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dm · 12-04-2008, 07:26 AM

She was going to retire last year to take advantage of a 25 and out plan that was expiring. But they have extended the plan so she decieded to work one more year. If they had not done this she would have had to work till she had in 30 years, or her pension would have been greatly reduced. The way it is now, for every year she works her pension increases around $6,000 per year.

Why would you think that the money would not be there? As far as I know the pension fund is funded by the teachers and administrators, and the state is not involved. Health care is not included.

cashbalancetrouble · 12-04-2008, 07:51 AM

"One measure of a retirement system’s health is how close it is to 100 percent funding. Illinois’ system is projected to be 57.7 percent funded in the current fiscal year, well below the 80 percent benchmark for a healthy fund."

Illinois' pension nightmare - Chicago Tribune

This Chicago Tribune article from 2006 is what alerted me.

dm · 12-04-2008, 08:51 AM

According to their website, they are 83.5% funded. So hopefully they can last another 30yrs or so. They have raised the contribution to 13% from 12.5% though.

There is always the lump sum option, but because my wife's salary has jumped the last few years, and the way they payout based on your highest 3 years salary, it is to our advantage to take the pension.

deserat · 12-04-2008, 10:17 AM

Yup different streams of income - I will have two pensions, SS (perhaps!), tax deferred and taxable savings to draw from....and an early retirement. How? LBYM and saving, saving, saving - up to 50-60% of income. What's interesting is the last employer I had used a 'three-legged' stool of their own - small DB Pension, 403B (of which they contribute 2% of your salary), and 401A (which they contributed 5% of your salary and which you could contribute to after-tax up to $10K yearly). I also supplemented with my own savings and another 'job' which has a pension. And all of this counted towards SS.....I consider myself lucky - very lucky. Let's see how this all pans out over the years....

As for a regular 'pension', yes, I can see how those could go by the wayside - I'll have to hand it to my former employer, they enforced a savings plan in addition to the pension aspect - plus, you have to have a combined number of 75 years age and time of service for free healthcare - also, if you retire early (at 55) you must have at least 15 years of service and that pension payout is 50% less than at age 65. I've opted for the pension at 65...figure it will be good for wine money or whine money :-)