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Pension Plans


magisme

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Do you have one? How does it work? Do you trust it?

I just opted out of mine, which was 5% contribution from me and matching contribution from the school up to 8%. So I'm leaving some change on the table, but it's worth it to me. If you have my money, I want to be able to get my hands on it tomorrow, no questions asked, if that's what I decide to do. Some "non-profit" whose CEO makes over $10 million is gonna watch it for me and keep it safe until I turn 65, and if I want it earlier I have to prove hardship or pay penalties? Go fuck yourself.

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Do you have one? How does it work? Do you trust it?

I just opted out of mine, which was 5% contribution from me and matching contribution from the school up to 8%. So I'm leaving some change on the table, but it's worth it to me. If you have my money, I want to be able to get my hands on it tomorrow, no questions asked, if that's what I decide to do. Some "non-profit" whose CEO makes over $10 million is gonna watch it for me and keep it safe until I turn 65, and if I want it earlier I have to prove hardship or pay penalties? Go fuck yourself.

Is it a pension plan or a 401K? Do you get to choose your investments like mutual funds?

If it is a 401 K then you control the investment and IMHO you would be crazy not to contribute to get the maximum match as this is free money.

Sure your money is locked up but it is your money and you would be surprised how fast it can appreciate over time. Plus it gives you big tax benefits.

If I had started investing in my 20's I could be retired by now.

JMO but investing some of your paycheck in your 401K is the smartest thing you can do if you can afford it. :shrugs:

Edited by classicrawker
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I'm really not sure how pensions work. sounds to me like you're talking about a 401k.

I put my money in the bank, so I can have it now, not in 30 yrs.

With interest rates less than 1% here in the US you may as well put your money under your mattress as put it in a bank as you get nothing for it.

If Mags contributes to his 401K he gets free money with the employers match plus he saves money on his taxes. When he gets ready to retire he will have a nice nest egg.

It is a no brainer to me if he can afford to contribute :shrugs:

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I'm really not sure how pensions work. sounds to me like you're talking about a 401k.

I put my money in the bank, so I can have it now, not in 30 yrs.

With interest rates less than 1% here in the US you may as well put your money under your mattress as put it in a bank as you get nothing for it.

If Mags contributes to his 401K he gets free money with the employers match plus he saves money on his taxes. When he gets ready to retire he will have a nice nest egg.

It is a no brainer to me if he can afford to contribute :shrugs:

You are correct. It's not a bad idea at all. I just don't like putting my money where I can not get to it. If I borrow from a 401k I must pay it back with interest.

It's tax deferred, which means you will be taxed when you take it out at at retirement. 401k is basically putting your money in the stock market. If your

money is in a medium or high risk stock, you could lose a lot when the stock market crashes like in 2008. So you take a risk either way IMO.

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I guess with 401K the company which you work for puts in a certain amount from your paycheck every month and when you retire you get a fixed amount, but well it depends on the company which you work for, some companies offer and some don't, mostly people who work part time they are not provided with the 401k from the company

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If I could give any advice to my young friends it is to invest as much as you can into your future retirement. (And don't start smoking).

Like Classic said, using a bank account for a savings is crazy. If your company matches your contribution - BAM you just doubled your money. That's incredible. Then gain 5-20% interest over 20-30 years. It really is a no-brainer.

My work 401 has made 14% over the past 10 years. I started a personal investment account at the same time and it's made 17% - but my money hasn't "doubled" every time I added to it like my work 401k.

It's just huge. Put as much money away as you can afford to do and forget about it. I check it once a year and make any adjustments needed. Half the time I don't even open my quarterly statements.

How's it worked out for me?

I'm retiring at the end of this year or early next year. I will turn 45 next month.

I wanted to be able to play and have fun while still young and healthy. Waiting until you are old and crippled and can't enjoy yourself while retired? No thanks.

Invest your money people. Especially if you have an employer match. Greatest thing ever in terms of your future. And buy property.

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Of course I'm saving and investing. I've been doing that. Question is, do I wrap up a chunk of it in the employer-sponsored plan that lockboxes my money until I'm 60+ unless I pay penalties and extra taxes and all that. I like to manage my own shit. If they tell me it's free money, I tell them there's no such thing as free money, so either there's either a catch or they're stupid, neither of which makes me want to have them holding my savings. I think I'll keep at it on my own.

Edited by magisme
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Of course I'm saving and investing. I've been doing that. Question is, do I wrap up a chunk of it in the employer-sponsored plan that lockboxes my money until I'm 60+ unless I pay penalties and extra taxes and all that. I like to manage my own shit. If they tell me it's free money, I tell them there's no such thing as free money, so either there's either a catch or they're stupid, neither of which makes me want to have them holding my savings. I think I'll keep at it on my own.

Your choice but your potentially leaving a lot of money on the table over time for a small out of pocket investment on your part. I mean 5% is not a lot of money in the grand scheme of things.

Look at it this way even if the 401k gives you net zero growth on your investments you are still making money on the employer match.

I am also guessing you have choices on what to invest so can take on as much risk as you are comfortable with.

And a far as paying interest if you borrow from your plan, so what you are paying yourself interest so it is a win win...

JMO but I think you at making a mistake not taking advantage of the match.

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I do appreciate the perspectives - I wouldn't have asked for them if I didn't - but you guys aren't making me feel any better about this. :lol:

I get that I'm leaving money on the table, potentially, but I'm saying I don't trust this shit from step 1. I don't trust the investments the organization has made as a whole, I don't like my investment options (which are pretty much go long stocks, go long bonds, or go long real estate), and I have no faith my money will actually be there in the end.

Look, I'm simple-minded when it comes to money and ownership. I laugh at my friends when they tell me they're homeowners. Why? Well, because they pay the bank every month in order to "own" that home, and if they don't pay the bank every month, they don't "own" it anymore. That sounds like renting. Like I said, I'm a simple man, but it seems to me we need to go back and relearn some vocabulary. :lol: So as an extension of that thinking, if you tell me that my money has to go to one of these 6-7 investments, and that I can't touch it until I'm 60+ lest I pay taxes and penalties, well, that doesn't really sound like it's my money, now does it?

Edited by magisme
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I do appreciate the perspectives - I wouldn't have asked for them if I didn't - but you guys aren't making me feel any better about this. :lol:

I get that I'm leaving money on the table, potentially, but I'm saying I don't trust this shit from step 1. I don't trust the investments the organization has made as a whole, I don't like my investment options (which are pretty much go long stocks, go long bonds, or go long real estate), and I have no faith my money will actually be there in the end.

Look, I'm simple-minded when it comes to money and ownership. I laugh at my friends when they tell me they're homeowners. Why? Well, because they pay the bank every month in order to "own" that home, and if they don't pay the bank every month, they don't "own" it anymore. That sounds like renting. Like I said, I'm a simple man, but it seems to me we need to go back and relearn some vocabulary. :lol: So as an extension of that thinking, if you tell me that my money has to go to one of these 6-7 investments, and that I can't touch it until I'm 60+ lest I pay taxes and penalties, well, that doesn't really sound like it's my money, now does it?

Sounds like you made your mind up and it is your money so I wish you luck with saving and investing.

Regarding houses you really don't see the advantage in owning a home as opposed to renting?

With rent there is no long term payback as when you move that is it you get nothing in return........with a home you build equity and in most cases your home appreciates in value so should you decide to sell and move you actually get money in your pocket. If you move into a desirable neighborhood you can actually increase your initial investment considerably if you hold onto a property before you sell. You also get to write off the interest payments on your taxes.

Now if you are not settled in yet on a job and where you live then renting may be a better option short term but in the long term buying a home or condo is a no brainer IMHO.

Now it is time to sound like a Dad............ I know it is hard to see when you are young as retirement is so far away, and it seems crazy to start 401K's, IRA's and own a principal residence, but unless you are an investment wizard, make wise investments and are a disciplined investor, 30 years from now you will look back and wish you had started a 401K, took advantage of the match and bought a piece of property instead of wasting money on rent. :shrugs:

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I've seen a lot of people lose their shirts because owning a home was such a no-brainer. Not just people on the news. People in my life.

Nothing is 100% guaranteed and many of the people who lost their shirts most likely overextended themselves or bought over valued properties they could not afford but if you go into property ownership with a plan it is a no brainer in the long run.

Spending money on rent long term is a waste with no return while property ownership is an excellent investment opportunity as you build equity and should be part of anyone's retirement planning if they have the job to support it. I am no expert but I have the benefit of life experience and also the knowledge of several wealth and retirement planners I have worked with on my own retirement planning.

I could get into details but since you have already made up your mind so I won't waste my time. :shrugs: Good luck with your investing.

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I've seen a lot of people lose their shirts because owning a home was such a no-brainer. Not just people on the news. People in my life.

Did something happen to them to make them lose their shirts? Loss of jobs, family tragedy, they purchased a lemon, etc?

********

Per 401K: You aren't going to miss 5% of your salary every month!!!

Think about this. If you put in 200 a month and your employer matches that amount......and you average 10% interest.....for 30 years........you know what you end up with? That money you can't touch until you are 60? You walk away with $400,000. Do you think you'll be able to save that much on your own? And considering your salary will rise every year, if you adjust your contribution accordingly - you are looking at least at a cool $500,000 if not more. If you get 14% then you'll have over a million dollars.

And by that time you'll have paid off your home, as well as paying off a renal unit, so you'll have another $600,000 asset on your hands.

You'll be 60 and have at least a million dollars of cash available to you. To go along with all the money you saved on the side!

Also, your work 401K should give you numerous options as to where you put your money. Mine must have 50-60 different choices. I just look at how something has performed the last 3 months, 1 year and 5 years. If it's double digits in all three categories - I slap a portion in it.

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I do appreciate the perspectives - I wouldn't have asked for them if I didn't - but you guys aren't making me feel any better about this. :lol:

I get that I'm leaving money on the table, potentially, but I'm saying I don't trust this shit from step 1. I don't trust the investments the organization has made as a whole, I don't like my investment options (which are pretty much go long stocks, go long bonds, or go long real estate), and I have no faith my money will actually be there in the end.

Look, I'm simple-minded when it comes to money and ownership. I laugh at my friends when they tell me they're homeowners. Why? Well, because they pay the bank every month in order to "own" that home, and if they don't pay the bank every month, they don't "own" it anymore. That sounds like renting. Like I said, I'm a simple man, but it seems to me we need to go back and relearn some vocabulary. :lol: So as an extension of that thinking, if you tell me that my money has to go to one of these 6-7 investments, and that I can't touch it until I'm 60+ lest I pay taxes and penalties, well, that doesn't really sound like it's my money, now does it?

I get what you mean about the pension plan. We have different systems here of course, but I think it's key to just spread your risks. In the end no one knows what will be the safest or best investment in the long term. So that's what I do, spreading risks. That way, I'm sure (or as sure as I can be) I won't end up empty handed.

I do share your concern about pension plans. I don't have other people's absolute faith that I will be getting every penny in my pension plan. But I have one anyway. Spreading risks.

Are you so sure about the investments you do? I'm at a stage where I don't think you can be sure of anything whatsoever, so I'll have a bit of everything :)

I don't agree about what you're saying about homeownership, but again, the situation in Belgium is totally different than the US, so what you say, may make sense in the US. If you're a lifelong renter, you may get into trouble later in life, since pensions are so low and I've seen lots of old people who hardly had enough pension to pay for their rent. Owning your house as a pensioner makes a huge difference.

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I could get into details but since you have already made up your mind so I won't waste my time. :shrugs: Good luck with your investing.

That's the second time you've said that. I'm not sure what that's about. Have I made up my mind for this year? Yes. Have I made it up forever? No. I opened the thread so I could hear what people like you had to say and debate with them, honing/changing my position in the process. I don't want you to feel like you're wasting your time, but I'd be happy to hear your perspective.

I've seen a lot of people lose their shirts because owning a home was such a no-brainer. Not just people on the news. People in my life.

Did something happen to them to make them lose their shirts? Loss of jobs, family tragedy, they purchased a lemon, etc?

I come from a town that 2008 decimated. Prior to that, banks were dropping 110% loans from helicopters, telling everyone that taking the money was a no-brainer. Then the economy got fucked, people lost jobs or lost benefits, and suddenly that manageable mortgage isn't so manageable. Oh, and remember how we told you real estate only goes up when you took that 110% loan? Yeah, well, your house is worth 30% less than what you bought if for now. Our bad. But you can always short sell!

I worked in real estate. I know my shit. Which doesn't mean I'm going to be a lifelong renter. Where did I say that? Not at all. But when I become a homeowner, banks can get fucked, because they won't be involved. I'll be paying straight cash.

and you average 10% interest

You realize that's madness, right? The only reason that's been happening over the past few years is because, as almost everyone admits at this point, the markets have been distorted beyond recognition. The huge gains over the past few years have effectively assured little to no gain in the short to medium term, at best.

Are you so sure about the investments you do?

Of course not. I'm not stupid. :lol: That's exactly why red flags go up anytime someone tells me something is a no-brainer.

Edited by magisme
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I did give you my opinions and you rejected them out of hand so you pretty much have made up your mind. Nothing is 100% guaranteed but with some proper planning taking advantage of a 401K matching and buying a property is pretty much a no brainer.

As far as investing goes you control the 401K so not sure what other guarantees you want. If you are that risk adverse the only near sure thing is buying gold and burying it in your back yard in case the economy completely collapses. No matter what other investment you make there is always the risk the company or bank goes belly up.

Regarding your example about real estate it is an extreme case where the people taking the mortgage over extended themselves.

IMHO if you go in with a decent down payment, have a proper cash reserve, and don't buy an over valued property it is pretty close to a no brainer over paying rent.

I don't know what else to tell you mate as everything is a risk these days but with proper planning and stable finances there are distinct advantages to starting a 401K and buying a principal residence but you have to do what makes you comfortable. :shrugs:

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I could get into details but since you have already made up your mind so I won't waste my time. :shrugs: Good luck with your investing.

That's the second time you've said that. I'm not sure what that's about. Have I made up my mind for this year? Yes. Have I made it up forever? No. I opened the thread so I could hear what people like you had to say and debate with them, honing/changing my position in the process. I don't want you to feel like you're wasting your time, but I'd be happy to hear your perspective.

I've seen a lot of people lose their shirts because owning a home was such a no-brainer. Not just people on the news. People in my life.

Did something happen to them to make them lose their shirts? Loss of jobs, family tragedy, they purchased a lemon, etc?

I come from a town that 2008 decimated. Prior to that, banks were dropping 110% loans from helicopters, telling everyone that taking the money was a no-brainer. Then the economy got fucked, people lost jobs or lost benefits, and suddenly that manageable mortgage isn't so manageable. Oh, and remember how we told you real estate only goes up when you took that 110% loan? Yeah, well, your house is worth 30% less than what you bought if for now. Our bad. But you can always short sell!

I worked in real estate. I know my shit. Which doesn't mean I'm going to be a lifelong renter. Where did I say that? Not at all. But when I become a homeowner, banks can get fucked, because they won't be involved. I'll be paying straight cash.

and you average 10% interest

You realize that's madness, right? The only reason that's been happening over the past few years is because, as almost everyone admits at this point, the markets have been distorted beyond recognition. The huge gains over the past few years have effectively assured little to no gain in the short to medium term, at best.

Are you so sure about the investments you do?

Of course not. I'm not stupid. :lol: That's exactly why red flags go up anytime someone tells me something is a no-brainer.

So banks gave loans to people who shouldn't have qualified and you don't trust the stock market.........

Well, like Classic said, you seem to have your mind made up! I was just giving you some "real life" examples. Multiple home ownership (including 2008) and both my 401K plans have averaged over 10% for the last decade are the reason I'm going to retire at age 45.

Good luck to you bro! You are a smart guy, I'm sure you'll do what works best for you. I wish you all the best.

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