govt. type jobs. least amount of years one stays

[zuki]

to get the maximum amount of benefits from a local govt. type job.

city or county work job.

my father stayed 35 years although my mom said after so many years in, he was working for free.

can anyone explain this logic.

or was he working for free

thanks

 

[yakers]

Re: govt. type jobs.  least amount of years one st

I do not know about state & local jobs but under the original Federal retirement plan (CSRS) after about 42 years there was no additional benifit to the pension for working. We had some 40+ and 50 year employees who we calculated were working at or below minimum wage if you deduct their pension amount from their work paycheck. But they liked working. One was actually worth a lot of money (several $M in 1980) but came to work anyway, it gave him something to do.
Maybe those WalMart greeters are really wealthy geezers who don't know what else to do with their lives?

 

[azanon]

Re: govt. type jobs.  least amount of years one st

It was probably an incorrect statement on your mom's part, but i can see how one might look at it that way.  Let me explain from a Fed government position.

After 30 yrs of service, and if you're 55, you can get a pension that pays 30% of your original salary, a benefit that climbs by 1% every year after that (with a multiplitive factor that kicks in at 62).  On top of that, if you retire under those terms, you get a SS suppliment until you reach 62 when you get your real SS.

By not retiring when you're eligible, you dont get those monies so from a point of view, you're only making your salary minus pension minus SS suppliment.  Mathematically those two things would probably never equal the full original salary but they might get close.

Perhaps she was thinking of a 401(k) he might have had too, that he could have annuitized.  Annuity + pension + SS suppliment could very well have exceeded his working salary.

All this is to say you lose a lot of things by retiring too; TSP matches, your IRAs are being drawn on now instead of added too, Your potential SS check doesnt grow any more, your potential pension doesnt grown anymore, etc.

 

[zuki]

Re: govt. type jobs.  least amount of years one st

anything wrong with buying 5 years at work ?

anything good about it ?

 

[newellcr]

Re: govt. type jobs.  least amount of years one st

Zuki,

Buying "years" is a really complex question. We bought 5 years on DW's pension. It was really cheap on a payback basis. If we had waited until she was near retirement, it would have been cost prohibitive. Our example is a glitch, IMO, based on youth and low wages. We'd have to think really hard before we would buy years now.

Post details if you like.

Cheers,

Chris

 

[zuki]

Re: govt. type jobs.  least amount of years one st

for example.

to buy 5 years would cost $110,000.00

is this a good idea.

 

[Rich]

Re: govt. type jobs.  least amount of years one st

Couple of things:

"Working for nothing" in a pension gov't job generally means the amount of pension you would receive is about equal to what you're being paid for coming to work. How can that be, you ask? Remember, when you retire from a gov't job you no longer pay; pension (+10% in my case, health insurance (varies with the job), social security and Medicaid (sp?). Close to 40% when you add it all up. I remember, when I was in the NYPD, guys who recently retired told me they were earning (take home, not gross) just about the same in retirement as when on the job. Natch, as salaries go up, the pension tends to stay flat.

Value of buy-back question; It'd be really helpful if you can work a spreadsheet. What you'd do is determine the increase in pension with and without the buy-back and subtract the differences over time to see when the break-even point is. For example, I am buying back four years of military time in my current job, around $18,000 bucks. After around 2 1/2 years retirement the increase in pension will have paid off that amount and the additional amount earned in my pension will be "gravy" so long as I collect my pension.

HTH

 

[Hyperborea]

Re: govt. type jobs.  least amount of years one st

Value of buy-back question; It'd be really helpful if you can work a spreadsheet. What you'd do is determine the increase in pension with and without the buy-back and subtract the differences over time to see when the break-even point is. For example, I am buying back four years of military time in my current job, around $18,000 bucks. After around 2 1/2 years retirement the increase in pension will have paid off that amount and the additional amount earned in my pension will be "gravy" so long as I collect my pension.

I don't know if you did it but this type of calculation gets more complex than just (cost of buy-back) / (extra monthly pension) = months to break even. You need to factor in cost of the money (i.e. what would the money used for the buy-back bring in returns if invested elsewhere) and the effects of inflation. For such a short break even time as yours they likely don't make much of a difference but if the time periods start to drag out longer (i.e. 10 years) then they can make a big difference. Also at those times to break even life expectancy starts to make an effect too.

This is very similar to the buy points on the mortgage decision.

 

[zuki]

Re: govt. type jobs.  least amount of years one st

i was thinking that since i cannot stop time.

maybe i could buy some and leave 5 years earlier.

vs. trying to buy 5 years later in a carreer when it really costs.