Monthly checks vs cashing out a pension:

[almost there]

That's really nice! Was your job state or federal?

 

[LinCella]

Almost there - my job was city. So local agency is what they call it. And my sweet deal is no longer available to employees who started 10 years ago and even less so now. The medical promise really killed the City. So through several contracts they now have a medical savings plan for new employees. Basically you would need to start at 20 and work until 65 to see any amount of money for medical insurance. My city also allowed retirement to be taken at 50, also a great idea in the flush days but not so much now. I was lucky to get into management, not so for many of the City employees who already have lower paying jobs, many will need to work longer.

 

[Chuckanut]

I get monthly pension checks, COLA'd and 100% medical paid. I am one of those people who like the security of that monthly check. I was never a seasoned investor and so would have major anxiety every month!

Were you also part of the SS system?

 

[almost there]

Lin, Glad it worked out! So much changed during our working lifetime / past 35 yrs. its amazing.
Most plans changed mid stream with grandfather clauses, reductions and restrictions.
I left with about 25% of the retirement benefits that I signed up for at a public utility. (80% highest 3 yrs average pay/ pension & 100% medical) at 55. I just had to alter my personal plans 1/2 was into it. No complaints. I left at 51 as I did get retiree medical after 29 3/4 years with the co. That was huge in my mind. I was also mgt / supervision. The union folks did pretty well. They got about the same deal.
For Kaiser med 1/2 dental & 1/2 vision I pay 242.00 / month. They pick up about $800.00 till 65. That combined with the neutered cash balance / annuity option and a 1 yr of pay severance was enough to get me out the door. (Did not know the severance would be treated like a bonus though tax wise, 46%? Ouch. And at the end of the year)
I did put in a couple hundred k into SS. Now the media is trying to make me feel guilty about collecting it. LOL LOL I plan to take that in 8 yrs at 62. And hope they do not try and convince me its an entitlement and ask me to go for a reduced benefit.

 

[LinCella]

Almost There and Chuckanut,

My City doesn't do SS so I am relying on my jobs previous to this one for some SS. Due to the pension I am subject to the WEP (Windfall Elimination). This makes me insane - I'll only get partial what I put in to the system and we're not taking big bucks here. It was when I was a young person just starting out, but the SS will take about 40% away from me. I will take it at 62. There is some legislation in Congress right now to eliminate WEP and I am all for it! I won't make that much SS even if WEP is eliminated.

Oh screw the media! I get such grief from people I know just for having a pension. Did I complain when these Dotcomers made tons of money back then and I had a lowly civil service job? I took the low paying job and now I'm reaping MY benefits.

Also, I don't even mention my pension or medical benefits anymore (except here!)

 

[Lcountz]

IS she single with no children or dependents, and, has she ever been married?

If she is NOT financially adept, I would recommend the pension. Even if it is NOT COLA'd, SS will be, and with pension and SS if she can swing it, she should.

Pay off the mortgage? Why? If she is single, why deplete savings and eliminate liquidity?

If she can pay her way with SS and pension, I'd leave the money in savings alone, live off the SS and pension, and have a good life.

As long as she can pay ALL her bills from SS and pension, retire and enjoy life.

What if she takes the lump sum and loses it to taxes and ridiculous spending? I know people who are doing just that. They are going to be in a world of hurt down the road.

With the pension and SS, the checks will be there every month til she dies, including when this market turns downward. Not having to stress about paying her expense when (not if) that happens.....priceless.

PS-Her pension appears to be WAY below the threshhold for the PGBC limits, and it is from a Megacorp...wouldn't worry if I were her.

 

[hnzw_rui]

Were you also part of the SS system?

Most local agencies don't pay into SS.

@LinCella
Ouch on retirement medical for newer hires. Medical really is a big burden on pension systems. A few years back, we started contributing an extra 4% for medical. For our system (Tier 1), those under age 65 need 25 years of service for full medical reimbursement (but only for single party premium, I think). Those retiring at 65 or older only need 20 years to get 100% reimbursement for Medicare Part B premiums (we don't pay SS but we do pay 1.45% for Medicare).

At least I was lucky enough to still be in Tier 1. Tier 2 employees have greatly reduced pension benefits. For Tier 1, as long as you have 30 years of service, you can retire at age 55 with full pension (ER starts at 45 but with reduction factor). For Tier 2, normal retirement has been pushed back to 65 years old.

Really not sure what they're going to do about the brain drain, though. Government usually pays a lot lower than private but at least before, the benefits were really nice. Now, Tier 2 pension benefits are not attractive at all. Oh well, at least employee medical is still good. For married couples, I think our health insurance is like $1000-2000 away from being considered a "Cadillac" plan.

 

[Mulligan]

Most local agencies don't pay into SS.



@LinCella

Ouch on retirement medical for newer hires. Medical really is a big burden on pension systems. A few years back, we started contributing an extra 4% for medical. For our system (Tier 1), those under age 65 need 25 years of service for full medical reimbursement (but only for single party premium, I think). Those retiring at 65 or older only need 20 years to get 100% reimbursement for Medicare Part B premiums (we don't pay SS but we do pay 1.45% for Medicare).



At least I was lucky enough to still be in Tier 1. Tier 2 employees have greatly reduced pension benefits. For Tier 1, as long as you have 30 years of service, you can retire at age 55 with full pension (ER starts at 45 but with reduction factor). For Tier 2, normal retirement has been pushed back to 65 years old.



Really not sure what they're going to do about the brain drain, though. Government usually pays a lot lower than private but at least before, the benefits were really nice. Now, Tier 2 pension benefits are not attractive at all. Oh well, at least employee medical is still good. For married couples, I think our health insurance is like $1000-2000 away from being considered a "Cadillac" plan.

My elderly neighbor retired from a utility and was in a small window of retirees who received lifetime health benefits. He told me management was poking around looking for a hole to get out from under it a few years back and their lawyers told them it would be cheaper to let them die off than fight it. Now he says he wants to live as long as possible just to stick it to them.


Sent from my iPad using Tapatalk

 

[LinCella]

The Brain Drain is a real problem in my city. Since we can retire early, people in their 50's and early 60's are gone taking with them years of great experience. However, my workplace, the public library, was more than happy to get rid of the "dinosaurs" - their term not mine! I was a fantastic librarian and these young folks - albeit not a drain on the city coffers now - still have very little experience. I go in as a customer now and cringe when I hear these young librarians try to answer questions...I want to jump in but as a "dinosaur" that would be dangerous.

 

[LinCella]

Mulligan - our paid medical is a contractual issue. However, my city has never changed the terms of any retiree's contract under which they retired. However, being in California there are many who want to take away my pension entirely!

 

[almost there]

"Did I complain when these Dotcomers made tons of money back then and I had a lowly civil service job? "

That's about the time I thought I was a stock guru as my benefits evaporated about the same time(1999) . Still have $20k in losses I deduct from my tax's every year from the dot com boom. A couple thousand at a time. I sure miss those days......... LOL LOL

 

[hnzw_rui]

The Brain Drain is a real problem in my city. Since we can retire early, people in their 50's and early 60's are gone taking with them years of great experience. However, my workplace, the public library, was more than happy to get rid of the "dinosaurs" - their term not mine! I was a fantastic librarian and these young folks - albeit not a drain on the city coffers now - still have very little experience. I go in as a customer now and cringe when I hear these young librarians try to answer questions...I want to jump in but as a "dinosaur" that would be dangerous.

It's not even just the retirees. Every year, we have highly skilled and trained scientific and technical professionals who leave for greener pastures because there hasn't been COLA for years and City pay is lower in comparison.

Mulligan - our paid medical is a contractual issue. However, my city has never changed the terms of any retiree's contract under which they retired. However, being in California there are many who want to take away my pension entirely!

Not sure they can, though. I guess that's the primary reason Tier 2 was instituted. I think for our system, previously earned medical benefits is also a contractual issue. However, if we didn't agree to pay 4% for retiree health, they would have capped the subsidy amounts at existing levels (which probably wouldn't be worth much after 20 years of rapidly rising health care costs).