would it be better if most companies could grant u retirement based on ur years of service?

Question

e.g. minimum of 20 yrs service

to the employees

Answer 1

Companies with pensions usually do use years of service and age to decide when you get benefits. Most employees don't stay on a job 20 years so that would be really bad for employees. My boyfriend was at one place 17 years but it had 3 owners, he had another for 5 years but the quit the business now he will be at the current one 5 years by retirement. He will get 3 little pensions if it was 20 years he would get nothing. Great for the companies since most employees would get nothing.

Answer 2

In the real world, most of us wish that we could work for a wonderful and great company for our entire productive life, and when we are no longer able to work, to get a pension that will keep a roof over our head, food on table, decent medical dare etc. But that is a fantasy world.

It is rare that a great employee and a great company can hook up each other. The vast majority of workers, from perspective of the company, are misfits, trying to do the best they can. Many people hunger for a better job, a better company, from time to time move to what might seem to be greener pastures, so a person in their lifetime might work from early 20's to mid 60's ... 40 years, but at 8 different companies, or more.

Very very few companies these days provide retirement benefits to their workers ... it is a historical famtasy that people rarely see in real business life.

The government offers various tax protected retirement plans, like 401 k for example. As an employee, I have the option of having a portion of my paycheck diverted to this financial entity, which can be a savings account, or a bunch of mutual funds, or an insurance policy, like an IRA which is run outside of the employer, but same basic theory.

Let's suppose I earn $ 50,000 in a year, and let's suppose I am able to put $ 10.000 into this thing.
My income taxes are based on $ 40,000 of income. The money that I put into the company 401k or a private IRA, that does not get taxed, but when it comes time to retire, and I start to withdraw from the thing, at that time I pay taxes on it.

However, for many years it was collecting interest, and that interest not being taxed. Also with a 401k, the company can decide to share some profits, where say in one year when I put in $ 10,000, the company added $ 1,000 to the pot, which also tax free (until I withdraw it) and its interest likewise.

Sounds great idea? There are risks.

Remember ENRON ... the employees had their 401 k money invested in ENRON stock, and there was a swindle that wiped out their retirement savings, and although they saw the value dwindling, they were blocked from taking the money out before it was all gone.

There were also various groups that invested 401 k and similar systems for people all over the planet. They did not lose all their money, but they lost a great deal.

The executives involved were prosecuted, but this did not help the many people who had lost their retirement money.

ENRON was not unique. Many other companies have had similar swindles. What was unusual about ENRON was the sheer size.

It is possible that you were not following all the news surrounding the Wall Street scandals of which ENRON was a part. So here is something to put that world into a big picture perspective for you.
1. http://wallstreetfollies.com/
2. near bottom of page is a complex drawing ... click on it
http://wallstreetfollies.com/diagrams.htm
3. now scroll about 1/3 of the way down
That is a GREAT flow-chart & educational also

So the quality of the investments in stock market, and quality of skill of people making the investments is a big deal. The whole stock market can be hurting, the bond market, banks can go bankrupt.

Answer 3

Better? For whom? Depends on what you mean by better. It would be nice for the employee, but if retirement was at 20 years, they might not have enough money to live the rest of their lives.

Answer 4

That has been tried. If it worked, GM would not have the financial problems it has. NO company can afford to pay people who no longer work for them. The same problem makes 'fixing' social security impossible. ONLY you can provide for your own retirement.