Spending in early retirement

[gayl]

Hi, Jonny.

I'm a "Defined Benefit Plan/457 type" also, working in Nevada.  Here we are allowed to buy up to 5 years of service credit in our DBP. ...My plan is to be able to live on the DBP and keep the 457 and IRAs intact and growing.  If I have to, I can start withdrawing the 457 and IRA money (will have to eventually per IRS regs, anyway).

Have a great day!

Patrick  

1. Ca also permits you to utilize service time -- but that is restricted to military / federal / or reciprocal civil sector time. The proposal to purchase 'air time' (ie: extra yrs that haven't been worked) hasn't been approved by Sacramento as far as I know. Once [read if] that happens, then each county would have to evaluate the strength of their retirement portfolios and adopt. It is doubtful that many counties could actually afford it. But you CAN get years for the amt of time in the military / federal / or reciprocal civil sectors (ie: other counties / municipalities).

2. this was my plan too but after running the FIRECalc I am beginning to think that that might be too conservative even though my COLA is capped at 3%. (future years with COLAs under 3 can use a catch-up to bring my overall to 3%)

Gayl,

I think they would have to rectify their error in not crediting you the correct amount. If they don't credit you, they should refund the money. At the very least it would be worth a phone call or letter to find out.

Patrick

It was worth the call, but they state that the county did not have to put in anything as it was a pre-tax contract that I broke. I still feel that they shorted me close to 5k. But I am out!

 

[Patrick M]

1.  Ca also permits you to utilize service time -- but that is restricted to military / federal / or reciprocal civil sector time. The proposal to purchase 'air time' (ie: extra yrs that haven't been worked) hasn't been approved by Sacramento as far as I know. Once [read if] that happens, then each county would have to evaluate the strength of their retirement portfolios and adopt. It is doubtful that many counties could actually afford it. But you CAN get years for the amt of time in the military / federal / or reciprocal civil sectors (ie: other counties / municipalities).

That's the way ours used to be, but the NV Legislature decided that it wasn't fair to those of us who didn't "serve" - after all we have to pay for the time we're purchasing. An actuary figures out the present value of the time that's bought based on the employee's age, salary and life expectancy. It doesn't cost the system anything since the employee buys it. Also, the law was recently changed to allow us to buy time with 457 money or our "cashout" for any unused sick or annual leave - all BEFORE taxes. Talk about a great deal! I can't take advantage of this, though since I already bought the max of 5 years. It would be nice if this were increased to 10 or some higher number, but that's just wishful thinking on my part.

Patrick

 

[JonnyM]

I sincerely hope that California gets it together and permits me to convert 457 money to 5 extra years of service before taxes. That would significantly boost my DBP numbers. The closest thing I could find to a calculator was one used by the military. If it's in the ballpark it looks like converting something in the neighborhood of 65k would net me about 6k per year. If that is close to correct, the return is great, and the risk is close to zero. I'd do it in a heartbeat.

 

[gayl]

I sincerely hope that California gets it together and permits me to convert 457 money to 5 extra years of service before taxes.  .... I'd do it in a heartbeat.

You and everyone else which is why this would have to be voted on by each county as well as becoming law. Problem is that most county retirement boards do not have enough earnings to enable them to do this. (Most negotiators call it 'purchasing air time'). There was a motion in Sacramento, but I believe that it died a natural death with the deficit we (state / counties / cities) are operating under.