Monday, March 11, 2013
9 comments:
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Anonymous said...
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So much for not posting before the thread lead-in is published.
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3/11/2013 8:24 PM
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Anonymous said...
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Given that employees from 23 to 65 selected or hired under TCP2, it is probably not possible to make an accurate generalization about the suitability of retirement for the group. It is too diverse.
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3/11/2013 10:48 PM
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Anonymous said...
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It is worth noting that if a newly hired employee of age 25, with a starting salary of $60k per year, growing at 2% per year, who can save 10% of her salary with a 5% employer match in tax deferred vehicles,who invests the plan in a 60/20/20 mix of low-fee diversified market equity fund, a low-fee aggregate bond mutual fund and a money market fund will over the long term (using historical data as a proxy for uncertain future performance ) achieve a portfolio performance of about 5-6% above the cost of living with a Beta (measure of covariance with the market,- a measure of risk) of 0.6, which means a standard deviation of about 12%.
What does this mean? This saver, if she doesn't waver or touch her 401k balance will have $1M which will provide about $85k gross each year for 20 years in addition to her social security, currently about $1800 per month at age 62.
The numbers are to variable to generalize, this is an example, but an new employee can do pretty well, probably even match the performance of the old TCP1 payout as long as both she and the lab continue to contribute. -
3/11/2013 11:14 PM
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Anonymous said...
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According to presenters in FRONTLINE, individual retirement plans are for the general population inferior to penison plans for the SAME INVESTMENT. Both can make returns balanced with risk, but a large fraction of the beneficiaries have no investment knowledge and some will make one of four key mistakes that PENSION HOLDERS CAN'T MAKE.
* take inadequate risk with investments so that returns are low. PENSION FUNDS can achieve 6% or better.
* take out money before retirement
* withdraw all money at retirement at once and incur a huge tax bite.
*I can't remember the 4th major flaw, perhaps it was that people don't start contributing as employment commences.
According to FRONTLINE, the state of OHIO, who had offered employees a choice between penison and individually directed retirement accounts, with the same employer contribution recently stopped the IRA type option because so many employees - 15-20% of all participants were very poorly prepared for retirement even though adequate money had been regularly provided. Pensioners suffered none of the problems, because they couldn't make the fatal errors listed above.
Message, if you have an IRA, you must become knowledgable, something not required of a pensioner.
More work on you. -
3/11/2013 11:26 PM
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Anonymous said...
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The chief downside of 401k's vs. pensions is that the 401k leaves you completely open to the huge damage caused by market "timing".
For example, the markets might collapse and enter a decade long bear market just as you retire. Pensions are better able to ride out long bear markets because younger members in the pension won't be retiring and taking out their money for many decades.
You can attempt to hedge against the "timing" problems of a 401k but it is still difficult to beat the enormous advantage giving by a large pension that has a good statistical sampling of members across a wide age group. Put simply, pensions have a big statistical advantage in the investment game.
Of course, the lab TCP1 pensions are now cut off from the entry of new, young employees so the benefits they would get from a wide age group are quickly diminishing. If markets collapse, it's likely that TCP1 will go bankrupt.
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3/12/2013 8:38 PM
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Anonymous said...
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I chose TCP2 in the 2006 transition at LANL. I had twenty five years in the UC system and will start collecting retirement from it in a year. I put the maximum in my 403B under UC and it has grown to $900k by now. My 401K has accumulated $250k in the past seven years. I assume that most long-term employees at LANL and LLNL are in a similar position. I plan to work for another ten years. My major worry is government-induced inflation that will cut into my savings.
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3/13/2013 6:37 AM
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Anonymous said...
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TCP1 is a closed off system with no new entries of young workers who can support the retiring staff during decades of employment at the NNSA labs.
With the zero-rate interest policies of the Fed and our Fed's bankrupt monetary policies, TCP1 will eventually collapse and the people in it will end up with pennies on the dollar from the PBGC if they're lucky.
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3/19/2013 9:30 AM
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Anonymous said...
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Is anyone going to start taking their UC retirement earlies than planned to make up for this 10% reduction in pay soon to come?
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3/19/2013 5:38 PM
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Anonymous said...
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"..With the zero-rate interest policies of the Fed ... TCP1 will eventually collapse and the people in it will end up with pennies on the dollar..."
next to impossible unless you include malfeasance of the LLNS pension board or a black swan event.
Under normally seen events, with the current estimated 20% margin above the present value of current obligations and contributions underway, a conservatively managed portfolio is likely to achieve a 5.5% - 7% average return on investments (attainable with high certainty using historic debt and equity rates of return) over very long time frames.
I don't have the chops or information to compare the investment returns and incoming cash flows against projected liabilities, that's Parney's job, but I think the last person collecting her burial payment from the successor LLNS trustee 80 years from now will be just fine. -
3/20/2013 8:27 PM
Last month Fidelity reported - "The average account balances for participants in 401(k) plans for which Fidelity Investments is record keeper reached a record high of $77,300 for the quarter ended Dec. 31, confirmed Michael Shamrell, a Fidelity spokesman."
This doesn't seem like much to retire on.
Most people on TCP-2 will NOT be retiring until the are 65 due to piss poor performace inthe stock market and chump change for contributions. So if you are young and hoping for a slot to fill think again. Most people close to retirment have about 7 years to go if the lab last that long.
March 10, 2013 at 10:21 AM
I suspect the reason for the low number is quite simple. Folks who took TCP2 either retired from UC at the transition and started TCP2, or were hired since then and chose TCP2. Either way, they haven't been contributing very long.
March 10, 2013 at 7:17 PM
What? Your comment makes no sense and seems to imply that Fidelity is somehow screwing the LANS/LLNS 401k participants?? WTF?? If that is what you mean, you are seriously sick in your paranoia. Fidelity treats LANS/LLNS 401ks as it treats all other 401ks, according to the law and according to the wishes of the investors - which is where your paranoia should be focused.
He's saying that the $77K figure is the average for the nation, not necessarily the average for LLNL employees.