Pensions or 401K

Unions reached their peak in the US just after WW 2 when 33% of all workers were unionized. This number fell steadily to 10% in 2025. Meanwhile union workers in the public sector remained steady at 35%. During these years most private pension plans were replaced with 401K plans but the public plans stayed with the pensions. A good example of public pensions is teachers who are mostly unionized. Teacher union contract negotiators often accepted better pensions in lieu of raises and that began to change about 30 years ago. A career teacher could retire at age 62 with more income than when they were working so most retired. They realized then that they needed less money at retirement and more money when they had young families and this changed the way they negotiated. The problem is that many states now do not have enough money to pay the promised benefits and taxpayers object to raising taxes to provide retirement benefits that exceed working income. This only holds true for career teachers many of whom have 35 plus years of service. Example $90,000 salary, 35 years of service yields a pension of $6000 per month or $72,000 per year. While working this teacher pays 7.5% or $6,750 into his pension and 7.65% or $6,885 into social security for a net before taxes of $76,365 which is only slightly more than his pension. At retirement he no longer pays into the pension and social security and gets $24,000 per year from social security giving him more than $20,000 per year above what he was earning while working.