Buying back time? Worth the investment?

[old medic]

I have reached my 30 years and can retire today at 57, but no insurance. when I do retire I will go on her insurance at around $550 a month.
The Wife has another 9 years to go to get insurance as a retirement benefit, she will be 61 at that time. I will be on Medicare by then...
BUT... she worked as a part time person almost 2 years before becoming FT and can buy that time back... Approx $24000 will move her retirement back 19 months, providing insurance to her for from 59 to 65... I will need to find other coverage for a year.
Considering rolling money from her 401K to buy the time back, but not sure if there would be withdraw penalties doing that.

Anyone care to voice an opinion good or bad.... TIA

 

[LakeRat1]

DW retired at 59.5, I retired at 52..... We decided to join Christian Healthcare Ministries...... After 18 months of cobra, then checking into plans, it was just crazy expensive for the two of us, it was costing over $1500 Per month..... Then we dropped traditional insurance..... DW is now on medicare, I am still a member of CHM..... My monthly payment is $172 ------ I did quite a bit of research before joining ---- Saving a lot of $$$$

 

[old medic]

We should look into that... A nurse in the ER talks very highly of it.
$1600 a month just for me on Obamacare... no medical problems or meds...

 

[Whisper66]

kitces.com has a couple good articles on managing costs of healthcare post retirement (just search his site for "healthcare). Here's one I read recently on some of the healthcare sharing programs that I found of interest.

https://www.kitces.com/blog/healthc...hm-medicare-lhs-samaritan-health-share-plans/

 

[Teacher Terry]

You need to do the math to determine how much time until you break even. It’s also a question of how badly you want to retire versus strictly being a math question. My friend rolled over money directly and didn’t pay taxes when she bought her time.

 

[old medic]

My apologies to the moderators, I currently have insurance at work, but looked into AHC and was floored.
Primary figures show the return would in about 4 years.

 

[rk911]

i worked 7-years for the state of illinois. when i left rather than let my pension sit i took a refund. bad long term decision but i wasn't thinking long term in those days. heck, i just plain wasn't thinking...period.

flash forward 30-years. i'm a couple of yrs out from retirement and in my planning i remember my state pension and started wondering if i could buy it back. a few phone calls and forms later, a check for $6 or $7K and my pension was restored. i start drawing 24-odd months later and i break even roughly 15-16 months after that. no lump sum option in Illiinois. was t worth the cost? absotively!

 

[smalltownguy1]

I have a Texas teachers retirement system pension.
I bought 5 years of military time for 31k for 11.5% of my income. Payed back in 2.6 years. And I transferred it from a 401k .

 

[Travelfreek]

I bought previous service (4.5 years for $4300 +
5 years of air time (time never worked) for $43k from state of CA after my return at age 53.5 to state service =
Best decision ever!!!) Our health care (for husband and myself) has been mostly free since I retired at age 60 for 5 years now. I also increased my pension by 12%. My husband will also get my retirement annuity if I predecease him. Definitely explore this option!

 

[steelyman]

I bought back time from when I was employed during graduate school (as a teaching/research assistant). The interest that applied was calculated based on the system-mandated rates compounded for many years so it was substantial but on balance it was worth it as it has increased the pension I’m now receiving as part of the benefit package that includes health insurance.

 

[Montecfo]

We bought back time from DWs teaching years in Texas to apply to her pension here in Virginia. It was very cheap to do so at that time, rules changed now to actuarial cost, which would seldom make it logical.

There was no healthcare benefit.

You just have to run the numbers.

 

[Born2Fish]

We should look into that... A nurse in the ER talks very highly of it.
$1600 a month just for me on Obamacare... no medical problems or meds...

Old Medic - Healthcare is not cheap.

What zip code are you in?

$1600/month seems high compared to my eastern NC rates for full price plans. Of course your area may be different!

(I looked at ACA plans (Healthcare.gov) in Asheville, NC zip code and found several Full Price Plans less than $1k/month premium. This one below is HDHP with $6900 deductible but if you are healthy and can max out an HSA for a few years, then the HSA can cover all deductible expenses.)

Estimated monthly premium
$910.37
Eligible for a Health Savings Account
Plan DetailsLike This Plan
Deductible
$6,900
Individual total
Out-of-pocket maximum
$6,900

 

[Chuckanut]

Is buying extra service years the same as buying back time?

I bought 5 years of extra service when I retired. At first, I had my doubts as the payback seemed awful long However, I decided to for it since it is the last time anybody would be offering me any type of additional pension benefit that was COLA'd (actually a capped COLA). The COLA was what made me tip into the 'Yes' side of the fence. The extra service years did not allow me to retire earlier, just with a bit larger pension. There is no health benefit other than being able to buy into a state employee health plan that was less expensive than buying my own personal plan.

FWIW, I checked on the health of my state's pension plan before I made the decision. It seems to fall in the area of 85-90% funded. As of today it is 90% funded. Had it been Illinois or, worse yet, Kentucky, I would never have written the check for the extra five years.

 

[kimcdougc]

My DH retired from Mega Corp. Are you allowed to "buy back time" with any company? Just wondering. Sounds like something we would like to do. DH retired with a pension 5 years ago at 57 and hind sight is he should have waited a couple of years before drawing pension. If I knew then what I know now, he would have waited and we would have just lived off of our after tax funds.

 

[redshift]

I also purchased 5 years in pers, 4 years ago. Not sure I couldn't have done better in the market, but I sleep better knowing I have an extra cola'ed cushion every month...

Is buying extra service years the same as buying back time?

I bought 5 years of extra service when I retired. At first, I had my doubts as the payback seemed awful long However, I decided to for it since it is the last time anybody would be offering me any type of additional pension benefit that was COLA'd (actually a capped COLA). The COLA was what made me tip into the 'Yes' side of the fence. The extra service years did not allow me to retire earlier, just with a bit larger pension. There is no health benefit other than being able to buy into a state employee health plan that was less expensive than buying my own personal plan.

FWIW, I checked on the health of my state's pension plan before I made the decision. It seems to fall in the area of 85-90% funded. As of today it is 90% funded. Had it been Illinois or, worse yet, Kentucky, I would never have written the check for the extra five years.

 

[old medic]

Its looking like a great option for us at the moment...
Tax advisor is looking into the 401K roll over aspect of it...

 

[Montecfo]

My DH retired from Mega Corp. Are you allowed to "buy back time" with any company? Just wondering. Sounds like something we would like to do. DH retired with a pension 5 years ago at 57 and hind sight is he should have waited a couple of years before drawing pension. If I knew then what I know now, he would have waited and we would have just lived off of our after tax funds.

I think it is more a government thing. You could not just opt to unilaterally"buy time" though that concept might be out there somewhere.

In DWs case she had prior service with another state education system. She had the option, since lapsed, to get pension credit for that time by making a payment to her present employer and that payment was cheap. Had to have "served" the time. My recollection was you could use pre or after tax money. We used after tax money.

Interestingly, I discovered that DW could ALSO have used her time in her current employer to "buy time" back with the prior employer, when she was 2 months short of qualifying for a separate pension. It would have been cheap to do that also. She needed to work there at least a month to be able to make the purchase. Could have actually done so in the summer. But never quite pulled it off and the window has now closed (rules changed).

I learned a lot about teacher pensions! Hers will never be lucrative but might buy some groceries. We view it as longevity insurance.

 

[Vacation4us]

I am sure at 59 your wife will appreciate buying back the 18 months and being able to retire.

Although DH didn’t buyback any time since he started at 21. Had his 30 years at 51, his pers pension is maxed at 30 years. He will be 53.5 when he calls it quits in November. So your welcome California ( he will have made 2 more years of contributions).

Many of his peers bought back time most were happy to leave a few years early, a few climbed the ladder and stayed longer.

 

[old medic]

I am sure at 59 your wife will appreciate buying back the 18 months and being able to retire.

he will have made 2 more years of contributions)..

As I also continue to work... Do love my job ...most days anyway...
adds a little to the pension check, But padding the 401k and the insurance is the main thing at the moment.

 

[old medic]

Well Its been done... And It has put her past the window to qualify for early retirement.
And has just interviewed for a supervisors position with a possible 20-25% salary increase.

 

[armor99]

I have reached my 30 years and can retire today at 57, but no insurance. when I do retire I will go on her insurance at around $550 a month.

The Wife has another 9 years to go to get insurance as a retirement benefit, she will be 61 at that time. I will be on Medicare by then...

BUT... she worked as a part time person almost 2 years before becoming FT and can buy that time back... Approx $24000 will move her retirement back 19 months, providing insurance to her for from 59 to 65... I will need to find other coverage for a year.

Considering rolling money from her 401K to buy the time back, but not sure if there would be withdraw penalties doing that.



Anyone care to voice an opinion good or bad.... TIA

The rule of 55 allows you to take money from your 401k with no panalties the year of your 55 birthday... so all good there. However, you have to retire from the company for that to work. At least I think you do. Someone with more knowledge feel free to correct me... [emoji3][emoji106]

 

[old medic]

The rule of 55 allows you to take money from your 401k with no penalties the year of your 55 birthday... [emoji3][emoji106]

Well the money came from HER 401K at 52, penalty free, and no taxes. and rolled into her state retirement time...
Over the 19 months she will collect about 30K more than she paid for that time.
Calling that a win!