With too many defined benefit pension assets tied up in private markets, savers should be grateful that such plans are becoming less common, says @AllisonSchrager (via @opinion) https://t.co/9gAWS4CKX8 ...

Core Insights - Pensions are increasingly unpopular among employers due to their high and indefinite costs, despite being valued for their reliability by retirees [2][3] - Employers typically offer two options for pension payouts: a lump sum distribution or monthly payments for life [8][23] Group 1: Pension Structure and Options - A lump sum distribution allows employees to receive a single payout at retirement, making it a more manageable expense for employers [1] - Pensions, also known as "defined benefit retirement plans," promise certain benefits in retirement, contrasting with "defined contribution retirement plans" [6] - Monthly payments are often preferred for their reliability, while lump sums may offer higher long-term returns depending on investment management [10][12] Group 2: Financial Considerations - The decision between a lump sum and monthly payments depends on various factors, including investment returns and personal financial situations [9][23] - To match a fixed monthly payment of $1,200 over an average life expectancy, an individual would need to invest a lump sum of $150,000 at a 7.03% return [13] - A reliable return of around 8% is necessary for the lump sum to be more valuable than monthly payments, with potential higher returns from equity investments [14] Group 3: Inflation and Risk - Inflation can impact the value of pension payments, with some pensions offering cost-of-living adjustments [17] - If a pension is not indexed for inflation, the fixed monthly payment may expose retirees to inflation risks, while a lump sum could allow for inflation-indexed growth [21] - Managing investment volatility is crucial for retirees, as relying on lump sums for income can be riskier during market downturns [15][20]

Core Insights - Early retirement poses significant risks, especially when leaving the workforce in one's 30s or 40s, as savings must last much longer than in traditional retirement scenarios [1] - Retiring in mid-50s reduces longevity risk, as the nest egg only needs to stretch for an additional decade rather than two or three [2] Financial Position - The individual discussed has a total portfolio of $4.5 million, comprising a 401(k) valued at $2 million and a brokerage account with $2.5 million, along with a pension that provides a reliable income stream [3][4] - Without a pension, the individual would face meaningful risk, needing to withdraw around 3% annually, equating to approximately $135,000 in income [4] Pension Impact - The pension significantly alters the retirement outlook, providing a strong income foundation and reducing pressure on savings; the individual is set to receive a $120,000 annual pension starting in 2026, potentially increasing to $170,000 over time [5][6] - This pension allows for a more sustainable early retirement, enabling the individual to withdraw less from investments while still achieving a total income close to $200,000 annually [6] Pensions in Context - Pensions have become increasingly rare, particularly in the private sector, with Social Security being the closest equivalent, yet it falls short of the pension benefits discussed [7] Healthcare Considerations - While the individual may face higher healthcare costs until Medicare eligibility, their income sources and savings position them to manage these expenses comfortably [8]

Pension Investment & Policy - UK chancellor threatened to force pensions to invest in the UK [1] - There are signs that pensions are getting ahead of the chancellor's plan [1] - Rachel Reeves's pension gamble is being questioned regarding its potential payoff [1]

Hungary’s government is planning to send out an extra monthly pension payment in a bid to win over retirees as part of voter-friendly measures ahead of next year's elections https://t.co/S0Rob9piFJ ...

Australia’s government has rolled back some of the most contentious elements of a planned tax on large pension balances after its initial plan drew heavy criticism https://t.co/jkvMgx8648 ...

RT Crémieux (@cremieuxrecueil)After a supposedly 111-year-old man was found to have been dead since 81 and unreported so his daughter could keep collecting his pension checks, Japanese authorities began investigating the country's oldest old.They found a mess. https://t.co/QxYyK7GDbu ...

Global Retirement System Challenges - The world could face a $400 trillion shortfall in retirement savings by 2050 [1] - Every country's retirement system is unique, shaped by its specific development path [1] US Retirement System Analysis - The US retirement system has both strengths and weaknesses [4] - The US has a progressive benefit formula in its social security program, benefiting lower-wage earners [4] - The US saves more than most other countries and has among the highest retirement incomes globally [6] - The US has significant assets in defined contribution plans and some defined benefit plans [3] Potential Reforms and Considerations - Mandatory defined contribution systems may face resistance in the United States [2] - Instead of focusing solely on features, the US retirement system should be evaluated based on its results [5] - The pension index aims to facilitate understanding of what works and what needs improvement in retirement systems [5]

Tax Implications for Retirement - Highlights 18 U S cities where 401(k) and pension withdrawals are not taxed by the state [1] Retirement Planning - Suggests relocating to specific U S cities to potentially save money on taxes during retirement [1]

BP has transferred a portion of its UK pension pot to an insurer, the latest move by a major British company to offload risks related to retirement payments. https://t.co/BTwnFGvj3d ...