Why a 401(k) Will Yield You More Money Than a Pension

[ThePackageDeli]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

 

[IVE GOTTA PACKAGE 4U]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

Well there are so many answers here

What if you retired in 2008 doing it Great recession or March of 2020 during the pandemic

When would you like to have take him withdrawals from your 401K plan?

 

[MECH-II]

UPS guys don’t live to be 85

SPEND FAST , DIE YOUNG

@MECH-II STYLE!!! RPCD STYLE!!!

 

[IVE GOTTA PACKAGE 4U]

UPS guys don’t live to be 85

SPEND FAST , DIE YOUNG

@MECH-II STYLE!!! RPCD STYLE!!!

Be thankful if you make it to retirement

 

[Cheesypurpletees]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

How much do you think they’d match? Up to 5% at best. You’re better off being more diversified with your own 401k without the match and a pension that out west; contributes $11 an hour

Honestly anything the company wants is never for its employees best financial interests. There’s a reason why FedEx abolished its pension program years ago and offered a garbage 401k Match instead. Simply because there’s no union and they could get away with it.

 

[Sissy Brown Short Shorts]

I operate under the assumption I won’t get a pension. I think ours is insolvent in a couple years anyways and has been completely mismanaged. Pensions were great when you worked until 65 and dropped dead at 68 sixty years ago. It is ridiculous that you can retire and collect a pension for as long as you worked at the company. It’s not really feasible given our longer lifespan. I throw 12% into a 401k and plan on not doing anymore big spending. I have the dream house and hopefully the old lady doesn’t divorce me and mess all that up.

 

[UnionStrong]

I operate under the assumption I won’t get a pension. I think ours is insolvent in a couple years anyways and has been completely mismanaged. Pensions were great when you worked until 65 and dropped dead at 68 sixty years ago. It is ridiculous that you can retire and collect a pension for as long as you worked at the company. It’s not really feasible given our longer lifespan. I throw 12% into a 401k and plan on not doing anymore big spending. I have the dream house and hopefully the old lady doesn’t divorce me and mess all that up.

None of the teamster pension plans will be insolvent after this year. Read the news much, chicken little? The Democrats were good for something, they funded all the failing plans.

 

[DriverNerd]

I max out my 401k every year (I'm at $14k already this year) and I also am planning on retirement assuming no pension. I'm not negative to the pension, but if I can get to where I want to be without it, if it's still around that's going to be one comfy retirement.

 

[cynz]

Pensions r better, that's why corporate America has hounded people with, hey you can manage your own 401k until the stock market crashes and you have no retirement. Or our pension which is awesome, they have been making tons of extra money that's why they have increased our pensions for the last 4 years. And I know Costco is in our pension group. Our pension in the west our solid, and last year congress fixed the other pensions. So, we get pension where we can give to our spouses if we die, and we can enjoy our pensions every month with a bonus 401k and Social Security.

 

[Fido]

Nice to have both

 

[bumped]

I can guarantee that I would not have saved into my 401K anywhere near all the money that was going into my pension for the first 10 years of working.

 

[Just A UPS Guy]

Way too many variables you're not taking into account, not the least if which is that if John worked out west his pension would be about double that.

 

[MORS HOSTIBUS]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

This only works if you live in a tent for 35 years and eat at a soup kitchen. Corporate slavery and then your ɓroken down and old. Living the dream.

 

[Sacrificial Lamb]

The Democrats were good for something, they funded all the failing plans.

 

[DELACROIX]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

OKAY…let’s get it over with are you ?

 

[Up In Smoke]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

Your example and theory is highly flawed. If you want to compare the pension vs a 401k match, then leave your contributions to a 401K out of the equation. If John's company matches at 5% or $5000 per year, use that amount against the value of a pension because that's what the company is contributing. So, 5K per year for 35 years at 5% return nets you around 500K. Drawing from that amount at the rate of 70K per year (your pension value) nets you 7 years of returns. That's 13 years short of the pension draws in your example. Thank goodness we have both.

 

[DriveInDriveOut]

Your example and theory is highly flawed. If you want to compare the pension vs a 401k match, then leave your contributions to a 401K out of the equation. If John's company matches at 5% or $5000 per year, use that amount against the value of a pension because that's what the company is contributing. So, 5K per year for 35 years at 5% return nets you around 500K. Drawing from that amount at the rate of 70K per year (your pension value) nets you 7 years of returns. That's 13 years short of the pension draws in your example. Thank goodness we have both.

Why does your calculation assume the 401k stops earning a return when he stops working?

Seems both of you presented a biased way of looking at the situation.

 

[Thebrownblob]

Hypothetical example:

John begins UPS on Jan 1, 2020 and retires on Jan 1, 2055, at age 65.

Under the current pension plan, John's 35 years of service entitle him to roughly $70,000/yr (- taxes) beginning at age 65.

If John lives to be 85, he will have earned roughly $1.4 million(- taxes) in pension income during his lifetime.

-vs.-

If John fully invests his 401(k) from 2020 to 2055, he will have contributed roughly $787,500.
If John's investment grows at 5% for 35 years, his 401(k) account value at age 65 will be roughly $2,130,000 (that's nearly $1.4 million in earnings)

The real question you want to ask yourself is this:

Would I rather earn $1.4 million in taxable income by age 85, or would I rather have $1.4 million of taxable income in my account by age 65?

This is why I would rather have a 401(k) match over a pension.

These numbers get even sweeter when you factor in a company match for 35 years, holy .

The pension is a freaking scam you guys. It's corporate welfare for dummies with no financial discipline.

Every assumption you just made assumes that John actually saved any money and doesn’t get divorced four times.

I have worked with drivers who have well over 35 years and have almost nothing in a 401(k).

If they didn’t have a pension, they wouldn’t have any money besides Social Security.

 

[DELACROIX]

Way too many variables you're not taking into account, not the least if which is that if John worked out west his pension would be about double that.

Another Company pipe dream…” a way to get out of paying into the Western’s pension plans. It is plausible that the (1997) attempt to take over all of our pensions was orchestrated by the Company taking advantage of the Central States underfunding. When Carey forced the Central trustee’s to raise our pension to 100 dollars a service year they found an opening.

Currently their monetary obligations are over $ 500 a week for every full timer and slightly less for a part timer.

Those plans will continue to grow even during a recession.

 

[DELACROIX]

Nice to have both

You nailed it…