I'm a complete noob to this, but I don't like a ton of money coming out of my paycheck. If I have a pension plan, is it smart to just forgo a 401K or should I do both? Any links or advice will get a e-handshake from me.

Find out how much the pension plan pays out upon retirement. If that amount of money is enough for you to live comfortably on than you may not want to put more money into your employees retirement account. Most people don't realize how much of a pay cut they take upon retiring with a pension plan. Even if you only contribute around 5% that will ease your transition into retirement. Like Afink said though if your lucky enough to have your company match any of your 401K contributions you need to take full advantage of that. It is the easiest money you can make.

Is there like a decent percent that's good to put in? There's not much info online.

gotcha, and I can always withdraw money from it, I just get taxed when I take it out? kind of like taking a loan against yourself, so it's like an untaxed bank account?

Assuming you are younger, and there is no way in hell you should ever plan on a pension being whatever is told to you right now. Companies have been cutting pension benefits left and right, we just had our rate of accrual cut (private company, not public) during the recession in 2008 and it is going to cost me over 150k based on the way they restructured it (I am 38).

You should never think about pension and 401k as a "one or the other" choice. If you are fortunate enough to be in a company that still has one, you should just consider this extra money for now, until you get later in life to the point where they could not take it away from you because you are grandfathered in. If you are still in your 20s or 30s, just because you have one now, might not mean you will still have one when you retire. Or even if you do, the terms may have changed greatly over that timeframe.

You need to provide a lot more information before anyone can help you.

Do you work for a public or private company? There are many public pension systems that are very likely to fail over the next decade or so, due to the fact that the government makes the laws, so they can decide what a reasonable interest return assumption is in the valuation, and then, if they don't like what the actuaries say needs to be contributed, they can you know, just not contribute (again, since they make the laws). If a public pension fails, the most likely change for a benefit holder would be a decrease in benefit.

If you have a private pension, then you're in a slightly better position. Any benefits you have accrued are due to you regardless of whether the company stays in business or not. If the company goes bankrupt, the pension benefits are backed by the PBGC, a federal entity which insures private pensions. However, there are some concerns that you should be aware of even here. 1) There was some concern a few years ago that the PBGC would go bankrupt itself (i.e. it was not charging enough in premium to the pension plans to cover the costs of the pensions of the failing companies). Now, in theory, the federal government could always shift some money to cover that...but where is that going to come from? The other concern is that many private firms are freezing their pensions, meaning that you will be entitled to benefits already accrued at retirement, but you will not be receiving any more. If you're early in your career, your already accrued benefits will be a pittance at retirement, and you'll wish you'd have some money already compounding in a 401K before the freeze goes into effect.

Is the company you're working for one that you see yourself working for for a long time? If not, you might not be able to count on the pension benefits anyway. Do you know how long the contract for your current plan says you have to be employed by the company in order to be vested? That's something you need to find out. Pensions were much more valuable retirement vehicles when people tended to stay employed at one job for their entire careers.

Personally, I don't work for a company that offers a pension, and I wouldn't want to anyway. I'd much rather be in control of my own retirement. I'm still early in my career, and have a 401K with my company and a Roth IRA independent of that, since I believe I will be making more in retirement than I am currently, and it also mitigates the risk of tax rate inflation between now and retirement (Roth contributions come after tax, and are therefore not taxable income in retirement).

The best advice you could probably follow, is that your company's 401K is likely through a major investment firm. If you work for a large company, they might even come on site several times a year. Sit down with someone and ask them questions that you may have.

 

Originally Posted by dams

it's a government position, so all this bs about a pension being good, pretty much is false, i thought i basically signed a contract saying I will get this shit if I put in the time, thanks for the info all too, didn't expect some of these replies

Maybe if you had met an Asian women on the Internet who made less that you when you met but kept getting promoted and now makes twice as much as you and has a sick 401k that will have two million in it, when she retires, even with a conservative rate of return, and you married her you wouldn't have these questions.

 

Originally Posted by dams

link to said site you found asian lady?

Lol. Yahoo chat

My wife has a pension and 401k. The track record of the pension fund to meAt obligations is the key to pension confidence. Therefore, in a 401k you can only blame yourself.

Use both and instead of just surviving in retirement you will be traveling and living it up. Think of the pension as your social security since ss wont be there.
Her pension fund is keeping up with obligations despite being down 9% last year. Pretty solid returns considering the markets.
A manager who had the foresight to be conservative is allsum. Fuckers who just try to beat the markets losses vs actually protecting your money arent helping your cause. Despite what they say.

Plus when you leave your job you can invest your 401k in your ira into better investments to make better gains once you have a large stack of cash. Then at a new job you start a new 401k. A 401k only job is actually an incentive to change jobs, not stay in the same one. A pension and 401k is a reason to stay for at least ten years so you lock in an automatic monthly retirement check in the pension. Hopefully you find another job with a pension but in ten years i would be shocked if there are many left. Personally, i wouldnt mind if they rolled it into the 401k.

If you leave your job before five to ten years i believeeeee you would get nothing in your pension paid back out until retirement age. Not sure on your job obv. In her job she is required to pay into it so she cant even say no. Even so, if she left there she wouldnt see any pension money until like 55-57 or something. She is in year 12. Even if she left she gets nothing rolled over so its stuck there. But at least they are doing well with it so no worries.
Just max out your 401k and get as much match as possible. The earlier you max out the better your retirement. Fyi you will be old in no time, you cant catch up later. Just do it. Dont say "i cant afford to now." Guess what, you wont suddenly be able to as life gets more expensive. Just adjust to your new salary and suck it up. Remember its pretax money anyhow so it wont be that big a deal.

True that. I hope it is too. Just cant count on politicians to do anything right until they do. Theres a first time for everything i guess.

Put money in the 401K as much as the company will match. You can roll it over to your next job too. Great to have a pension but don't rely on it as many have said.

 

Originally Posted by LDM

this. but if you have debt on credit cards, cars, or HELOCs then you should pay them down and then start 401K contributions up to the maximum match.

that makes pretty much no sense at all and is terribad advice in reference to putting money into a 401k.

uh no. every pay period that passes without you making a contribution is money that you have passed up putting towards your retirement. This is terrible advice, in particular, if your company is providing an employer match.

 

Originally Posted by BigJohn804

uh no. every pay period that passes without you making a contribution is money that you have passed up putting towards your retirement. This is terrible advice, in particular, if your company is providing an employer match.

I'll clarify my statement, because you are correct. You should contribute only up to the company match and no more especially if you have CC debit. You seem to be saying that if you have CC debt of 12% you're better off contributing to your 401k than paying off your CC debt. I'm no math genius, but I'd find it hard to believe that any 401k is paying more than 12% in which case you are costing yourself money, company match notwithstanding.

 

Originally Posted by runninbad

I'll clarify my statement, because you are correct. You should contribute only up to the company match and no more especially if you have CC debit. You seem to be saying that if you have CC debt of 12% you're better off contributing to your 401k than paying off your CC debt. I'm no math genius, but I'd find it hard to believe that any 401k is paying more than 12% in which case you are costing yourself money, company match notwithstanding.

nevermind, i misread this statement. I agree with you