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How much are a pension and a company car really worth? Login/Join 
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Picture of Syngin1066
posted
I currently have a job with a pension, car, and a 401k match. I’m happy with my current job, but got a pop fly call the other day and after a few conversations, have job offer with another company that will double my salary. The new place has the same 401k match, but there is no pension or car. The healthcare is essentially the same. Both companies are solid financially and I have no concerns about the pension going away. I’m just trying to gauge if making the move is worth it. I’m fully vested in the pension at my current employer, been there about 10 years and I’m 45.

Could any of the Sigforum financial gurus weigh in?

Thank you


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All I've had all day is like six gummy bears and some scotch...
 
Posts: 4851 | Location: Celina, TX | Registered: February 07, 2008Reply With QuoteReport This Post
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Picture of mjlennon
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I'm pretty sure double salary trumps pension and car. Although you will fall into higher tax bracket, still think it'd be easy decision.

Now, you didn't mention wife. If she's not on board, particularly if requires a move, likely a nonstarter.
 
Posts: 1817 | Location: Fayetteville, Georgia | Registered: December 08, 2005Reply With QuoteReport This Post
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Picture of jbcummings
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You should probably look for a professional wealth management individual. I’m curious, though, as to what is the difference in the “pension” & the 401K. Who funded the “pension” and if you’re 100% vested in it, does that mean it can be rolled out to a new retirement fund? I haven’t heard of any companies offering a “pension” since the 1990’s. I worked for Southwestern Bell at a time when they had a pension. When I left it was a buy out amount that I got based on the company funded “pension”. They quit offering a “pension” in 1995 offering only a 401K as a retirement fund. It seems possible your roll over of the pension and 401K could be the seed of a more profitable tax deferred investment. Seek better help than a gun forum, even if everyone here is well intentioned.


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Posts: 4306 | Location: DFW | Registered: May 21, 2012Reply With QuoteReport This Post
Do No Harm,
Do Know Harm
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What’s the pension? If you know the pay out upon retirement, the math should be relatively easy to do to determine if you could match or beat it by investing the extra money.

Retirement healthcare with both?

A real pension is a big deal. Depending on what it actually pays.




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Although sometimes distracting, there is often a certain entertainment value to this easy standard.
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Posts: 11446 | Location: NC | Registered: August 16, 2005Reply With QuoteReport This Post
crazy heart
Picture of mod29
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The pension you're currently building up is a huge perk. You'll have to do the math and see what makes the most sense. Having that income when you retire is pretty nice, I can tell you.
And the free car you're enjoying is also pretty sweet.
That stuff helps make up the salary difference.
Not sure I would bite.
 
Posts: 1779 | Location: WA | Registered: January 07, 2009Reply With QuoteReport This Post
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Picture of cparktd
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As for the car... for a rough off the cuff figure use the current compensation rate. About 0.58 per mile for use of a private car. So .58 times how many miles you drive per year... but... That would include insurance, maintenance and fuel. So deduct any of that you pay for yourself now and you get the approximate value of them suppling you a car per year. YMMV



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Posts: 4118 | Location: Middle Tennessee | Registered: February 07, 2013Reply With QuoteReport This Post
Page late and a dollar short
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Easy enough for me to say but a pension is only as good as it’s funding. Ask the Union members and municipal government employees who have seen theirs get slashed due to bad investments and or bankruptcies.

Or in the case of my wife, one of her employers had a pension plan. She was fully vested when she left but because she was not 55 at the time the funds were to be controlled by the fund until she met the original age qualification of 55. Well, the company sold out, new owners then changed the eligibility age to 65. Apparently due to the company now being European owned the rules have changed more to the benefit of the company instead of the employees. Other roadblocks have come up, some of the things are almost comical, like me having to have a notarized declaration that I have no objections to her wanting a lump sum payment instead of a defined monthly payment that would cease at her death. I know a 401K is a different animal but anytime she or I have left a job with one we never had to get “permission” from a spouse to take our money out.

The auto, well it may be nice but that money is not figured into your Social Security benefit calculation. It may not seem like a lot now but at some time down the road when your retirement benefits are calculated you may appreciate the higher paycheck and buying or leasing your own car.

I left a job and increased my income by about 45%, it made a huge difference in my SS benefit. The amount that was calculated at my full benefit age was reached at age 64 instead though I waited until Medicare kicked in. Even with my eight month early retirement I still got more than if I had remained at the previous employer and waited for full benefits.


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————————--Ignorance is a powerful tool if applied at the right time, even, usually, surpassing knowledge(E.J.Potter, A.K.A. The Michigan Madman)
 
Posts: 8066 | Location: Livingston County Michigan USA | Registered: August 11, 2002Reply With QuoteReport This Post
Page late and a dollar short
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Another thing, pension income may be taxed depending on the state you reside in. That might me something to take in consideration also.


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————————--Ignorance is a powerful tool if applied at the right time, even, usually, surpassing knowledge(E.J.Potter, A.K.A. The Michigan Madman)
 
Posts: 8066 | Location: Livingston County Michigan USA | Registered: August 11, 2002Reply With QuoteReport This Post
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Picture of MikeGLI
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I'd never want to be stuck somewhere because I have 60% of my time vested in a pension and leaving would cost me, but you say youre fully vested. I'd also want to be able to pass my money on to someone one day, something you cannot do with a pension.




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Posts: 9676 | Location: Orlando, Florida | Registered: July 12, 2005Reply With QuoteReport This Post
This Space for Rent
Picture of ugeesta
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15 years ago when I took my current job, I figured a car was worth about %10k/year. That was car payment, maintenance and insurance. I would say that number is more like $15k/yr now. This is just my guess.

No idea on the pension tho those are the things that tend to get litigated out when a company goes into Chapter 11 (i.e. no guarantee it will be there)




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Posts: 5745 | Location: Colorado | Registered: April 20, 2009Reply With QuoteReport This Post
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It's not hard to take the expected lifetime in retirement, expected pension payment, and calculate present value.

A major consideration is if you will get retirement health insurance along with the pension. That can be a huge value, depending on when you plan to retire and your age for medicare eligibility.

Also, is it a defined benefit or defined contribution? My current company has a defined contribution pension - company pays credits into the fund each year based on age/salary. The money is invested by the company in whatever they put it in. You get what you get when you retire. This is in addition to the 401K and match.

I've seen analyses of public school teachers pensions, lifetime health insurance and other benefits in Illinois. The present value of all the benefits is essentially a doubling of their salary. For them taking a private job for twice the salary but without the pension and retirement health care is a wash.

For you, you are probably ahead taking the better salary, but I'd have a professional run the numbers.
 
Posts: 4690 | Location: Indiana | Registered: December 28, 2004Reply With QuoteReport This Post
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Picture of Syngin1066
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My current company has been around for a very long time and isn’t going anywhere. With some very conservative assumptions, it will pay $90k from retirement till death if I continue to work there till age 65. Benefit would transfer to my wife upon my death. If I walked away now, it would pay about $15k a year. I can’t cash or roll it, but I would get when I eventually retire.

It does not include retirement healthcare.

I agree the car is worth about $15k a year.


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All I've had all day is like six gummy bears and some scotch...
 
Posts: 4851 | Location: Celina, TX | Registered: February 07, 2008Reply With QuoteReport This Post
Res ipsa loquitur
Picture of BB61
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How much would you have to save to meet the 90k per year?


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Posts: 12436 | Registered: October 13, 2002Reply With QuoteReport This Post
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Picture of Woodman
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A few years ago my sister began jumping around to the highest wage. She's got one of those made-up marketing positions with a language other than english. It works for her, a single mom with two kids about to enter college.

I'd "run the numbers" with the wife. Two columns. Intangibles at the bottom of the columns, hard numbers towards the top.

$90k a year is what a school principal would get after 40 years with the City of Philadelphia. It is a nice number which allows travel and a good standard of living. And 65? Fairly young with today's healthcare.
 
Posts: 8759 | Registered: March 24, 2004Reply With QuoteReport This Post
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When faced with a similar situation I viewed it this way. In order to generate $75,000 ( difference in pension amounts) how much additional would you have to save in order to generate it at a reasonably assumed rate? For example, you assume 5% it would require $15 million additional savings.
All pensions have some risk but even assuming a 5% return rate is going to expose you to a fair amount of risk in today's market. I know because I'm living that complication now.
My way of saying I view your pension as golden handcuffs.
 
Posts: 1950 | Location: Indiana or Florida depending on season  | Registered: March 18, 2012Reply With QuoteReport This Post
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quote:
Originally posted by Powers77:
When faced with a similar situation I viewed it this way. In order to generate $75,000 ( difference in pension amounts) how much additional would you have to save in order to generate it at a reasonably assumed rate? For example, you assume 5% it would require $15 million additional savings.


That's a bit high. $1.5 Million would generate $75,000 at 5% annually without even touching the principal.
 
Posts: 8944 | Location: The Red part of Minnesota | Registered: October 06, 2002Reply With QuoteReport This Post
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Companies don't have to pay healthcare either. ATT pushed us onto Medicare as soon as we qualified. Signing permission for the lump has been standard for a while. Cushy Gov jobs will probably be safe as far as pension and benefits.
 
Posts: 1397 | Registered: November 07, 2013Reply With QuoteReport This Post
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Picture of smlsig
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90K plus at least 25K from Social Security plus what ever you want to pull out from your 401K (maybe 3-4% of principal?) should be a pretty comfortable retirement given the limited info we have…


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Posts: 6309 | Location: In transit | Registered: February 19, 2013Reply With QuoteReport This Post
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quote:
My current company has been around for a very long time and isn’t going anywhere. With some very conservative assumptions, it will pay $90k from retirement till death if I continue to work there till age 65.

I understand you are confident about this but I would never bet my security on an assumption like that.I'd view it as gravy that is likely but not certain.
 
Posts: 3529 | Registered: August 19, 2003Reply With QuoteReport This Post
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how many miles are you driving the car? if its 5 miles a day no big deal. if you are a regional manager that covers three states then it would be a pretty big deal.

I would also go over medical with a fine tooth comb and ask them how long they have had the medical. not all plans are equal even though they may reach certain benchmarks.
 
Posts: 7791 | Location: Bismarck ND | Registered: February 19, 2003Reply With QuoteReport This Post
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