Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Rollover Teacher Pension?
Old 07-31-2016, 04:51 PM   #1
Dryer sheet aficionado
 
Join Date: Sep 2014
Posts: 33
Rollover Teacher Pension?

My wife taught for eight years and is now a SAHM. She has no plans to go back to teaching. She is eligible to draw on her teacher pension on 12/31/2038. At that time, she would receive $389.73 per month (with an estimated payout of $133,755.33 over the remainder of her life.)

Or we can roll over $31,086.07 now if she waives her right to the pension and other teacher retirement benefits.

Any thoughts on whether we should leave the money where it is or roll it over?


Sent from my iPhone using Early Retirement Forum
__________________

__________________
Legally_dead is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-31-2016, 04:55 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,337
Quote:
Originally Posted by Legally_dead View Post
My wife taught for eight years and is now a SAHM. She has no plans to go back to teaching. She is eligible to draw on her teacher pension on 12/31/2038. At that time, she would receive $389.73 per month (with an estimated payout of $133,755.33 over the remainder of her life.)

Or we can roll over $31,086.07 now if she waives her right to the pension and other teacher retirement benefits.

Any thoughts on whether we should leave the money where it is or roll it over?
what are the other benefits?
__________________

__________________
bingybear is offline   Reply With Quote
Old 07-31-2016, 05:09 PM   #3
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 7,949
A couple of questions.
Is the pension COLA'd? Or is it a fixed pension.
Have you plugged in the $31k lump sum into a SPIA quote calculator to see how much pension that money could buy on the open market.

Also - some retirement planning talks of a 3 legged stool. SS is one leg, Pension is another leg, and savings are the 3rd leg.... It's good to have all 3 legs - even if one is shorter (like mine is - I have a very small pension starting later this year.) Diversity in income streams is a good thing.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is online now   Reply With Quote
Old 07-31-2016, 05:27 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jun 2014
Posts: 1,032
I would leave it because if you died or became disabled tomorrow she might go back. Also in many states the teachers and any other public worker (city, county, state) are all in the same pension plan. So if she went to work for one of them she would be building her pension. As someone else mentioned a 3 legged stool is good.
__________________
Teacher Terry is offline   Reply With Quote
Old 07-31-2016, 08:01 PM   #5
Full time employment: Posting here.
ohyes's Avatar
 
Join Date: Sep 2010
Posts: 608
Hi Legally,

Really, I know nothing except that my mom taught 11 years (60's and 70's), got out of teaching and took the payout as soon as she could. More than a few times, she has mentioned wishing that she had not done that.
__________________
ohyes is offline   Reply With Quote
Old 07-31-2016, 08:07 PM   #6
Recycles dryer sheets
lemming's Avatar
 
Join Date: May 2008
Posts: 395
So would it make a difference in her getting 1/2 spouse SS if she cashes out a teacher pension rather then draw on it at SS age? Or would it be treated the same? WEP is confusing.
( I thought this thread was about the 4yr old logic-how to put an elephant in the refrigerator.)
__________________
lemming is offline   Reply With Quote
Old 07-31-2016, 09:44 PM   #7
Full time employment: Posting here.
 
Join Date: Sep 2014
Location: Grapetown
Posts: 542
DW taught school for 5 years before she retired to be a SAHM. I took her contributions and theirs, and rolled it into DW's IRA. Year 6 we moved to another state, and DW got bored cause the kiddos were in school then and started subbing. She re-certified herself in the new state and taught for another 20 years. 2 years before she FIRED, she was able to go back and repurchase her time, bringing her grand total to 27.

I suggest you roll her pension into a tIRA but it would depend on the "other benefits". The rollover would be a nontaxable event and if invested in similar investments you could expect the same future value.

We still have to purchase HC insurance, my employer dropped coverage for retirees, and DW needed 30 years in same school district to get subsidized HCI. OUCH!
__________________
Winemaker is offline   Reply With Quote
Old 07-31-2016, 09:59 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 12,353
I agree that other benefits matter....


However, with as little time as your DW has they probably are not that much...

I have a sister who taught 40 years and gets really cheap medical insurance... this is secondary to Medicare... but pays 80% of her 20%... so in the end she only pays 4%... saved her big bucks when she was hospitalized for a year...
__________________
Texas Proud is offline   Reply With Quote
Old 08-01-2016, 11:30 AM   #9
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 660
Quote:
Originally Posted by lemming View Post
So would it make a difference in her getting 1/2 spouse SS if she cashes out a teacher pension rather then draw on it at SS age? Or would it be treated the same? WEP is confusing.
( I thought this thread was about the 4yr old logic-how to put an elephant in the refrigerator.)
What you're thinking about is GPO and it doesn't make a difference whether you take a lump sum now or pension later. They will make an estimate on the lump sum and reduce the spousal SS by 2/3 of the estimate.
__________________
akck is offline   Reply With Quote
Old 08-02-2016, 02:55 AM   #10
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 2,551
For many years, pensions tended to pay out better than individual annuities although, I'm sure that was not universal. In any case, in addition to finding out what you could get on your own, annuity wise, I think you need to decide if you feel comfortable managing this lump sum yourselves. Not everyone is good at investing a chunk of money. You have to know yourselves to make that decision. Good luck.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is online now   Reply With Quote
Old 08-02-2016, 05:51 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 14,636
I would roll it into an IRA even though the $390/month is attractive based on today's annuity pricing.

If you took the $31,086 and bought an annuity that began in 2038 (in 22 years) for a currently 4 yo female living in Texas the monthly payout would be $293... so the $390 looks pretty good.

However, if you roll it over and invest it in a target retirement fund that returns 6% annually for the next 22 years, at the end of 22 years you would have $112,019 which at today's annuity rates would buy a SPIA that would pay $591/month.

All of the above assume that the payout is fixed... if it is COLAed then it is a whole different analysis and probably would favor keeping it in the plan and not rolling into an IRA.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 08-02-2016, 06:07 AM   #12
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,793
would the $390 get colas to 2038? that's a game changer
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 08-02-2016, 01:27 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 14,636
No, I think the question was if the 390 gets colas starting in 2038 when benefits begin.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 08-02-2016, 01:33 PM   #14
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,793
Quote:
Originally Posted by pb4uski View Post
No, I think the question was if the 390 gets colas starting in 2038 when benefits begin.
sometimes terminated vested members get interim COLAs
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 08-03-2016, 02:05 PM   #15
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 1,367
Quote:
Originally Posted by rodi View Post
Some retirement planning talks of a 3 legged stool. SS is one leg, Pension is another leg, and savings are the 3rd leg.... It's good to have all 3 legs - even if one is shorter. Diversity in income streams is a good thing.
I like this concept also. I would keep the pension.
__________________

__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Anyone Married to a teacher w/Pension? Have a SS Question Cheesehead FIRE and Money 53 10-17-2014 01:21 PM
Teacher Pension Question ... green night FIRE and Money 25 04-03-2014 09:37 AM
Employer pension or lump sum rollover of pension? PawPrint53 FIRE and Money 21 06-01-2012 12:37 PM
Illinois Teacher Pension Fund DFW_M5 FIRE and Money 25 12-21-2011 06:12 AM
Educational Careers: Teacher's Schedule? BigMoneyJim Young Dreamers 14 12-10-2004 06:12 PM

 

 
All times are GMT -6. The time now is 06:01 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.