Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
whatcha think about buying service credits?
Old 06-03-2013, 08:36 PM   #1
Recycles dryer sheets
 
Join Date: Jun 2012
Location: Seattle
Posts: 79
whatcha think about buying service credits?

Here's our situation; DW about to retire, guvmint/state job, 30 years of service, looking at buying the 5 additional years of service offered.

Formula is .0057184/mo or 6.8%/yr return (principal and interest); up to 3%COLA (my favorite thing); can get an extra $330/mo for $57k(plus change). Can use deferred savings from 457; think we've got plenty of funding avail with over $1.5M in deferred accounts, as well.

Seems to be a solid, 95% funded pension, this plus 80% of SS for us would meet all basic (and more) needs. The deferred is really living large money.

Whatcha think? Pull the trigger on the extra five years?
Thanks.
__________________

__________________
jime444 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 06-03-2013, 09:34 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
How much of a payout could you buy from a well-rated (Aa3/AA- or better) life insurer with that 57k?
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 06-03-2013, 10:22 PM   #3
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: 16,411
Sounds like a pretty good deal to me. Check out immediateannuities.com and see what you think.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 06-03-2013, 11:46 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Generally speaking buying the service credits is a good idea, especially if you are married to a younger spouse. Although as suggested you'll want to check to see how much you could get buying an annuity for $57K. Also if you are in poor health or your family doesn't live long than it might not be a good idea. But generally speaking it is worthwhile.
__________________
clifp is offline   Reply With Quote
Old 06-04-2013, 01:40 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,689
I would be shocked if you could get that same cola benefit on an annuity site for anywhere close to 80K so I think at 57K it is a very good deal. Does this include spousal benefit as well?
__________________
Running_Man is offline   Reply With Quote
Old 06-04-2013, 05:33 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,323
I bought extra service credits. I figured it was probably the last time anybody was going to offer a guaranteed monthly income, partially inflation protected, in my lifetime. I did look at SPIA's - cheaper but no inflation protection at all. It's a bit of a gamble. If I live less time than I figure and/or the average inflation is low they get some extra dollars from me and my heirs. If I live as long as I hope and /or the inflation average is high I get the extra dollars.

The extra security of this 'old age insurance' does allow one to invest somewhat more aggressively and/or spend a bit more today. My 2 cents.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 06-04-2013, 08:45 PM   #7
Recycles dryer sheets
 
Join Date: Jun 2012
Location: Seattle
Posts: 79
Thanks, guys. It appears to be a pretty good deal to me when I look at TSP, Berkshire or immediateannuities. Especially, the COLA protection. about 40-50% better, in fact.

Now just trying to figure out if we're going to buy survivor benefits for ME. Just doing livingto100, the DW should outlive me by a minimum of 10 years, and she's 2 years older than me. So, probably not..........

Yep, you're right, "I've been rode hard and put away wet." As my daddy always said, "if you're gonna use candlelight, burn the damn thing from both ends."

Cheers/
JimBob
__________________

__________________
jime444 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


 

 
All times are GMT -6. The time now is 07:25 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.