Are pensions gone?

If you are under 35 and work for a private company the chances of you having a pensions are 1 in 20. If you work a government or state agency then your chances are 1 in 2. However many state pensions are undergoing reform as well. What is the likelihood that someone just starting out will have a pension? And the chance that it will be there in 30 years?

I find myself in all retirement planning not counting on a pension. In fact I’m not counting on Social Security if I’m honest. I think SS will be icing on my retirement cake rather than the cake itself. I think that by the time I retire SS will be provided on a sliding scale though we all pay into it. Those who have saved and been responsible will not be able to claim SS. They will be in too high an income bracket to need it.

Another issue is whether people will be able to manage without company pensions? How many people expecting a company to help them in their golden years? What sort of annuity are they expecting to be able to count on? My mom’s pension is absolutely golden. She’ll retire at the age of 55 from the state government with 70% of the average of her highest three years of salary (2% for each year of service, so she’s worked 35 years!). And she’ll have medical premiums paid for the rest of her life and my father’s. Talk about generous. This will be her primary medical benefit from 55 until 65 when medicare kicks in. Then after 65 medicare will be primary and the 20% she’ll be responsible for will be covered by the state paid insurance. That is a phenomenal deal.

Of course her pension is not available to current workers entering state government jobs at this time. In fact reform of this overly generous pension began in 1990 and many benefits were cut. Including only 1.25% of salary per year of service pension, no medical benefits for spouses, and retirement at 65 not 55 or else a penalty. This means that it’s more difficult to have such luxury. Of course I’d probably be grateful to get any pension.