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04-30-2011, 08:14 PM
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#1
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Dryer sheet aficionado
Join Date: Apr 2011
Posts: 44
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Retire on $100 k a year?
I am 50. I plan to retire from a government job in 2 years. I will get a pension of appoximately $100,000 a year, plus 2 percent cola a year. I have a very small mortgage on a house, which shouldn't be a problem. I still have about $100,000 in mutual funds.
Is this enough to last me til I die (don't know when, let's estimate 85).
No Social Security, and my medical will be taken care of with a nominal fee.
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04-30-2011, 08:19 PM
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#2
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Full time employment: Posting here.
Join Date: Apr 2011
Posts: 625
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Depends on the person. For some, that wouldn't be enough. For others, that may be 2-3x what they need.
For you, to answer that question you need to ask this one: What are your current yearly expenses?
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04-30-2011, 08:22 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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Welcome to the forum, Senin. The answer to your question is "it depends"......on how much you plan to spend each year, and on inflation. You are lucky to have a defined benefit pension!
If you haven't already done so, check out the link to FIRECalc at the bottom of the page. Plug in your own data and submit. Then play with the options.
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04-30-2011, 08:24 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
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I think you're good. If you could invest 10k-20k of that 100k to protect against future contingencies -- like hyperinflation or catastrophic illness -- that might be prudent.
__________________
Greg (retired in 2010 at age 68, state pension)
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04-30-2011, 08:37 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Nov 2006
Location: Bossier City
Posts: 2,183
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That's the amount I'd like to have, but it's almost twice the amount I'm going to have...
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04-30-2011, 09:13 PM
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#6
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Recycles dryer sheets
Join Date: Nov 2010
Location: Earth
Posts: 334
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I would like to know how a person gets a $100,000 COLA'd pension from the Gov. I did 20 years and only get about $15,000 before taxes and no increases for two years. I must have missed something when I signed up. Oh, and welcome to the forum and like they have already said it depends on expenses and what the future hold for the government pensions.
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04-30-2011, 09:51 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Seattle-ish
Posts: 1,156
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I'm sorry, but getting a guaranteed $100K annually with a 2% COLA, plus cheap health insurance, would make me dance every day of my remaining life.
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04-30-2011, 09:51 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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Quote:
Originally Posted by DFA
I would like to know how a person gets a $100,000 COLA'd pension from the Gov. I did 20 years and only get about $15,000 before taxes and no increases for two years. I must have missed something when I signed up. Oh, and welcome to the forum and like they have already said it depends on expenses and what the future hold for the government pensions.
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My guess he is a state or local government employee not Federal.
Que the state pension thread battle.
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05-01-2011, 01:24 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Sep 2008
Posts: 2,171
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Quote:
Originally Posted by clifp
My guess he is a state or local government employee not Federal.
Que the state pension thread battle.
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Not again! Why don't you go over there and beat up on CEOs instead?
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05-01-2011, 02:44 AM
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#10
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Dryer sheet aficionado
Join Date: Apr 2011
Posts: 44
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Thanks guys, great replies.
To answer a few questions. Yep. local government, in a city that cries poverty but has bucks.
"If you could invest 10k-20k of that 100k to protect against future contingencies -- like hyperinflation or catastrophic illness -- that might be prudent."
That was a great comment. I never thought of continuing to invest the 100k pension, I was just thinking of taking. Of course the investment better be pretty darn safe. I would not want to go through another one of these recessions. So the question would be... invest in what? Bonds?
By the way, that 100k is before taxes. So I don't know if I would really have the 10k-20k to invest.
I am feeling pretty good about the first day out the door. I just worry about the next 35 years, even with the 2% cola.
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05-01-2011, 04:00 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 2,487
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Quote:
Originally Posted by Senin
Thanks guys, great replies.
To answer a few questions. Yep. local government, in a city that cries poverty but has bucks.
"If you could invest 10k-20k of that 100k to protect against future contingencies -- like hyperinflation or catastrophic illness -- that might be prudent."
That was a great comment. I never thought of continuing to invest the 100k pension, I was just thinking of taking. Of course the investment better be pretty darn safe. I would not want to go through another one of these recessions. So the question would be... invest in what? Bonds?
By the way, that 100k is before taxes. So I don't know if I would really have the 10k-20k to invest.
I am feeling pretty good about the first day out the door. I just worry about the next 35 years, even with the 2% cola.
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Do you live in a state that taxes pensions? If so, are you willing to move to one that does not? Have you run FIREcalc with your expense, pension, and COLA? Do you know which expenses you are willing to cut if inflation goes over 2% and the cola does not?
All of that said, most people around here (or anywhere) would be jumping for joy with that amount.
Good luck, and welcome!
R
__________________
Find Joy in the Journey...
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05-01-2011, 05:00 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: USA
Posts: 1,050
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Probably, most here could, but depends on all your expenses. I know I could.
Enjoy ER!
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05-01-2011, 05:12 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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Same here. I know I could.
Quote:
Originally Posted by Aiming_4_55
Probably, most here could, but depends on all your expenses. I know I could.
Enjoy ER!
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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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05-01-2011, 05:42 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by DFA
I would like to know how a person gets a $100,000 COLA'd pension from the Gov. I did 20 years and only get about $15,000 before taxes and no increases for two years. I must have missed something when I signed up. Oh, and welcome to the forum and like they have already said it depends on expenses and what the future hold for the government pensions.
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It's entirely possible if you work for 30 years and have a good salary. In MA the average state pension is $27k a year and you don't get SS.....so that's not much to live on. However, people like cardiac surgeons and medical researchers who work for the state medical school often work for over 30 years and can earn salaries well above $100k a year......hence it is possible to get big pensions. These are quite rare and I would say deserved given the skill and qualifications of the recipients.
If the OP can keep their spending below $100k then they are set. The COLA is key and survivor benefits should also be considered.
Given such a big pension and the small size of other investments I'd try to save 25% of the pension for an emergency fund.
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05-01-2011, 05:53 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,309
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Quote:
Originally Posted by Senin
That was a great comment. I never thought of continuing to invest the 100k pension, I was just thinking of taking. Of course the investment better be pretty darn safe. I would not want to go through another one of these recessions. So the question would be... invest in what? Bonds?
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Odds are you will go through another recession, possibly worse or several. I assume you meant you don't want to go through another with your own investment portfolio [which is what many of us are faced with].
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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05-01-2011, 06:09 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Midpack
Odds are you will go through another recession, possibly worse or several. I assume you meant you don't want to go through another with your own investment portfolio [which is what many of us are faced with].
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You should arrange things so your pension covers your expenses. Then any excess can be invested. As you have a guaranteed income source you could be quite agressive in your investing. Take a look at the FAQs on here and sites like bogleheads.com to get some basic information on asset allocation etc
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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05-01-2011, 06:20 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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So ask yourself what could go wrong?
1) Inflation over 2% Mitigation: Have a portfolio of equities whose dividends will rise with inflation.
2) Divorce Mitigation: Don't know if you are married but if so be very nice to your spouse
3) Spend more than after tax income. Mitigation:Pretty obvious- cut spending
4) Catastophic illness: Mitigation: Hopefully your insurance will cover but should try to live a healthy lifestyle anyway.
Conclusion: Many(most?) people on this forum would be very happy to be in your position.
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05-01-2011, 06:58 AM
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#18
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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My personal concern would be a "single source" for retirement income, without any alternative backup. Just because you forecast $100k today from a "government source" we know that the state funding battle has just begun (good or bad - not a political statement at all).
I've been retired four years; DW is expected to join me in the next year or so. Even though we're both 63, we will have different current income sources along with future sources coming on line during the next seven years, including two SS streams (ages 66/70), a temporary SS stream (my claim against my DW from ages 66 through 69), two small pensions for her at age 65, an existing SPIA (joint), along with my small existing VA disability income and of course our individual/joint retirement portfolios.
It's a bit like driving an 8-cyl vs. 4-cyl (or even 1-cyl MC) vehicle. On the 8-cyl, a misfire may be noticeable and only affect performance to a small degree. Once you reduce the number of cyl's (e.g. income sources), any "miss-fire" becomes more of a problem.
As far as other comments? I agree with the one's asking if 100k meets your personal income requirement, along with increases over the year. As for DW/me, it is below what we require, but then again there are two of us and our lifestyle is not conservative (nor is it extravagant in our situation, IMHO).
BTW - welcome!
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05-01-2011, 07:54 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,244
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I am just curious how someone can earn enough money over say..... 30 years where they have a pension of $100K per year and only have $100K in savings....
Still did not list your expenses... without that nobody can tell you if you have enough.... IOW, if you were pulling down $250K per year and spending it all... then you do not have enough...
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05-01-2011, 08:27 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,228
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Quote:
Originally Posted by Texas Proud
I am just curious how someone can earn enough money over say..... 30 years where they have a pension of $100K per year and only have $100K in savings....
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That's a good point, sounds like the OP is used to spending a lot of money.
Quote:
Still did not list your expenses... without that nobody can tell you if you have enough.... IOW, if you were pulling down $250K per year and spending it all... then you do not have enough...
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Yep, the question is like asking "I want to buy this coat, will I be warm enough?" without telling anyone what kind of weather you'll be wearing it in.
OK, $100K is certainly enough to retire on, but we have no idea whether it means you will have to severely curtail your current lifestyle. 2% COLA isn't great, but if you have medical covered that helps, since that's one of the biggest unknown costs and most likely to rise faster than inflation.
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