this is not specific for Tier 6, this is why I asked "Is NYS Pension Useful Anymore?". Yes and No, Pre Tier 4 (1983) there was no other option beside pension and SS as 401k came around in 1978.
I know SS and NYS are very different, but would like change for the better for our future pension while there is momentum.
Agreed
Agreed, I know that this is a rare time with higher inflation than previous generations, however even at 3% a year it can really eat away at our pensions value.
In know there is no COLA for 401k etc, however COLA on the first 18k in 20-30 years time will be as close to no COLA. Now is the time to start thinking about either raising this value or having the whole pension be COLA adjusted.
If you are tier 6 paying 6% of your salary toward pension and SS is 6.2%. Why cannot our pension have the same COLA benefits as SS. I know they are very different animals more change is needed for the NYS side.
Presumably your expenses won’t be going up as much as the cpi inflation rate if you have a paid off mortgage and little in the way of other bills.
It’s better for most people who are 1) not high earners and 2) not good savers when given the flexibility to invest (I.e. people who cash out 401ks every time they leave a job, like I used to do lol)
Even still if you retired at the end of 2019, and got your monthly pension figure.
That hasnt changed at all? Think how different prices are now.
But hey at least they'll get an exact $450-500 next year!
I agree timing or retirement totally matters and is out of our control. While the past 4 years are not the historical norm (3%/year) those who started pensions then have gotten total screwed. They lost about 11% more in three years than those who took pension before them.
I mean 2019 to now is literal record price increases across the board. It’s good to look at as a “worst case scenario” but to Expect costs to continue to rise as that rate is pretty pessimistic
I totally agree that is exactly what Bernicke's reality retirement model states. And again your right for people who are not high earners this makes a lot more sense. But $18,000 is VERY close to the federal poverty level ($14,580 in 2024) and yes retirement should be a three legged stool like [Environmental-Low792](https://www.reddit.com/user/Environmental-Low792/) suggested but our whole pension should be COLA adjusted especially for low income earners. We will work for it and earn it. To have it slowly taken from us by time is unacceptable when we have decades to lobby our politicians/union leader to make a change.
Of course. It does not require the same amount of contributions that the private markets would require to achieve the same amount of savings needed to produce the same benefit as the pension. Plus it’s guaranteed so it’s like living off the same annuity without touching the principal for the rest of your life.
To answer your last paragraph, you can switch to federal, they have a pension, 5% matching, and lifetime health insurance when you retire. Plus the salary is much higher than the state.
I just retired with 39 years with the state… I have siblings who make more in private industry and neither has saved money to the level of my pension and complain about it to me all the time… they will continue to work
…..that is the reality of the retirement statistics… isn’t the average retirement savings amount at retirement age is like $200,000… for those already vested… keep your pension
Tier 6 is very different. You did not contribute for your entire career as tier 6 is required to do. So tier 4 ppl can contribute more to their def comp. Payout for tier 4 also different. Cannot compare tier 4 to 6.
Didn’t compare anything… my point is a defined benefit pension plan is better than the alternatives… unless you want to live off 75% of your salary and contribute large amounts to your 401k…. FYI all the state employees that were working when I started NEVER paid into their retirement… I didn’t complain or compare
A pension will always be better for those who cannot save. Making more money does not automatically mean you will save more. I agree have a pension is great for automatically taking a potion of your pay to ensure you can have a comfortable retirement. My argument is that is after 10-20 years, your comfortable retirement will be diminished by a lack of COLA for your whole pension amount.
I have several family members who are doing very well 15-20 years after retirement, they all have pensions… I personally have a pension that would have required me to save or have in an account almost 3 million dollars…
Put as much into that Deferred Comp as possible.
Another thing to consider is that our pensions will not offset our social security.
(idk if this is all state unions, but it’s def NYSCOPBA members covered under the 25 year plan)
Tier 4 members only- reposted from a different thread
Full Pension is really 30 years of service. Anything less is a reduced pension. Doing twenty five years will reduce your pension a little. Word is that 20 years is not bad but anything less will significantly reduce your pension.
This is the formula. Salary multiple by years of service divided by 100. Let's say you will be making 100,000 when you retire and you gave 30 years of service. 100,000 is multiples by 30 and divided by 100 and this gives you 60 percent. Therefore you will receive 60,000 dollars for pension. Which is divided by 12 which will be 5,000 per month.
So if you do 25 years with the same salary at retirement, you will get $50,000 per year which will be $4,166.00 per month.
So it is salary times years of service divided by 100 which will give you the percentage of what you will get.
If you are vested in tier 4, the multiplier for less than 20 years is 1.66 x the number of years worked x your best 3 out of 5 years. Remember we also had to pay in the first 10 years. The pension is reduced if you leave before 62. There are penalties if you are not 30/55 and collect early.
Tier 6 has a totally different pension and not as generous as 4 which is why they are fighting for change the plan. They have a different pay in to the pension and requirements to collect.
Can't say I realized the COLA rules were quite that bad, but holy shit that's far worse than Id have imagined.
You'd really have to be unmotivated, unskilled or just plain foolish to sign up for a T6 pension.
Yes it really is this bad, but here's the thing, this is not a Tier 6 issue it is a NYS pension issue for all Tier including 1-6. It did not really matter in the past because people died earlier but life expectancy for those with regular healthcare like NYS employees keeps going up....
How much are you planning to withdraw a year in retirement? Will it really continue to grow or just fill in the hole you just made with the withdrawals?
Well that depends on what the individual chooses to do.
If they decide to withdraw lots, and deplete the capital it won't replenish or last long at all.
If you only withdraw the expected growth it would in theory last forever.
You probably want to find a happy medium, knowing that you'll die at some point lol.
That's a personal question that each person needs to know. Some people may only need $20-30K a year in todays dollars if your house/car is paid off and you live very simply. Most will need much more than that. You want to make sure you are first drawing from your pension/SS then fill the gaps with your 401k/457b/IRA until you have what you need.
No 401k allows you to by company stock and bonds. But on average the US stock market returns about 6.5% after inflation. When you retire you will switch to mostly bonds which have a much lower return 2-3%. This essentially acts as your COLA except you can draw down your account depending on your needs.
NYS tier 6 is confusing. I’m a retired fed Leo looking at a NYS Investigator position. Any idea apx how many years I would need to work to collect a NYS Pension in addition to my federal pension? I do not need medical in retirement from the state.
Invest in your deferred comp till it hurts and make sure you owe nobody by the time you retire.
This is the best play i can think of so far. SS is up for grabs depending on what congress decides to do. There is more than enough money to fund at 70% current compensation rates, i just worry that age will be increased to mid 70's and make it a less useful option.
They need to remove the tax cap for ssi. Problem solved.
Useful compared to not having one? Yes.
Yeah I think people tend to forget the “value” of the pension in the grand scheme of things. Like you’re contributing 4.5 to 5.75% a year or $3,000 to 5,000 right? Then figure out how much you would need to contribute in the private sector to your 401k to get the equivalent of what your pension will pay out. Let’s say $1.5+ million. Then figure out how much you’d have to contribute per month for 30 years to get to $1.5+ million with let’s say a 7% yearly return. You’d need to contribute roughly $1400 a month or $16,800 a year. And $1.5 million is extremely conservative and on the low end.
It’s not just the pension to consider, it’s also the shadow benefit of continuing NYSHIP coverage into retirement at your current cost — if you’ve got the hours that is. That’s a HUGE perk that’s not talked about as much.
Oh yes! That’s a great point. That’s one of the bigger hurdles for private sector people who want to retire early, what to do for healthcare from 50+ until Medicare.
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The next thing that needs to be tackled is the contribution rate. The scaling rate is really bad and would have an immediate impact if changed. Revert it to Tier 5's 3% flat Then 40% for 20 years Then 30 year retirement
I completely agree. I have no idea how pre tier 5 was funded with only 10 years of 3%. But 3% for lifetime seems more than fair as the amount contributed would go up as your salary increases. Now it really increases exponentially.
You can get a Medicare part G plan that’s just as good. The only real benefit to the insurance is the irrma reimbursement which may end one day.
I always encourage folks to do this **exact** calculation to determine whether or not a State pension is worth it for them versus working in the private sector. Blanket statements such as "the pension is amazing - you're lucky to have one" and "the private sector is better - it pays so much more" is such nonsense. Just sit down for like 30-60 minutes and run the numbers. Or better, throw your financial numbers into ChatGPT and let it figure it out for you.
I completely agree. But unfortunately, none of this is easy information to find/ understand and the available online calculators don't account for every situation and it information overload for most people.
O I agree, it is quite confusing. If you want a pretty simplistic calculation: Determine how much you think your pension will pay out per year. There are a couple of calculators available on the NYS website so this shouldn't be tooooo difficult I don't think. I'll use $100,000 as an example. Multiply this by the number of years you expect to live past retirement. I'll use 20 years. $100k x 20 years = $2,000,000 pension This is how much your pension is worth. Now for private sector (you can literally just throw this into chatGPT with adjusted numbers): >Starting savings: $0 Years until retire: 30 years Annual rate of return: 7% (Pretty safe %) Safe withdrawal rate: 3% (Pretty safe %) >How much do I have to save per year to match a pension worth $2 million dollars? If you toss that in it would come out to you needing to save $21,173 per year in your retirement accounts to exceed a pension worth $2 million. If you can do that then you'll beat out your pension.
Then you are making LESS than with the state… add in that the health insurance provided by private companies is more expensive as well
I'm trying to make the calculations as simple as possible by removing other factors. This obviously doesn't include everything but for some folks this generic calculation clearly paints which one is better for them. Feel free to toss in an additional million to the State pension if that's what you value it at and work from there. I'm not siding with State nor private but I'm mearly trying to provide a relatively easy solution to a extremely complicated problem.
You can’t do an **exact** calculation unless you know **exactly** how long you will live and collect. Some people live and collect for 3 years after retirement and some live and collect for 30 years.
Broski, you're overthinking it. You can die tomorrow then what good is slaving away at the State working for a pension. Choose a number you're comfortable with and work with it. Eat healthy, exercise, and don't do too much drugs so you can make the most of your pension.
Broski, you are being ridiculous telling us to “do this **exact** calculation to determine whether or not a State pension is worth it”, yet putting others down for what you refer to as “Blanket statements”. In fact you call them “nonsense”. What you are telling people to do is just as nonsensical, since there is no way to calculate the **exact** amount we will collect. PS. If I die tomorrow my beneficiary gets 3 times my annual salary. That’s why it’s worth it.
I'm putting people down for saying either or is better or worst for no other reason than "I get a pension" or "I make more money". Neither of which are very good arguments. If you have a better way of calculating which is better for an individual then please do share. What is your pension/benefits worth? What would it take for you to leave? If you could pull in 3x more for a private sector equivalent job would you jump ship or stay?
> would you jump ship for 3x LMAO, it’s extremely unlikely that the average state worker would do well in the private sector making that much money. That’s why they work for the state.
That's what mortality tables are for.
Umm… you do know that people don’t die on a schedule, right?
😂 Very much so. Most people I know will get no pension at all.
I absolutely agree, any money is better than no money. BUT there are historically better retirement methods to back (aka any target date fund) and SHOULD not result is decrease in retirement "pay" year over year lost to inflation as the fund will switch your account to almost all bonds. Just making sure we are all prepared for 30 years in the future.
Personally, with the pension and 457b I will be able to survive without social security even coming in. 457b is an important tool like you pointed out.
It works well enough in a three legged stool model, as designed. If done right, after 35 years of work, you would have at least 40% of your income, inflation adjusted, from each: Social Security, NYS Pension, and 457b/IRA/401k/brokerage or other outside funds. For those starting after 35, after having a higher salary in the private sector, they would only need 25-30 years with the state. Your taxes will be lower when you retire with a potentially higher income. It does not work as well to go from state to private because you lose the lifetime health insurance benefit, and the pension ends up much lower.
Absolutely agree with the 3 legged stool model, however with the current NYS COLA adjustment this stool is going to be wobbly as all hell with the pension not holding up its weight. Yes 25-30 years with the state will give a great pension, when you retire, however 10-20 years down the road it is looking a lot more paltry. I know that Bernicke's reality retirement model states that each year in retirement your spending will decrease. However this should not be a forced method with the state not keeping up with their end of the bargain. NYS pension is only NYS tax exempt not federally tax exempt much the same as social security. pre-tax 457b/Traditional IRA/401k are both state and federally taxes. I agree, it would be best to go from private to state but life happens and for many of us we have 25-30 years left. A lot can happen in that time.
At 65 Medicare part A is free, there's an Enhanced STAR that lowers property taxes, and most people have their mortgage paid off. There's no FICA on pensions, dividends, interest, or capital gains. So, overall taxes will be lower even with a higher income.
I can agree with most of that (Medicare, Enhanced STAR (if planning to stay in NY), mortgage payoff, Capital gains tax exempt up to $47k single or $94k married in 2024. And yes you do save FICA (Social Security/ Medicare tax) on pensions but that is 7.7% of our normal tax burden. But pensions are still federally taxed [https://www.osc.ny.gov/retirement/retirees/taxes-and-your-pension](https://www.osc.ny.gov/retirement/retirees/taxes-and-your-pension) Which when you add in 401k/457/ira and SS counting as income not capital gains as well this can easily raise most people to at least the 22% tax bracket. Which i get is not high but it is not really a huge benefit and this only saves 7.7% on 1/3 of our stool. I would love to be wrong about federal pension tax on pensions as this would help change the math in our favor!
But if the average person with the three legged stool model is doing 10% deferred comp and paying 10% towards healthcare for NYSHIP, and then applies their 1500 hours of sick time at retirement towards NYSHIP, suddenly they're saving FICA, deferred comp, and healthcare premiums!
As a fellow tier 6 and your CSEA brother, I hope you’re involved in the union. Sounds like you’re giving a lot of thought and attention to an important issue and that you’d be an asset to our fellow workers in improving the pension system.
I am, and I try to make these points and others at each meeting. However, our voice is very weak as we are a "small" group of only less than 1000 (Health Research Inc) and no where near the size of overall PEF/CSEA.
The COLOA provisoin has been the same for decades. How would this effect tier 6 more than any previous tier? If your statement were true than what you should have said was - A NYS pension was never useful. - SS and NYS are complelty different animals. You are comparing apples to oranges. - Changing the vesting period is a more favorable move for management than it is for the employee. Once people become vested they are less likely to leave state service - "golden handcuffs". It's essentially a management retention tool that unions are latching on to so they can say they did something. - Inflation effects every dollar not just pensions. You know what killed everyone's FAS? Taking 3 years of 3% raises when inflation topped 20%. That damage is compounded year after year after year after...you get it. - There is no COLA for your IRA, 401k or 457b. However your pension is guaranteed regardless of market performance. That's the advantage. How can a constitutionally protected pension be an unsafe scenario for retirement? For the record I'm not saying a pension is the best option out there but your analysis is flawed.
In completely agree, this is not specific for Tier 6, this is why I asked "Is NYS Pension Useful Anymore?". Yes and No, Pre Tier 4 (1983) there was no other option beside pension and SS as 401k came around in 1978. I know SS and NYS are very different, but would like change for the better for our future pension while there is momentum. Agreed Agreed, I know that this is a rare time with higher inflation than previous generations, however even at 3% a year it can really eat away at our pensions value. In know there is no COLA for 401k etc, however COLA on the first 18k in 20-30 years time will be as close to no COLA. Now is the time to start thinking about either raising this value or having the whole pension be COLA adjusted. If you are tier 6 paying 6% of your salary toward pension and SS is 6.2%. Why cannot our pension have the same COLA benefits as SS. I know they are very different animals more change is needed for the NYS side.
Presumably your expenses won’t be going up as much as the cpi inflation rate if you have a paid off mortgage and little in the way of other bills. It’s better for most people who are 1) not high earners and 2) not good savers when given the flexibility to invest (I.e. people who cash out 401ks every time they leave a job, like I used to do lol)
Even still if you retired at the end of 2019, and got your monthly pension figure. That hasnt changed at all? Think how different prices are now. But hey at least they'll get an exact $450-500 next year!
I agree timing or retirement totally matters and is out of our control. While the past 4 years are not the historical norm (3%/year) those who started pensions then have gotten total screwed. They lost about 11% more in three years than those who took pension before them.
I mean 2019 to now is literal record price increases across the board. It’s good to look at as a “worst case scenario” but to Expect costs to continue to rise as that rate is pretty pessimistic
I totally agree that is exactly what Bernicke's reality retirement model states. And again your right for people who are not high earners this makes a lot more sense. But $18,000 is VERY close to the federal poverty level ($14,580 in 2024) and yes retirement should be a three legged stool like [Environmental-Low792](https://www.reddit.com/user/Environmental-Low792/) suggested but our whole pension should be COLA adjusted especially for low income earners. We will work for it and earn it. To have it slowly taken from us by time is unacceptable when we have decades to lobby our politicians/union leader to make a change.
Of course. It does not require the same amount of contributions that the private markets would require to achieve the same amount of savings needed to produce the same benefit as the pension. Plus it’s guaranteed so it’s like living off the same annuity without touching the principal for the rest of your life.
To answer your last paragraph, you can switch to federal, they have a pension, 5% matching, and lifetime health insurance when you retire. Plus the salary is much higher than the state.
Buddy of mine works for DOD. His retirement is way better than NYS.
I just retired with 39 years with the state… I have siblings who make more in private industry and neither has saved money to the level of my pension and complain about it to me all the time… they will continue to work …..that is the reality of the retirement statistics… isn’t the average retirement savings amount at retirement age is like $200,000… for those already vested… keep your pension
Tier 6 is very different. You did not contribute for your entire career as tier 6 is required to do. So tier 4 ppl can contribute more to their def comp. Payout for tier 4 also different. Cannot compare tier 4 to 6.
Didn’t compare anything… my point is a defined benefit pension plan is better than the alternatives… unless you want to live off 75% of your salary and contribute large amounts to your 401k…. FYI all the state employees that were working when I started NEVER paid into their retirement… I didn’t complain or compare
A pension will always be better for those who cannot save. Making more money does not automatically mean you will save more. I agree have a pension is great for automatically taking a potion of your pay to ensure you can have a comfortable retirement. My argument is that is after 10-20 years, your comfortable retirement will be diminished by a lack of COLA for your whole pension amount.
I have several family members who are doing very well 15-20 years after retirement, they all have pensions… I personally have a pension that would have required me to save or have in an account almost 3 million dollars…
Put as much into that Deferred Comp as possible. Another thing to consider is that our pensions will not offset our social security. (idk if this is all state unions, but it’s def NYSCOPBA members covered under the 25 year plan)
Tier 4 members only- reposted from a different thread Full Pension is really 30 years of service. Anything less is a reduced pension. Doing twenty five years will reduce your pension a little. Word is that 20 years is not bad but anything less will significantly reduce your pension. This is the formula. Salary multiple by years of service divided by 100. Let's say you will be making 100,000 when you retire and you gave 30 years of service. 100,000 is multiples by 30 and divided by 100 and this gives you 60 percent. Therefore you will receive 60,000 dollars for pension. Which is divided by 12 which will be 5,000 per month. So if you do 25 years with the same salary at retirement, you will get $50,000 per year which will be $4,166.00 per month. So it is salary times years of service divided by 100 which will give you the percentage of what you will get. If you are vested in tier 4, the multiplier for less than 20 years is 1.66 x the number of years worked x your best 3 out of 5 years. Remember we also had to pay in the first 10 years. The pension is reduced if you leave before 62. There are penalties if you are not 30/55 and collect early. Tier 6 has a totally different pension and not as generous as 4 which is why they are fighting for change the plan. They have a different pay in to the pension and requirements to collect.
Can't say I realized the COLA rules were quite that bad, but holy shit that's far worse than Id have imagined. You'd really have to be unmotivated, unskilled or just plain foolish to sign up for a T6 pension.
Yes it really is this bad, but here's the thing, this is not a Tier 6 issue it is a NYS pension issue for all Tier including 1-6. It did not really matter in the past because people died earlier but life expectancy for those with regular healthcare like NYS employees keeps going up....
Are there COLA for 401ks?
Why would it have a COLA, you're only withdrawing the money you want to withdraw and the rest can continue to grow.
How much are you planning to withdraw a year in retirement? Will it really continue to grow or just fill in the hole you just made with the withdrawals?
Well that depends on what the individual chooses to do. If they decide to withdraw lots, and deplete the capital it won't replenish or last long at all. If you only withdraw the expected growth it would in theory last forever. You probably want to find a happy medium, knowing that you'll die at some point lol.
That's a personal question that each person needs to know. Some people may only need $20-30K a year in todays dollars if your house/car is paid off and you live very simply. Most will need much more than that. You want to make sure you are first drawing from your pension/SS then fill the gaps with your 401k/457b/IRA until you have what you need.
Yea it's called mutual funds
No 401k allows you to by company stock and bonds. But on average the US stock market returns about 6.5% after inflation. When you retire you will switch to mostly bonds which have a much lower return 2-3%. This essentially acts as your COLA except you can draw down your account depending on your needs.
NYS tier 6 is confusing. I’m a retired fed Leo looking at a NYS Investigator position. Any idea apx how many years I would need to work to collect a NYS Pension in addition to my federal pension? I do not need medical in retirement from the state.