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Old 11-08-2015, 10:19 AM   #41
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I have been struggling with the math for a similar situation. I can buy up to 24 months of service. Each year adds 2.5 % to my pension. The pension has a 3% cola. Salary pension is based on is 100k, so that math is easy. The hard math is it cost 41k per year so for 82k for two years Of credits, I can receive 5k a year additional in pension. Pension goes from 60k to 65k.
So bottom line for 82k I receive 5k with a 3% cola. So the first year is aprox. 6% .
I'm torn. Leaning towards not buying any. I retire June 3, 2016. Any comments, suggestions??
Thanks.
Does that include survivor's benefits? Are you married? What other assets/pensions do you and your spouse have? Social Security? If the above includes survivor's benefits at 100% or 75%, and your pension income is not more than, say, 60% of your total projected income, I'd feel comfortable buying it....but I wouldn't want to have me and my spouse depending entirely on this pension, and then when you pass on they get nothing. Depends on your overall portfolio and what % this pension represents of your other cash flow sources.
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Old 11-08-2015, 10:33 AM   #42
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I plan to purchase 5 years of service credit when I retire next month. It is COLA'd and transferable to spouse, and will increase pension by 10% of salary. I like the recent poster's plan of putting the required funds in stable value pool until transfer. I'd hate to take a big hit on the value in the last month, although I'd love for it to go up...

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Old 11-08-2015, 11:49 AM   #43
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wkoukious, sorry I don't know the answer to your question; but, is that a guaranteed 3% COLA every year? If so, that is pretty nice. Also, maybe I missed it; but, how old are you (may be a factor in your decision)?
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Old 11-08-2015, 12:11 PM   #44
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Does that include survivor's benefits? Are you married? What other assets/pensions do you and your spouse have? Social Security? If the above includes survivor's benefits at 100% or 75%, and your pension income is not more than, say, 60% of your total projected income, I'd feel comfortable buying it....but I wouldn't want to have me and my spouse depending entirely on this pension, and then when you pass on they get nothing. Depends on your overall portfolio and what % this pension represents of your other cash flow sources.
Curious why it would matter if their pension income is more than ~60% of their total projected income?
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Old 11-08-2015, 01:13 PM   #45
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Very good points all of them. You can see why I'm unsure what to do. It's a Illinois Firefighter pension so it is within control of a corrupt, bankrupt state. That is another issue entirely.
With businesses and people of means leaving in droves, betting on Illinois is not prudent either.
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Old 11-08-2015, 01:23 PM   #46
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Very good points all of them. You can see why I'm unsure what to do. It's a Illinois Firefighter pension so it is within control of a corrupt, bankrupt state. That is another issue entirely.
With businesses and people of means leaving in droves, betting on Illinois is not prudent either.

Do you know the funding ratio of your specific pension plan?


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Old 11-08-2015, 01:40 PM   #47
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54% funded.
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Old 11-08-2015, 01:45 PM   #48
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54% funded.

Ew....That is shaky... "Experts" say a sound pension system is 80% funded... I dumped most of my extra cash into buying 4 service years which was about $100,000. But our system is close to 90%. Personally I would not have put my money in if it was 54%. I feel for you.


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