nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
I have the chance to use my DC retirement money to buy into my state employee's DB pension plan.
I'm ERed at 52.5 and have $250k in taxable accounts and $750k in tax deferred retirement accounts. I can give the state $250k now and at age 55 they will get a single life $19k a year pension. The first $13k is COLAed (that COLA base gets periodic increases) and this year's COLA was 3%. If I assume 5% return my $250k would grow to $282k by the time I'm 55 giving a payout rate of $19k/$282K = 6.7%.
If I was to buy into the pension I'd think of it as part of my fixed income allocation and adjust my AA accordingly. Would you spend 25% of your capital to buy this annuity?.....PS I'm pretty healthy and have no dependents.
I'm ERed at 52.5 and have $250k in taxable accounts and $750k in tax deferred retirement accounts. I can give the state $250k now and at age 55 they will get a single life $19k a year pension. The first $13k is COLAed (that COLA base gets periodic increases) and this year's COLA was 3%. If I assume 5% return my $250k would grow to $282k by the time I'm 55 giving a payout rate of $19k/$282K = 6.7%.
If I was to buy into the pension I'd think of it as part of my fixed income allocation and adjust my AA accordingly. Would you spend 25% of your capital to buy this annuity?.....PS I'm pretty healthy and have no dependents.