Early Government Retirement

[John Clemore]

I have worked for the government for 31 years in Nov. I would get 83.7 pension at 56 and 3 percent for enhancements so total would be 88.7. If i stay till 60 it will be 97.5 and tow more years it will be 100 percent. I am happy with the pension but we self fund it, no taxpayers dollars and it costs me 1200 a month. If I retire i will save 1200 and approximately 700 more in meds, union dues, credit union etc. Problems is our heath care in retirement is crazy, the cheapest i can do for a family is 1100 a month with a 5000 deductible. Even crappy Kaiser is like 2300 which will take half of what i make. So I keep working but if i can take care of this health care issue i can retire happy. [MOD EDIT]

 

[brucethebroker]

Welcome, BTW.

If I read this correctly, you can retire in Nov., receive 88.7% of your current pay, and save $1,900 a month in pension contributions, and other payments?

But you are worried about the $1,100 mo. health ins. payment?

If that is correct, consider:

1. Look into a larger deductible.
2. Open an HSA.
3. If the premiums still concern you, consider starting a small business with the possibility of deducting your premiums.
4. Look into the tax subsidies of Obama Care, if married. Your income (based on the 1/2 of what I make comment) should be under the limit.

I dunno...looks to me like the choice is slaving away for another 4-6 more years with minimal financial impact, or not working anymore and pursuing your dreams. Freedom has a price...and yours is the insurance issue it seems.

I know which I would choose.....good luck!

 

[Teacher Terry]

I would retire and pay the 1100. You can always work p.t. doing something you love to help offset the cost.

 

[38Chevy454]

It seems to me that you are money ahead if you retire. Same question as Bruce, unless 11.3% of your salary is more than $1100, you are better off not working.

The other big question is do you have understanding of your expenses and will 88.7% cover all of those?

 

[Blue Collar Guy]

Sir, if your lucky you will live to a 100, so you will have many years to enjoy your 100 % pension, if your average, you have not too many years left , if you want to be the best pension in the cemetery stay till your 65, i would have ran out the door already, look at my signature line ,i wasted 5 years working extra HUGE mistake, retire this friday, i just looked it up ,you have a 5 % chance of dropping dead between 55 and 60, i bet that 5 % wished they retired regardless of financial situation. let alone 88 % pension.

 

[Koolau]

I really do sympathize with OPs dilemma. I was fortunate in that my employer provided subsidized group insurance to retirees. That was as important to me as my modest pension (much less than 88% to 100%). Knowing that health insurance is taken care of allows one to relax and retire early with little fear. Knowing that you are on your own could be daunting in ER. I don't know the answer, but I probably would have continued to w*rk to have guaranteed health insurance. YMMV

 

[sweetana3]

No one really knows what health insurance will be in this situation in one or two years. I might consider waiting to see what the shake out seems to be. To much instability in the market place right now.

 

[Fermion]

$1200 a month for 31 years at 8% real return is about $1.8 million.

So you really did fund most if not all of this pension.

It is nice to hear of a government pension that seems to have been well designed.

 

[John Clemore]

Yes our government pension is not free, we fund it 100 percent, no tax payers money. OCERS is the best managed of any pension system with 2 billion in surplus. I also have a 403b that should give me around 1700 a month for life.

 

[gerntz]

Are we talking Illinois?

 

[Just_Steve]

Are we talking Illinois?

Good joke.

 

[W2R]

Yes our government pension is not free, we fund it 100 percent, no tax payers money. OCERS is the best managed of any pension system with 2 billion in surplus. I also have a 403b that should give me around 1700 a month for life.

Are we talking Illinois?

I googled OCERS and came up with "Orange County Employees Retirement System", and John Clemore's public profile says he lives in California... so I'm thinking Orange County, California.

 

[nate2953]

Pretty sure OCERS receives tax payer money.

 

[phil56]

Fwiw, your health care may end up being the best feature of your federal retirement package. Instead of bailing out now (and I don't blame you for thinking long and hard about doing so), consider working part-time or taking a few month 'sabbatical' and then seeing about going back to work. Feds can take up to six months off, with approval, and their service clock keeps on running, for example. Worth considering since once you go, you are gone. That said, life is short and not everyone gets to enjoy a healthy 30 year retirement. An option for you to consider, also be sure to take one of the retirement classes fed agencies offer. That can help clarify options, etc.

 

[ERD50]

$1200 a month for 31 years at 8% real return is about $1.8 million.

So you really did fund most if not all of this pension.

It is nice to hear of a government pension that seems to have been well designed.

Yes our government pension is not free, we fund it 100 percent, no tax payers money. OCERS is the best managed of any pension system with 2 billion in surplus. I also have a 403b that should give me around 1700 a month for life.

Are we talking Illinois?

Good joke.

Believe it or not, DW's (small) pension is with IL, and it's in good shape. She is part of IMRF (IL Municipal Retirement Fund), as an office worker in a school district. Somehow, this organization managed to keep this pension fund out of the hands of politicians. It appears to be run kind of like a credit union, employees elect the managers. Seems to be working, but there are some spiking issues that need to be fixed.

Unfortunately, IMRF is an exception here in IL, most of them seem to be a sad joke.

-ERD50

 

[pj.mask]

If I use 1200/mo current, reduced by actual CPI going backwards and use actual S&P returns (average 11%/yr) I come up with $1.39 million current valuation.

If you want a safe withdrawal let's say 3.75% (because you have pool risk for ~35-45 years). That works out to $52k/yr.

Unless your payout is less than that - it would be disingenuous to say it was entirely self funded (appreciation from stock with risk of bonds).

If your pension is more - then for sure there was taxpayer money added to the pot.

Not saying there shouldn't be or that we should do away with pensions - just running the numbers.

 

[youbet]

pj.mask......

For your analysis to be meaningful, you have to consider that the 3.75% WR has a high probability of leaving a substantial balance at the end of the the withdrawal period. It's not an annuity that ends with zero balance whenever the recipient dies. It is a WR highly likely to leave a big balance.

Comparing annuities with WR's is apples to oranges.

 

[pj.mask]

I didn't do the math it was just a guess knowing 4% has failure in a 30 yr period. Did a quick online quote that shows 5.28% @ 56 but I don't know if that is just an advertisement to lure you in. (56 male, no spousal benefit)

Plugging in 1.39mm gives 73,416/yr.