Ragged Trousered Philanthropists

[Bob Owens]

 
401k match is a con anyway.
 
Using Bob's example of 665k....... how much will that actually be when that 20 year old retires?
 
 

A lot more than if he didn't put anything and gave over $100k to the company by not getting the match. 
 
 

Pay is not increasing but costs are.
 
My guess is in 47 (when a 20 year old would retire with full SSI IF it is available by today's retirement standard) years 665k MIGHT be about 9 years worth of income if that.
 
So you lose a pension that you are paid for the rest of your life and get........ enough to live on for 9 years or less.
 

I didn't say that they should only put in enough to get the match, thats the bare minimum because otherwise not only arent they saving for retirement, they are giving money back to the company.  
 
 
 

401K is in NO WAY comparable to a pension.  Not even close.
 

And a 401K match is in no way comparable to a 401K contribution. Unfortunately Little and Videtich were able to get our peers to buy into it despite the fact that both the Flight Attendants (9%) and Pilots (16%) got contributions. If we were to successfully fight for a 16% Contribution and then match that we would end up just as well off as we would be under the pension. So thats what we should shoot for, a rate thats equitable to what the pilots get. Thats only fair, its not like our pensions would be as good as theirs because we make much much less, but we should have the same percentage contribution. 
 
Unfortunately the Association has other plans for us, the IAMNPF ,  make us slaves like the old men we see at US tied to a Union run plan, run by a Union we don't belong to, that sets up so many restrictions that we are stuck here till we die. 

 

[Bob Owens]

I'm going to poke a few holes in you example. 
In your example, a person age 25 contributing 5.5% of his or her pretax income would equate to a yearly income of $60,000.
I will give you a better and more realistic scenario.
The same person, age 25 is a new hire FSC. Making entry level wages. $9.50/hour, $19,760. yearly. For this example the max that a FSC would ever make in his or her career, putting all other extras aside (longevity, CC pay, overtime, ect.) $24.54/hour, $51,043.20yearly.
Even though top out is within ten years I spread out increases for 34 years to reach max pay expectation of  $24.54/hour.
At the end of 35 years this 401K would be worth $207,677 and cost $38,298 or about 18.44 cents out of pocket and gains of a modest %5 annual. 
Your example is misleading by not taking into account a person should increase his or her contribution every year by 1% and with a starting income if $60,000.
By putting more pretax income into your 401 up to $37,450, your income tax will be held to only 15%
Someone told me once "You can suffer now.....or suffer worse later".

Holes? No just other scenarios. The whole point of the post is not how to set yourself up for retirement, its about not giving back money to the company, so whether they are making $9.50/hr or $35/hr nobody under any circumstances should be putting in less than 5.5% and giving that money back to American Airlines. 

 

[Bob Owens]

To earn a pension, all you have to do is show up. But to build a large 401 dose take work, and for a long time you work hard and will bring home a small takehome check, all depending on how large you want to live when you retire. 
A pension cost the company a lot. Cost the employee nothing but time.

Not if you have a contribution like all the other Unions on the property got for their members in BK. We were the only ones that got ZERO contribution, only a match. 
 
Our pensions ended up costing us a lot. We gave everything away to save the pensions, workrules, holidays, sick time, vacation, IOD time, Job security, Longevity etc etc. If not for the Pension mechanics at AA would likely be earning around $50/hr because the Pension and fear in Tulsa were just enough to get us to give it all away. Now they have nothing to really threaten us with anymore, no golden handcuffs, unfortunatly they are working with the IAM to make brass ones. With a company contribution of 9% like WN, us maxing our our contributions, and all the OT most of us would already have enough where we could leave today. 

 

[Bob Owens]

My preference for DC plans will not be news to most on this board. They simply empower rank and file workers more than a DB plan might.

I also happen to be a IAMNPF plan participant...

Portability brings power. The key is getting a realistic contribution like the Pilots have-16% and at least matching that with your own. 

 

[Bob Owens]

yes, I am aware that you have a patchwork of retirement plans because of your own NW/DL history.

and you are absolutely right that a 401k is a tool for EMPOWERMENT.

a DB pension is a tool for the company to CONTROL your future.


some of us figured that out a long time ago and have used the events thrown at us to improve our own financial security. In my current job, I can participate in a DB or a DC plan. It wasn't even close to a choice what decision I would make after being in the airline industry.

Provided there is a substantial contribution from the company, a 5.5% match is pitiful. Even a 5.5% contribution is woefully inadequate to be considered a Pension. 
 
To me the best thing about DC is the fact that it takes so much away from the company as far as bargaining leverage, if we were all in DC plans from the get go the Airlines would never have been able to reduce compensation like they did. The Pension was their most powerful weapon against us. With a DC (and no profit sharing) we have no reason to really care whether the company succeeds or not. If AA were to liquidate today somebody would pick up those new planes and fly all those people to where they wanted to go, and whomever bought those planes would need us to keep them flying. Sure the seniority system is still there, but thats not nearly as powerful as the Pension, now most people would just leave the industry permanently if they lost their seniority. Seniority is only powerful if its a desirable job. Being King of the Hill doesn't mean much if the hill is really just a pile of shyte. 

 

[Kev3188]

 To me the best thing about DC is the fact that it takes so much away from the company as far as bargaining leverage...

^This^

 

[Kev3188]

Portability brings power. The key is getting a realistic contribution like the Pilots have-16% and at least matching that with your own.

Absolutely agree.

 

[Zom JFK]

It is a complicated problem.
 
There is some truth to what you say.
 
I just don't feel I should be FORCED to fund someone else's retirement while mine is underfunded. I rather put that money into MY retirement. After all I worked for it.
 
I am only asking that they fund their own retirement as I have to fund mine. Asking me to fund theirs AND mine is unfair to me.
 
Would it be fair for me to TAKE their money by FORCE and put it into MY pension?

La, you don't need to make words bigger to get your point across. I understand your mentality and I'm not trying to change your mind. If your state has public employees that are doing well, you can move to one where they don't. NJ is doing wonderful things ( in your mindset) to their public employees. So are Wisconsin and Detroit. You can rest easy in the fact that it's over for them also. Their retirement is being stolen just like ours was. Isn't it great? Not that you will benefit from it in any way. Your taxes will remain high and be raised like always. They need that money to feed, house, and provide medical to employees of billion dollar companies like McDonalds and Wal Mart. Being forced to pay for that should piss you off. Pensions weren't unaffordable in the private sector, they were stolen. It was theft, nothing more elegant than that. The super rich will get the public employees' retirement money too. It's happening now and will only accelerate. Your side is winning.
 

A lot more than if he didn't put anything and gave over $100k to the company by not getting the match. 
 
 
I didn't say that they should only put in enough to get the match, thats the bare minimum because otherwise not only arent they saving for retirement, they are giving money back to the company.  
 

A lot of people in high cost areas can't afford to lose any more money. Even to put it into their own 401k (money you have no access to for decades and can be decimated if the market takes a dump). In NY we have to work tons of OT just to put food on the table. Forget about any extras. A contribution would have made a big difference over a match, as if this goddam union cared about that though. Way to go twu.

 

[Bob Owens]

 
 
A lot of people in high cost areas can't afford to lose any more money. Even to put it into their own 401k (money you have no access to for decades and can be decimated if the market takes a dump). In NY we have to work tons of OT just to put food on the table. Forget about any extras.

 
 
Well thats just it, if you don't put in 5.5% you ARE losing more money. You are giving money back to American, and I agree with the guy who said only a fool wouldn't at least put in enough to get the max match. Where else can they make 100% on their savings? This isn't an extra, and like I said each dollar you put in that gets matched at 100% doesn't cost you a dollar of take home pay because it comes out before taxes, so it may only cost 65 cents on the two dollars that gets added to your savings and the money isn't totally inaccessible either, you can borrow against it if needed and even withdraw. So you pay the penalty but you already made 100% on it. It can be decimated if you are greedy and put it in high risk investments, or you can put it in bonds and earn very little but you already made 100% by getting the match. I live in NY as well. People make choices, and Yes a lot of people live at work to pay the bills, but generally speaking the FSC have nicer fancier cars than mechanics do, life choices, maybe mechanics are putting their money in homes and 401Ks while FSCs are buying fancy cars because they cant afford a house, but maybe if they settled for a slightly less fancy car, or didn't have the latest smart phone, or brown bagged it to work they would have that 5.5% in before tax money, see it more than double and build up over time so they would have enough in the 401K to borrow and get that fancy car a few years later and pay themselves back instead of a bank.  
 
Look I'm not saying its a great deal, but its the only deal, and its foolish not to do whatever it takes to not give that 5.5% back to AA, I think we both agree AA certainly doesn't need or deserve it. 

 

[WorldTraveler]

Provided there is a substantial contribution from the company, a 5.5% match is pitiful. Even a 5.5% contribution is woefully inadequate to be considered a Pension. 
 
To me the best thing about DC is the fact that it takes so much away from the company as far as bargaining leverage, if we were all in DC plans from the get go the Airlines would never have been able to reduce compensation like they did. The Pension was their most powerful weapon against us. With a DC (and no profit sharing) we have no reason to really care whether the company succeeds or not. If AA were to liquidate today somebody would pick up those new planes and fly all those people to where they wanted to go, and whomever bought those planes would need us to keep them flying. Sure the seniority system is still there, but thats not nearly as powerful as the Pension, now most people would just leave the industry permanently if they lost their seniority. Seniority is only powerful if its a desirable job. Being King of the Hill doesn't mean much if the hill is really just a pile of shyte.

well said, Bob.

and let's also remember that ALL of the airlines either terminated or froze their pensions because they absolutely must know what the cost of operating is going forward and active pensions are an incredible unknown to companies since they are based heavily on current interest rates.

Companies want nothing more than to put more in your 401k the minute they issue your paycheck and then be able to say that they have no more obligation to you.

the same is true for retirement medical benefits.

they are vestiges of the past which companies will not assume.

hose who take control of their own financial planning and not be subjected to what a company wants are the winners.

Leave when you are ready to leave, not when your pension benefit can support you. Or stay as long as you enjoy what do.

and by all means, demand the most you can get from the company in a company match but expect to contribute way more.

WN employees' retirement is so go in large part because their profit sharing goes into it. Many DL employees contribute large portions of their profit sharing checks into their 401ks.

it's money you don't live on thruout the year but can make all the difference in how soon you can move on to do whatever you want to do in life - and do it on your schedule.

 

[La Li Lu Le Lo]

thank you, Kev.

an actual DL employee and pro-IAM supporter that doesn't support 700's IAMNPF sales job.



there are lots of people who have walked away from their jobs early because of responsible 401k mgmt. and contributions. that is virtually impossible to do with a defined benefit pension because the mindset of a pension is that you get "exactly what we said we would give you, no more but in some cases less if we decide to change rules, file for BK, terminate the plan etc"

American workers DON'T want defined pension plans and companies aren't offering them as an option for the vast majority of workers.

trying to hold onto yesterday's solution will cost the employee

My father has pension, 401k, and SSI. He probably makes more a year than most people working.

 

[WorldTraveler]

I will have all 3 as well... and I will likely be like your father.

and my wife has a similar earnings history.

 

[La Li Lu Le Lo]

yes, I am aware that you have a patchwork of retirement plans because of your own NW/DL history.

and you are absolutely right that a 401k is a tool for EMPOWERMENT.

a DB pension is a tool for the company to CONTROL your future.


some of us figured that out a long time ago and have used the events thrown at us to improve our own financial security. In my current job, I can participate in a DB or a DC plan. It wasn't even close to a choice what decision I would make after being in the airline industry.

I would like to ask what you do now for a living if you are willing to share.

 

[WorldTraveler]

I will pm you.

 

[MetalMover]

My father has pension, 401k, and SSI. He probably makes more a year than most people working.

I think many of our fathers and mothers are enjoying the benefits they were promised. Sadly the DB has gone the way of the dinosaur. Many new hires don't have a clue as to what a pension was or is.