How the IBEW pension works for Lineman

What are the retirement options for lineman in 2024?

Depending on your employer as a lineworker, you will have different options to save up for retirement. Some of the most common options include:

• Pension Plans

• 401K

• Individual Retirement Accounts

What is a pension plan for lineworkers?

A pension is a type of retirement plan that provides monthly income after you retire from your position. The employer of the lineworker is required to contribute to a pool of funds invested on the employee’s benefit. As an employee, you may contribute part of your wages to the plan, too.

What benefits can I become eligible?

Source NEBF

What is the National Electrical Benefit Fund (NEBF)?

NEBF is a pension plan for a for electrical workers. It is popular union lineworkers.

How Are Contributions Made?

Contributions are made each month by Covered Employers on behalf of employees who are covered by either:

• A collective bargaining agreement with the International Brotherhood of Electrical Workers (IBEW) or one of its Local Unions, or

• A signed participation agreement with NEBF.

Can I Contribute to NEBF?

No. All contributions to NEBF are made by Covered Employers. Covered employees do not themselves make contributions to NEBF and do not have individual accounts in NEBF.

Contributions to the NEBF are made by the Employer, not the employee. The employer will put the equivalent of 3% of the employee’s gross pay into the fund on their behalf each pay period, but this amount is NOT taken out of the employee’s check, this benefit is in addition to their pay.

NEBF provides three types of benefits:

• Retirement Benefits

• Disability Benefits

• Pre-Retirement Spouse Benefits

What is the National Electrical Annuity Plan (NEAP)?

The NEAP is an individual retirement account funded by the employer, the amount of which is determined by the local unions Collective Bargaining Agreement.

Can Lineman use an annuity?

Yes! Many union lineman will decide to use the NEBF or NEAP. It has supported thousands of retiring lineworkers in the past decade.

How much do I need to save to retire as a lineman?

What if you are not planning on using a pension? How much do you need to save up?

Lineworkers in North America typically follow one of two main strategies when it comes to deciding how much they need to save to retire. If you do not have a monthly pension income to look forward post-retirement then keep these in mind:

• The 4% Retirement Plan for Lineman

The 4% Retirement Plan works this way:

Divide current income by 4%, which shows the total amount needed for retirement. If you make $50,000, the 4% Retirement Plan says you’ll need $1.25 million ($50,000 ÷ .04 = $1.25 million) for retirement.

If you had $1.25 million in retirement savings (earning a modest 4% return), you could withdraw $50,000 a year for more than 30 years.

Yes, that sounds like a lot. But Social Security benefits can account for $300,000-to-$400,000 depending how long you live. Too, the Labor Department relates that those who start saving $6,000 per year at age 25 would have almost $850,000 by age 60 with even a modest rate of return.

The benefit of the linemen that choose to strategize using this calculation is it takes into account how you currently spend your budget and realistically how expensive of a lifestyle you will live down the road.

• The 70% Rule

The 70% Rule states that to keep our standard of living in retirement, you will need 70% of present income. If you currently make $80,000, the goal is $60,000 per year, which if we live 20 years after retirement equals $1.2 million.

If you’re the frugal sort, you may need less than that, but it’s always wise to plan conservatively. Overestimating expenses and underestimating savings would lead to a surplus of funds once we stop work, which is the best situation possible.

70% rule