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Frequent Contributor

Re: The influence of big labor

Nearly useless to post any conservative views, only gives them another opening to blast away with mindless blabber and then give each other kudos.    Perhaps they have some other redeeming qualities but providing intelligent/effective arguments certainly isn't a strong suit.  Better most stick to the plow.   Fortunately I didn't have to suffer the embarassement to have them as my parents.

Veteran Advisor

Re: pensions r3020

  Here in IL., we have a similar pension fund but I can't think of the name right now, and it's in really bad shape because they have borrowed against it, and sometimes never even funded it. We have some friends that are teachers and also school employees and even municipal employees, and they are all in that pension program but probably different funds. Some pay into Social Security, and some don't, but I can't remember who specifically does.

  A lot of those pension funds either do a percentage of hourly earnings for payment in, and for payouts they do the last 5 or 10 years of yearly incomes, take out the highest and lowest,  and average out the remainders to get a yearly rate, and then yearly increases after that are tied to inflation. Most of them try to exclude overtime, just because it flaws their formulas, and stretch out the base years to actually reward people for lots of work over more than 1-3 years.

  I would have to figure out how much I've paid out this year in pensions alone, because it's combined with a few other things like health care too. I'm afraid to actually see what it is, because I don't even have a pension, that's what our properties are for. We like the cash flow and to be able to invest or direct it however we want to as opposed to letting somebody else handle it and hope for good capital gains over a long period.

Veteran Advisor

Re: pensions dagwud

dagwud, my experience here in Ontario would be......

first it has to be a 'defined benefit' plan that you are describing, one where the pensioner is guaranteed a certain payment on retirement as opposed to a 'defined contribution' plan where benefits are based on contributions made AND how well they did in increasing in value. In that case each person has their own plan which is available on an individual pay out rate often with some direct control of the pensioner.

So I am assuming the pensioner you describe has a defined 'benefit' plan.

That means the pension payout is based on a formula which will have a number of things in it. The formula will determine payout with little if any control from the pensioner. These will likely include number of years contributing to the plan (but could be a relatively short period in some plans) the salary earned over some period of years, possibly the age of the pensioner and other factors can all influence the final pension paid.

In plans that I have some knowledge of the pay out rate is/was heavily weighted to the last number of years income earned.

In your case you indicate it was overtime worked and that is possible.

More often it is because the last years of employment were in managemnet positions at higher wage rates.

So pensioner A may have contributed at the same rate as pensioner B for many/most years and then A was promoted to a higher paying job for the last 5 or so years and therefore gets a substantial increase in pay out.

I am not a pension expert just have a little knowledge and of course do not know all the details of any specific plan but above explains how 1 plan that I have some info on works.

BTW both my wife and myself have no pension "plan". We are both pensioned off with our own investments to cover our retirement. 

But we are both just 'semi' retired as we both still have 'jobs' that produce at least a little extra income. In my case with no pigs soon to be in effect I just removed a cost so will increase my 'net' income.

Senior Advisor

Re: pensions dagwud

Pension payout really means little. If the government needs it, the government will just tax it back into the general fund. The answer is less government and more personal responsibility.

Senior Contributor

Re: pensions dagwud

Personal responsibility? That went out the window when the government said we will take care of you when you retire. It left when the government started paying women to have babies out of wedlock.

 

This country needs to wake up and see the government is the problem. Less government is the answer.

Senior Contributor

Re: pensions r3020

Tom, I take it from your reply that Illinois state employees have the choice to pay into the Social Security program or opt not to?  Curious if that is correct if Iowa and all other states employees have that option and if so I would be curious to know what percentage of them choose to pay into Social Security as well as their state's IPERS or similar retirement program which I assume participation is mandatory.  I wonder if they choose to to pay into the S.S. program does their employer which would be the state, have to pay for half of their S.S. payments as is typically the case for most employees I believe.

 

Thanks for the replies Tom and Canuck as I'm getting an education on this topic.  If I was a state employee that was already paying into a state pension fund I doubt I would choose to pay into the S.S. program as well. 

 

Many years ago while I was still working full time as a grain inspector I had a visiting USDA Federal Grain Inspection Service employee that was out doing annual monitoring of our sampling and grading techniques suggest I go to work for the FGIS.  He told me at the time their retirement pay was 80% of their best year.   Good thing I stayed where I was as many FGIS employees were pink slipped under Reagan. 

 

On a related matter my youngest son had counselor at the school decide to become the assistant football coach for the Jr. High team during his last year before he retired.  The man had never coached before nor played any sports while in school.  My son came home at the start of practice complaining how bad their new coach was but I never thought much about it.   Then later I talked with a young volunteer coach who had recently played some college football telling me that the new coach had no idea how to teach the kids basic things like the proper way to tackle or block and that he was afraid some kid could get hurt as a result.  Then later a couple of teachers told me the only reason the counselor decided to coach his last year was to increase his retirement pay. 

 

I think a lot of self employed people and especially farmers tend not fund our personal retirement accounts as diligently as we should opting to instead use the money to invest in our businesses counting on the business or farm ground to pay for retirements.   I know friends in town that work at the local manufacturing plant which is non union but has a good retirement plan that the employer helps pay into have a lot more in their retirement accounts then I do in my IRA accounts.

 

Canuck, I'm curious what will become of your hog buildings when you quit raising hogs?  It is none of my business so if you would rather not say I will not be offended and hope you are not for me asking.  As an ex-hog farmer I am just curious if you have family taking over or renting out your facilities or simply shutting things down all together?   Perhaps you are like I was in that it was getting to the point where I would need to spend a bunch of money on new buildings so it helped make my decision to get out a little easier.  I always enjoyed raising hogs but it was never as enjoyable raising hogs in confinement buildings as it was on open dirt lots even if it was more labor intensive.

Veteran Advisor

Re: pensions dagwud

"I think a lot of self employed people and especially farmers tend not fund our personal retirement accounts as diligently as we should opting to instead use the money to invest in our businesses counting on the business or farm ground to pay for retirements.   I know friends in town that work at the local manufacturing plant which is non union but has a good retirement plan that the employer helps pay into have a lot more in their retirement accounts then I do in my IRA accounts."

True, and it is probably necessary as young people start and need capital to operate a viable business. Mistake some make is never allowing any profits to show for tax purposes. In our system it certainly reduces your options for setting funds aside for retirement if you never show a profit and pay some tax.

It is OK as long as lots of assets are accumulated but then the tax rate can be higher when you try cashing it all at one time.

My accountant always encouraged me to show enough profit to be taxed just to the higher rate. Never sure how he fine tuned all the numbers but end of year positioning was always with this goal in mind. 

 

"Canuck, I'm curious what will become of your hog buildings when you quit raising hogs?  It is none of my business so if you would rather not say I will not be offended and hope you are not for me asking.  As an ex-hog farmer I am just curious if you have family taking over or renting out your facilities or simply shutting things down all together?   Perhaps you are like I was in that it was getting to the point where I would need to spend a bunch of money on new buildings so it helped make my decision to get out a little easier.  I always enjoyed raising hogs but it was never as enjoyable raising hogs in confinement buildings as it was on open dirt lots even if it was more labor intensive"

All old buildings, converted years ago when that was the way to raise pigs and now worn out, patched and worn some more.

Have already shut down a barn at another site a few years ago and torn it down.

Same plan here although we will save one smaller barn for future use but not for pigs.

For what it is worth I was going to quit the pig business when the last of our kids was through school. Time came and I realized I did not like golf so kept the pigs a little longer.

Time finally came when it started to look like golf was a cheaper hobby although I think I will find something better to do with my time than golf.

 

Senior Contributor

Re: pensions dagwud

"Time finally came when it started to look like golf was a cheaper hobby although I think I will find something better to do with my time than golf."

 

Thanks for a good chuckle.

Senior Advisor

Re: pensions r3020

I know retired school teachers that draw both ipers and SS. I don't know but guess that it is manditory.

 

In addition dag, I find that farmland is the best IRA you can find without government involvement. Interest and improvements are tax deductable and it can increase in value without those pesky taxes, If and when you do sell out the gains are taxed at a lower rate.Not only are you growing your retirement but you are growing your current  income as well. It's a win win as far as I am concerned.

Senior Advisor

Re: pensions r3020

Mr Kraft, I agree with you that farm land is an excellent investment. That being said, there is nothing that states the value can not be cut in half in a short period of time. Also the income off of that land could be cut very quickly also.