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Comment by stephenr | Hacker News Reader

I guess maybe it's a factor of the US employment/benefits situation but I don't quite understand this scenario.

In Australia (where I grew up) if you leave a company, you don't lose your retirement savings from that time, because they're not controlled by the company.

Is that what you're suggesting: that if your wife changes her job, she'll lose the money that's been paid into a retirement fund for her?

As for kids: changing schools can be a hassle but I'd hardly consider it a reason not to move to a much more liveable location.

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The parent is referring to a pension plan, which is generally guaranteed income for life after a certain amount of service. If you leave or are fired prior to the service requirement, you could lose all or part of the pension. Just want to note in the US these are usually offered to public sector workers - e.g. teachers, firemen, police, military, civil servants. I don't know of a private company that still offers pensions.

Separately we have retirement savings programs (usually called a 401k) that are offered by private sector employers, often with a match. Employees can invest a percentage of their paycheck in the program, and companies will match that contribution to a certain level to incentivize savings. When you leave the company you can keep the account or roll it somewhere else. Unfortunately these contributions are capped by federal law at no more than $19,500 per year per person. There are tax benefits to the 401k - you can choose to pay tax on the contribution when you make it and pay no income tax on those funds in retirement, or not pay tax now and pay income tax in the future. This is a lot better than investing in a taxable brokerage account, because you get taxed on the income as well as the securities.

Right. That clarifies things a bit. The only "pension" I've seen in Australia (and apparently UK, as my father's situation implies) is a fairly minimal "pension" payment to all retired citizens, and then huge incentives for people to pay into their own "Super" (short for Superannuation) plan, which is fairly similar to your 401K it seems - but they actively encourage paying more into it.

Is the cap on any payment into the 401K or just the employer's contribution?

I've not heard of nor experienced anything similar to the 'pension plan' concept you have, and my first job was in State Government, from whence I still have a Super plan... somewhere.

How does Australia handle retirement pay for members of the military?

I've never been in the military so I don't know from personal experience, but when I had a government job, I just had a Super plan like everyone else.

> a fairly minimal "pension" payment to all retired citizens

The U.S. version of that is "Social Security" (which is funded by a payroll tax).

> Is the cap on any payment into the 401K or just the employer's contribution?

Yes, the maximum amount an employee can contribute yearly is limited by law. (You can make additional "catch-up" contributions if you're aged 50 years or older, which are also limited by law.)

Huh. Australia used to have “social security” (it’s now referred to as the cryptic “Centrelink”), but I thought it was essentially only unemployment/disability payments, and specifically not pension payments.

Does the US S/S cover unemployment benefits as well as those who are retired?

Re:401k wow. I cannot fathom a government preventing its citizens from saving more money for retirement. Seems bonkers to me.

> Does the US S/S cover unemployment benefits as well as those who are retired?

No. Unemployment benefits are a separate program, run by the individual state governments. (Social Security is run by the Federal government.)

> Re:401k wow. I cannot fathom a government preventing its citizens from saving more money for retirement.

You can save as much as you like for retirement outside of your 401k. The limit on the 401k only puts a cap on how much you can save in tax-deferred accounts.

Yes she has a 401k so she can take that with her, as well as IRA accounts we have privately with our bank, but at 20 years she gets a huge pension from her employer, which is a large health insurance company that operates hospitals (Kaiser Permantente).

For a lot of jobs in the US, you have a pension where if you retire from the company after X years there (in this case 20 years), then they’ll pay you some fixed sum every month for the rest of your life. There isn’t a “retirement fund for her” that money has been paid into, but rather it’s a single on/off switch. This dates from the 50s-70s when staying at a single company your whole career was the norm. Nowadays, most companies offer a 401k retirement plan that you can take with you, but some older companies or government agencies still offer pensions.

As for the kids, I’d say that staying in one school district is a huge plus for them, but it varies depending on the kids and the school district.

> For a lot of jobs in the US, you have a pension where if you retire from the company after X years there (in this case 20 years), then they’ll pay you some fixed sum every month for the rest of your life.

Pensions are extremely rare outside of the public sector, and have been for about the length of the average working career.

What do you consider extremely rare? 13% of private sector employees still participate in a pension plan.

It does seem very likely a large share of those are older workers and that that percentage will continue to erode over the next 10-20 years.

https://www.pensionrights.org/publications/statistic/how-man...

> What do you consider extremely rare? 13% of private sector employees still participate in a pension plan.

Down from 18%, ~7 years before, when 39% and growing of those who still had pensions in the private sector had non-traditional pensions that weren't pure specified-benefit plans, but instead were (for the vast majority of non-traditional plans) hybrid cash-balance plans where the actual benefit is determined by investment returns through the point of retirement (basically, a defined contribution plan where the accumulated balance is used to purchase an annuity at retirement.)

https://www.epi.org/blog/private-sector-pension-coverage-dec...

IIRC, a big part of the decline being that for many private employers, pensions, especially traditional ones, are legacy plans that haven't been offered to employees for decades, and are only available to employees that have been working with the firm since they were generally available.

As for kids: changing schools can be a hassle but I'd hardly consider it a reason not to move to a much more liveable location.

I'm not sure how it is in Australia, but the US is very racially/culturally diverse on the coasts (where it is expensive), and more homogeneous in the interior (where it is cheap). My daughter is in a great school with a diverse student body that would be difficult to find in other places.

The interior of Australia is a desert mate.

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