I don’t know the specifics of the examples you are thinking of, but pricing the pension value/cost at $50k a year probably posits some extreme assumptions (e.g., start and retire at lowest age, end with a very high salary, take pension with full value immediately, and live a very long time).

I think you would be shocked how much an annuity costs that pays out starting at <50 years (like police or other workers with very strong unions get). One million dollars saved up might get an annuity of $30,000 per year.

The post my original reply was to was for teachers and “general government workers”. I gave a typical retirement age for those folks.

Military, police, firefighters, and (iirc) prison employees are a completely different cup of tea. Unions are a part of it, but the element of danger is also supposed to be factored into their pensions (rightly or wrongly). They also can start getting paid as soon as they retire without regard for age (unlike many/most other pensions).

All that said, the reality is actually worse. Structurally those positions tend to give members of those groups a relatively-easy-to-get disability component to their retirement (which can often be huge). They also have functionally similar jobs with higher pay that are designed to goose up their salaries for the last x years that is used to determine their pension.

These pensions are completely out of control, imho. That said, the politics and optics around those jobs make them tough to change to a more reasonable level.

These types of pensions are completely different than that of a typical government worker that doesn’t work in these types of jobs — a complete apples and oranges comparison, imho.

The crazy benefits that people nag about are for uniformed folks only, as they tend to get overtime based on seniority, and don’t have aggressive caps. Most civilian employees like teachers don’t get anything like that.

The caveat to that is as of today you contribute 4.4% of your salary / year into the pension fund, in addition to 401K savings + social security. The Obama administration raised it from 0.8%.

Even then, sure, it's above median. My point is that it's still "normal middle-class average joe" money, not "basically an executive so there should be different special non-compete rules" money.

It may not "feel like it" but to be alleviated of financial burden and put away meaningful savings puts you above half the country outright.

Non-conpetes should be reserved for select few in the firm that know the secret sauce, and are paid well enough that a year on the beach will hardly affect their cash flow. Basically executive level compensation and responsibility. This clearly does not qualify.

https://www.immediateannuities.com/information/annuity-rates...

I’ll leave it as an exercise for the reader to calculate how much you would have to save in a 401K over 20 years to have that much at retirement.

When making these calculations, remember:

- lifetime annuity

- include death protection (at least in my state, surviving spouses continue receiving pension payments).

- Everything above $19,500 is fully taxed (...and, in fact, not including tax on that $19.5K isn't even an apples-to-apples comparison).

Anyways, you can add or subtract many tens of thousands to the annual salary equivalent and the point remains the same: without a pension, $100K is not "special person who doesn't need non-compete" money.

I don't know how to square this with 12 percent of salary I was contributing towards the state pension. Care to share your math? I agree that pensions are worth something, but not 150% of salary.

There is a big difference between money taxed and money saved, and calling money collected from Social Security “savings” is misleading.

The drawback of a capital-only pension system is that ever more and more "dumb money" gets locked into things like ETFs - and more and more shares of "safe" companies get owned by entities which have ... questionable interest in exercising their voting rights.

For example, take big oil or coal companies. Their time to live is limited, last but not least because the demand is going to dry up sooner or later. Normally, investors would shed off these shares or at least push the company to sustainable goals - think car companies here: the long term goal that's most beneficial to society is to shift to electric / hydrogen, while the short-term goal that's most beneficial to next quarter's benefit is to cut r&d and sell high-margin SUVs instead.

The other problem that locking huge amounts of money into ETFs presents is a bit more complex: as more and more marker volume is held by ETFs which have to track the base stock get into a precarious position. Assume a stock drops in value because of a large sell-off, bad news, a Presidential Tweet or whatever, the ETFs the funds have to follow... and sell off, creating a race to the bottom due to oversupply (and the other way around). That means that, as more and more percentage of wealth is gobbled up by "dumb money", the remaining traders gain undue influence since they can essentially force the hands of the dumb money.

And then there is the final drawback: a government backed pension scheme like the German one where current employees pay the pensions of current pensioners in exchange for the in-kind promise ("Rentenpunkte") will weather any economic crash as long as the government keeps existing. A capital-based system is in for a nasty surprise in a total collapse event. The 'rona was a warning sign in that case.

You're undercomplicating the story of Social Security.

1. The program was instituted with an eye towards applying to everyone immediately, not 30 years from now. You cannot hand out retirement benefits to people using savings that were never set aside; so the program was always pay as you go. Not necessarily a bad thing but considering the government has low borrowing costs, perhaps it should issue some low cost, long term debt to fund the program. On the other hand, investing on the margin like this is fraught, so /shrug

2. There actually was some investment made when the boomer population came around. They were putting in more money than their predecessors took out and thus we have a surplus. Those boomers are now retiring and drawing down social security surpluses has begun, leading to the '75 cents on the dollar' estimates we've seen

3. The actuarial estimate of the cost of running social security relies on predicting variables far into the future, many of which are affected by the rules of social security itself. Longevity in particular has gone up with time.

4. People on average are not great at investing. They buy high and sell low, they buy the dividend, they don't read the prospectus. They're not even great at saving; it's why we had to institute the SS program as mandatory. Folks pointing to their 401k strategy on HN ignores how the HN crowd is a highly biased sample of the population.

Anyways, even if it were equivalent to $30K, as others have suggested, I think that still speaks to my original point. That doesn't exactly hit my threshold for "wow you're definitely super duper well-paid so we should exempt you from non-compete rules because you're making so much damn money".

Or the employer stiffed the pension fund in the past.

https://www.immediateannuities.com/information/annuity-rates...

I think with 1.2mn you can get a better annuity than 20k/year

It’s probably more like a 100k job with no pension is comparable to 60-70k with a final salary pension

Sure, there might be an employer match, and your money will maybe grow over those 20 years, but unless there's a generous match and your portfolio grows, a lot of that gets eaten up by the 20%-30% taxes you're paying on that extra $40K you need to save. I mean, market returns were good between 2009 and 2019, but beating that tax burden of 20%-30% a year is pretty damn hard.

Also, your money might now grow over those 20 years. Especially the next 20 years. I don't think anyone has high hopes. "Past performance is no guarantee of future results". C.f. public sector pensions, which receive extraordinary protections and pay out the same whether the market is up 5% or down 30%.

The other not talked-about benefit is that a public pension is doing the investing and maintaining the financial discipline for you. Most people in the United States are not capable of this, as the savings rate has only been approximately 7%[https://fred.stlouisfed.org/series/PSAVERT], and 5 years down the road Once the Covid vaccine is developed and the economy has recovered it will probably return to those levels. Which brings me to the point that it is almost impossible for 99% of people in the United States to save 40k/yr. At a 10% savings rate this is someone making 400k/yr which is way above average even for FAANG companies. So government work might not be so bad afterall.

That $5055 is not much, under the Roth IRA limit and not nearly enough to pay the median rent for a 1br apartment in the United States At $1025/mo per month https://www.abodo.com/blog/2018-annual-rent-report/amp/. IMO it’s time to go full ubi and Soviet housing blocks as we are keeping way too much artificial scarcity in housing. This will only get worse and causes more social unrest as we are currently seeing the beginnings of.

Why? I’d rather pay government employees in cash rather than with future tax money from my kids as the politicians and government employee unions will undoubtably understated benefit costs and underfund it.

well 2 factors..

1. Most people care about TODAY not tomorrow, this is reflective in all kinds of metrics related to personal fiance

2. Many people do not have kids, including myself, so I am not sure if I care they paying with things with YOUR kids tax money instead of my tax money

You seem to instead mean something like "prompts the question" or "brings to mind the question"

Language is a lot more nuanced than a freshman philosophy major’s Logic 101 textbook.

"literally"'s conversion to meaning its opposite represents a loss of meaning in the language; expressiveness dulling into useless ambiguity.

"begs the question" isn't a term that expresses the underlying idea effectively, it merely indicates a failing attempt to sound educated.

In either case, I prefer to educate people on how to use language less dismally. This does make me a pedant.

I prefer this discussion of the meaning of the term: https://languagelog.ldc.upenn.edu/nll/?p=2290

Further where compound interest limits the impact of savings very close to retirement, pensions are more closely linked to your final salary.

Early on compound interest often wins, but at 40 getting a government job can be a very good financial decision.

Also, medicare doesn’t have a cap and is also ignores your 401k.

Is this a tax? Is it materially different from the universe today?

Social security is an investment, you should consider it as such when budgeting for retirement.

The spouse of a young worker can also receive benefits assuming they have children. But, that’s very much a social program effectively independent of how much money the worker had paid into SS though not their income.

Supplemental Security Income (SSI).

The SSI program pays benefits based on financial need and is intended for low income individuals and families.

If SS taxes where not paying for that money then it would need to come from the general fund. Similarly, with SS doubling your income from 50k to 100k doesn’t double they payout at retirement age. Instead, money is being shifted to support the less fortunate. Further, a married couple with one worker get’s a 50% larger payment than if that same worker never married.

In the end social security doesn’t act like a self funded retirement program.

No, I they can be much higher than 50%. I think the NFL does a 200% match.

There is a $56,000 total limit though of employee + employer contributions. So assuming that an employer wants to do the max match that still has the employee contribute 19500, then that employer should have a (56000-19500)/19500 = 187% match.

I'm sorry, but what? Rent or Rent equivalent is absolutely a part of US regional inflation measures.

edit: The BLS publishes a Consumer Price Index published by for Seattle metro area^1. The breakdown^2 quite literally includes housing as part of the basket of goods, listing about a 3 percent increase for that section yoy, and I believe the weighting is typically 1/3 of the total index. Seems like it's capturing it just fine?

^1 https://www.bls.gov/regions/west/news-release/consumerpricei... ^2 https://www.bls.gov/regions/west/news-release/consumerpricei...

EDIT: And rent is part of the national CPI as well. It just doesn't reflect narrow regional trends because why would it? Those are outliers, and not particularly relevant national news media, and even those news stories that do cover it would use the more specific Case-Shiller indecies to tell the story.