Update - Buying back years of service credit (was - Hello, I'm new here)

[Sue J]

UPDATE for 2008!!!

It's been almost a year and as of this week we have purchased back all of my husband's years of service. We didn't use a credit card offer or the HELOC, we just used savings, my part time income and the "household contributions" from our son who works and lives at home.

Fine tuning the calculations results in my husband looking at retirement in October 2013, at age 58 with 30 years of service. The repurchase was actually for 5.25 years and it cost us $18,825, which included the 6% interest as we paid partial payments throughout the year. We wanted to hurry up and complete this and be done with it. He works for a county agency that is supported by tax levies and along with office politics and being one of the older employees, he wanted to know that he had all his years of service back. Just in case.

In the meantime I've been hit with the Dave Ramsey bug. I found his TV show and radio show and now that we have taken care of buying back the service time we are focusing on paying off our last few annoyances, 2 small car loans. Some of Dave Ramsey's stuff I agree with, but some I think we will adapt to our own situation. He places saving for retirement after paying off debt and we wanted to take care of the buyback of the pension service time FIRST.

This topic was my first post last year and I've learned so much! Especially about PenFed. I joined and bought the 6% CDs in October and last month we refinanced a used car to 4.99%. Next is the PenFed VISA with the cash back and I just talked to my son about refinancing his car through them for the lower rate.

So thanks for the help and advice. We are stepping in the right direction. And my husband, the spender in the family, is almost giddy about his retirement prospects. He got another raise in January. He's stopped a lot of his extra spending because he sees that the goal is reachable, in just 5 years and 7 months. We've written up a hypothetical retirement budget and even after taxes his pension should cover the basic expenses for us. The 5.25 years we bought back will not be taxable. I am about a month from completing my Social Security credits so, if it's still there, I will be able to collect a little something in the future.

We have 3 feet of snow here (NE Ohio) and LIFE IS GOOD!

[OAG]

Sue J: I remember your first post and congratulations on all that you and DH have accomplished in the last year.

We are in Central Ohio and I think we got drifts approaching about 4 to 5 feet around the condo. What a difference from the past couple of years.

[Tekward]

Any updates? I'm facing a similar buy-back decision on service time for state retirement.

[Sue J]

Quote:

Originally Posted by Tekward Any updates? I'm facing a similar buy-back decision on service time for state retirement.

For us the buy back was one of the best decisions we've made.

DH lost his job in 2010 but because we had bought back that 5.25 years he had a total of 26.667 years and was eligible for a reduced pension. The minimum years of service needed to retire was 25.

Last October, at age 58 was when he would have completed 30 years if he had still been working for his agency. Instead, he's enjoyed being retired since 2010.

For us, it's all worked out very nicely.

[LinCella]

I was lucky enough to purchase 4 years of "air time" - got me out just when I thought my head would explode!

[unno2002]

Crunching some very basic numbers (check your own annuity purchase sources).
For a federal employee, age 58, using the "401k" type account called the federal Thrift Savings Plan (TSP). A $18,000 annuity purchase would only provide retiree / spouse payment of $71.31 per month.

[PERSonalTime]

Quote:

Originally Posted by LinCella I was lucky enough to purchase 4 years of "air time" - got me out just when I thought my head would explode!

I bought years back as well. They were in the process of eliminating retiree health benefits and those additional years turned out to be my ticket to RE! What a blessing!!!