In a nut shell, things are changing at work and they are making us decide between 2 options. The best I can describe is…..
The first option is take a pension when we retire, in about 30+ years. This pension is only worth 7 years of my working time. This means that I won’t get a full pension, like I would if I worked there 20, 30, 40 years. I have only been there for 7 years, so the pension would be small and based on 7 years.
The other option is a 401k match at 6%, up to $6,000 a year. There is no pension when I retire, just the 401k plan. This option starts right away.
What do you think is best?
2007-08-25 04:32:26 · 6 answers · asked by msjackaloane 2 in Business & Finance ➔ Personal Finance
The company is the Department of Energy.
2007-08-25 04:39:45 · update #1
Take the 401k match. That's your money as soon as it's put into your account.
I have no faith in any company to be solvent enough to pay a pension 30+ years from now.
Just look at all the people now that were promised full pensions and lifetime benefits decades ago, that have been screwed as the company goes into tough times and has a bankruptcy judge OK'd severe cutting in benefits.
UPDATE: A gov't job changes the picture. If I understand it, if you take the pension, you still only get credit for 7 years, even though you potentially could work their 30 years? If that's the case, the 401k match has to be a better deal.
2007-08-25 04:37:07 · answer #1 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
no, l think you misunderstood, you become fully vested in the retirement plan after 7 years but the payout is calculated on all your years so that as you earn more, you receive more.
The 401k is a supplement to your retirement. Its a special
retirement savings fund plus the matching funds that grow
over time. You pay no taxes on them until anytime after you
are 59 1/2 , which is the earliest you can begin withdrawal.
YOU need to talk with your personnel dept & have them explain this too you, l'm quite sure you misunderstood how this works. You get to do BOTH of these things.
2007-08-25 05:44:48 · answer #2 · answered by rpf5 7 · 0⤊ 0⤋
It sounds like the 401k match is the best as at least you get $6,000 a year - not many people can put that much aside. Also if you leave the company it is your $$. You can roll it, probably leave it, or put it into another high interest 401k investment.
If you take the other you have to stay to get any $$ and it is not enough to benefit you.
2007-08-25 04:40:03 · answer #3 · answered by Anonymous · 0⤊ 0⤋
The match is BY FAR the better option, so long as you diligently contribute at least 6% yourself you get up to $6,000 a year in FREE MONEY deposited into your account! In 30 years, if it earns an average of 10% long-term, that will be worth $1,085,661 when you retire, that's in addition to the million your own 6% deferred money will be worth! If we have another "Great depression" during that period (and you average only 6% long-term as a result), it'll be worth about $600,000....If you average 12-15% (lucky, but very doable), it'd be worth about $3M
Take the match!
2007-08-25 04:58:29 · answer #4 · answered by Anonymous · 0⤊ 0⤋
401k. good time to be in the market now.
2007-08-25 04:38:05 · answer #5 · answered by Dana Blanco 4 · 1⤊ 0⤋
you will need all you can get when you retire
2007-08-25 04:39:24 · answer #6 · answered by Anonymous · 0⤊ 0⤋