Is an extra year of w*rk worth $2700 annually?

[badatmath]

If your pension is only 23K. . .

I'm trying not to ask a finance question so leaving out my other assets, more of a way to think about it being the "right" thing or not.

Probably not making a lot of sense but you folks always make me think.

 

[tmm99]

So extra $225/mo? Not worth it for me, but if you don't have a lot of padding in your budget...

 

[Bigdawg]

It could be a finance question. It might not be. All depends. What does that extra $225/mo do for you? Is the job that bad that you can't handle 365 more days? What are you going to do on day 1 of retirement if you leave that job? Lot's of questions. Basically, it depends. Good luck with your decision.

 

[badatmath]

Well I do have other assets, I can't live on that alone but maybe I should ask how much padding is enough? I think I have some but . . .

Well yes job is pretty bad, I was forced into it at last reorg rather than laid off. But its like 62 vs 70 for SS. But one more year could turn into 5 and well um no. . .

The good part about being single is I don't screw up anyone else's life with my (bad) choice if there is one.

 

[Aerides]

If $225 per month is the difference between a comfortable retirement vs. one that has worries and little wiggle room, then sure.

 

[cathy63]

Have you played with Firecalc? What are your odds of success without the $2700/yr?

 

[RunningBum]

If it means you're not dumpster diving for food, of course it's worth it. If it means a little less caviar, maybe not.

As someone who worked (part-time) a few years longer than needed, it's nice to have the buffer and to shrug off a bad market day like today. I'd be reluctant to retire today if I didn't have buffer. 10 years ago I couldn't know that the market would be so good to me, and now I can enjoy extras like flying first class if I want to.

Use that info however you want to.

 

[Sunset]

This $2,700 annually seems small, but over 30 yrs it's $81,000

That will basically pay for 2 maybe 3 cars over that time period.

If a person doesn't have much in savings, then it would be a big help.

 

[dak2018]

This is fundamentally a finance question and without knowing your assets, income, age, SS at FRA, and real or projected expenses, it is not even possible to hazard a guess.

 

[teetee]

I also would check firecalc. Net worth in the context is important. If you have $5m NW, $2700/yr is not as important as if you only has $500k NW plus the 23k annual income during the retirement.

It also relate to your age and how healthy you are. You can do a lot of things in a year if you are able to.

 

[SecondCor521]

A typical work year is about 2000 hours, so an additional $2,700 is $1.35 per hour per year. If I thought I were get 10 more years of increased pension payments, then the pension increase would be an additional $13.50 per hour. If you thought you'd get more than 10 years, multiply by whatever number you think is reasonable.

Given that most pensions are taxed as ordinary income, you would escape Social Security and Medicare taxes on that $13.50 an hour. You'd still probably have federal and state income taxes, and it could push some of your Social Security income into taxability depending on your tax situation.

It's also not quite worth that $13.50 an hour, because of inflation and the fact that you'll have to wait to receive the money. How you discount based on those two factors is personal.

Then it would come down to the marginal benefit versus the marginal cost. Marginal benefit would be based on how much I needed that $13.50 an hour. Marginal cost is how much I hated the job. That's a personal decision also.

Since the math is complicated here, I'd almost go on a gut level decision. Would I stay at work another year for $2700 a year for life? My gut would probably crunch the numbers as well as my brain would.

 

[badatmath]

I suppose you are all right. Working saves me $300 a month in health care too vs retiree health.

I have a tendency to lie to firecalc in order to build that buffer. Like I rounded down (slightly) the 401k, and ignored taxable, roth and savings. But did I ask for it for enough annual income, IDK.

SecondCor, very interesting point. My point of returns diminish at 58 (due to years of service cap) and stop entirely at 62 (which I am not contemplating) . I know most of you have much greater assets than me and many believe in delaying SS so I guess I am asking myself what I am doing wrong here. . .

It will be a year until I can vacation out, if it goes as planned.

I am much better at saving the money I have then spending it.

 

[Dash man]

When I made the decision nine years ago it was for only for about $1500/year. I chose no. You have to decide for your situation .

 

[Hamlet]

If your pension is only 23K. . .

I'm trying not to ask a finance question so leaving out my other assets, more of a way to think about it being the "right" thing or not.

Probably not making a lot of sense but you folks always make me think.

Is the pension going to provide most of your retirement income? If so, then I think I probably would work the extra year, since you are running things tight enough that if something goes wrong ( say an unexpected increase in expenses) you could end up in a tight spot, and that extra money could significantly impact your quality of life.

If you’ve got a bunch of other savings and this is just suspenders when you already have a belt money, than I’d skip it.

Remember that it will always be financially better to keep working, but maximizing your money ends with you dying in the harness.

 

[aaronc879]

Too many variables unique to each persons situation to give a definite answer. I would be able to live happily on a $23K/yr pension so I would not consider working another year. Most people want more than that. You have to choose what is best for your personal situation.

 

[CuriousJoe]

May be I am missing something, but aren't you also losing a year's worth of earning by not working another year?

 

[PandaBear]

When I made the decision nine years ago it was for only for about $1,500/month. I chose no. You have to decide for your situation .

Shows you different thought processes……I am planning on working another year for about $10,000 per year increase, let some $18,000 a year. That’s a big difference. I’m impressed you did it, especially 9 years ago. That’s a lot (for me) to leave in the table. I could never use the word “only” for $1500.

 

[badatmath]

May be I am missing something, but aren't you also losing a year's worth of earning by not working another year?

Yep. It is confusing. I put 40 years in fire calc too and chances of me living to 93 are less than 1% I'm sure given that no one in my family has made it anywhere close to that long.

 

[Dash man]

Shows you different thought processes……I am planning on working another year for about $10,000 per year increase, let some $18,000 a year. That’s a big difference. I’m impressed you did it, especially 9 years ago. That’s a lot (for me) to leave in the table. I could never use the word “only” for $1500.

I really need to start double checking my typing! It’s supposed to say $1,500/YEAR!

 

[Gumby]

May be I am missing something, but aren't you also losing a year's worth of earning by not working another year?

Yes, you are, and you probably should put that in the equation. Also 1 less year to fund going forward.

 

[jollystomper]

If your pension is only 23K. . .

I'm trying not to ask a finance question so leaving out my other assets, more of a way to think about it being the "right" thing or not.

Probably not making a lot of sense but you folks always make me think.

As other have said, it all depends on how much "padding" you have in your other assets, and whether or not the additional $225/month is worth it.

In theory I could have retired at 54, but it would have been a basic retirement. Every additional year until I turned 60 would add over $2K annually to my pension and push it where it alone would cover our basic expenses. In addition, that gave us additional years to save and invest.


I like my job so the additional years were not a burden (and gave us time to better refine my retirement plan). But after age, 60 the pension would only grow about $800 a year to age 65. At age 60 I had plenty of "padding" in cash, investments, and future SS to support an extravagant (in our terms) retirement. Forgoing any additional pension growth (and salary) was an easy choice at that point.

 

[Aerides]

A couple of other points - it's not just the pension:

You add one year of savings to everything else
You reduce one year of the span your retirement needs to cover
You reduce one year of pre-medicare health care needs
You retire one year closer to your SS timing

If all those add up to way over the $2700 difference, great. But all of that is also the OMY trap.

Once you get to numbers where you can look at all that and go "i don't care, I'm confident and happy in my numbers", then you're good.

 

[Mr._Graybeard]

One year? I'd tough it out. You have no need to remain in anyone's good graces. Be a Wally for 12 months. Or at least be your own person. What are they going to do, nudge you into retirement?

There are employers so ruthless that they'd sh!tcan you with an aim to keep pension costs down. It's up to you to determine whether your employer falls into that category.

 

[Chuckanut]

What's you life style like?

For some an extra $225 a month allows for weekly meetings with friends for lunch, maybe even buying a little something for the grand kids from time to time.

For others, $225 wouldn't cover the cost of a few shots of their high-end important brandy.

 

[FANOFJESUS]

Too many variables unique to each persons situation to give a definite answer. I would be able to live happily on a $23K/yr pension so I would not consider working another year. Most people want more than that. You have to choose what is best for your personal situation.

Me too. I would do a dance for a 23k pension but many would not. I would run out the door. Just remember I heard one poster say you always leave money on the table. So true.