Retirement Heist:How Firms Trimmed Pensions

[geekette]

that's right. Lifetime guarantee always means lifetime of the entity making the guarantee. Can't see how it's any different from an annuity in that regard.

target date funds, not a fan, but only because I am capable of maintaining the asset allocation I desire and am not willing to abdicate that control. Bluntly, I don't need that product. But, I am glad it exists for those who do not understand stocks vs bonds and need an "autopilot". I think it's a better option for those folks than putting all the savings into a "guaranteed income contract" product that's almost always a choice for a 401k. Those pretty much guarantee that inflation will eat all the money while at least "target date" funds generally keep some portion in stocks so there is the chance of outpacing inflation.

Chance, not guarantee

 

[bogey21]

.........that inflation will eat all the money

That is a real fear of mine. Fortunately my Pension has a "locked-in" cumulative 3% cost of living payment every January. Having retired 10 years ago that has now grown into a good sized annual payment. But run away inflation is still a concern.

George

 

[geekette]

Yes, COLAs are good. When they occur. I wouldn't buy a fixed income product without it. Fixed is too ... Fixed!

Didn't SS have a COLA freeze? Did it thaw yet?

I have a friend that is very risk-averse, wants only to invest in CDs and treasuries, while I am a dividend stock lover. A few months ago we compared our last few years of returns and he was shocked that I was still ahead, and showing great yields. He had assumed that anyone holding stock in 2008 was still quite underwater and foolish to still be holding.

He had invested a lot more money than I did and the interest he earned was far less than the dividends I had accumulated. His portfolio returned less than inflation while mine was beating it. Not every stock a gain to date, but every one of them paid 4 dividends in each year since I've owned them so I end up with more shares. Which generally puts me ahead even at a cellar price, thanks to dollar cost averaging.

At the very least, he got an education in stock investing and had some misconceptions corrected.

Risk vs reward. I'm taking the risks and reaping the rewards even in a volatile market. I had to laugh when dividend investing came back in vogue. For me, the appeal never tarnished. I'm small time, will always be small time, and I believe that the best way for me to accumulate wealth is thru dividend reinvestment over the long haul. There is no guarantee of outpacing inflation but it is the best shot I have at it. There will be no COLA so I will just have to be smart when it comes to taking divs in cash and/or selling, but, that is 20+ years down the road (I hope). And the long dividend history will give me a lot of control over whether I take a gain or a loss for any given redemption.

Meanwhile, I ignore paper losses but pay attention to the companies I own.