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

[Doingitwrong]

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.

Sounds to me like $2700/year + one year of income + one year of not spending from savings = Is it worth my time given up?

 

[SnowballCamper]

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.

For me, no, another year of work is not worth $2,700 annually. I think the question is not well formed because there're are a lot of other considerations, as mentioned above.

A very lean retirement (if possible) with only $500,000 to draw from (ignoring SS) has the $2,700 annual increase equivalent to just 0.5% growth on that $500,000. In this situation another year of work is necessary because there likely isn't enough saved to meet spending. So it depends on your spending too.

Good Luck.

 

[mystang52]

Again, without knowing your age/assets/expenses it's a guessing game. Your asking the question, though, makes it sound like that $2300 could be a big help. And, as mentioned by another, putting in that extra year means one less year of drawing down your assets.
It sounds to me that you should do your best to tough it out for another year. In that year, be a 9-5er, no extra "volunteer" work for the boss, dot your i's and cross your t's and just do your job, nothing extra. Who knows, Providence may shine down on you and your employer lays you off or offers a package!

 

[Ready-4-ER-at-14]

I would ask myself also how could I reduce my expenses annually by the amount of that amount.

Can I downsize my dwelling? IE sell a house in the city, and buy a mile out of town. Sell a house, get a condo or a manufactured house (saw you are in AZ) and know some of the park model homes are ok and inexpensive to live in.

Maybe you want to vagabond for a year and live very frugally while the nest egg increases? IE cook your baked potato on the manifold of your car. lol

I believe Robert Kiosaki said in one of his books," I never say I can't afford something; I just have to figure out how to finance it."

 

[badatmath]

Maybe you want to vagabond for a year and live very frugally while the nest egg increases? IE cook your baked potato on the manifold of your car. lol

haha definitely not. I need to work the year plus just to make 55 so it might be more clear by then.

 

[GenXguy]

This is the sort of thing I'm thinking about every year. lol I was pretty certain 2022 was going to be the year to retire until high inflation broke out and prices started soaring. Now, I'm not sure, so I'm just not getting my hopes up and prepared to work another year to help compensate for the higher prices.

 

[Ronstar]

If you feel that you have less money than time left on this earth, then keep working. If you feel that you have more money than time remaining, then quit your job.

 

[NW-Bound]

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

+1

I would hate to figure out the earned income I forfeited by stop working at 55 instead of hang on till 65. And to think of that money compounded by the market return.

But then, I remember that when I was in the hospital recovering from 2 major surgeries to treat something that could have killed me, I did not think of that forfeited money at all.

PS. But I will admit that on the hospital bed, I did reach for my laptop to check my portfolio balance.

Of course, I cared, because I knew I would not be going back to work, and I counted on that money to live on, now that I was not going to die.

 

[Exchme]

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.

I agree, it doesn't make sense to me for the OP to be focusing on the pension bit, surely the effects of working and saving for a year instead of spending down the portfolio are more important than the pension increase. The pension bump is just the cherry on top.

 

[TheWizard]

For me, working one more year would have been something like another $7k in my Roth IRA, another $24k in my supplemental 403(b), and another $40k+ in my main 403(b) including employer contribution.

So you need to look at the whole picture, not just a fragment...

 

[CRLLS]

Another year increase your pension. Have you thought that in addition, another year of income adds to your personal retirement accounts, reduces the number of years your retirement accounts will have to support you, and may increase you SS benefits too.

I know you don't want to go into financial discussion. You do the math and see where it takes you. My point is, another years in not simply just the pension. It is a question that should have a wider view.

 

[grayv]

at that retirement income level, the extra $225 per month can make the payment on a used car.

 

[Koolau]

I left a fair amount of money on the table. The pension was pretty much maxed out, but it was clear we would soon have a package for retirement. I guessed about 2 years when I left.

When my j*b assignment changed (from enjoyable to horrible) I left the next week. Sure enough, the package came along 18 months later. Do I regret the decision. Well, I admit that I did regret it - for about 30 seconds. I didn't need the money and you can not ever buy back a year and a half of life - at any price.

If you really need the money, stay. If not, consider FIREing yourself. It has to be up to you because YMMV.

 

[Badger]

Our combined pensions are 2/3 your $2700. Should we have worked longer? We both could have but neither of us think we would have. We are happy with our financial situation and an increase in pension would not have made a difference. But that is us. How would you answer your question?


Cheers!

 

[Andre1969]

For me, the quick answer would be that no, one more year of my life spent working is not worth another $2700 annually. But, there's more to it than just that. As others have mentioned, working an extra year means one less year of retirement you have to fund. And one more year that your investments can grow, as you're not tapping into them yet. And the added bonus of one more year of continued investments, if you're still putting money away into an IRA, 401k, or even an after-tax account. Then there's health insurance. If your company is currently paying your health insurance, that's a bill you're going to have to pick up, unless you're old enough to go on Medicare. But even there, there's gap insurance. Also, if you're expecting to receive SS, an extra year of work will increase that payout if you're replacing a low-paying year or a "zero" year with a year's worth of higher wages, for their calculations.

 

[badatmath]

I feel like I have enough in the 401k I guess is why I don't think about it much. I mean it is not objectively a lot ~1M. . . but I mean its enough that I feel like I won't be living in the car.

Still you have brought up some good points, giving me more to think of. I can't leave before 55 if I want to take their insurance so I have time to consider. (Currently not quite 54).

The only way I think I could make say 3 years is to find a different job at the same place - not impossible but not easy at my age. 3 years would be pretty golden really but its just not going to happen in this crappy job they shoved me in after the last layoff mess.

 

[38Chevy454]

For me, the quick answer would be that no, one more year of my life spent working is not worth another $2700 annually. But, there's more to it than just that. As others have mentioned, working an extra year means one less year of retirement you have to fund. And one more year that your investments can grow, as you're not tapping into them yet. And the added bonus of one more year of continued investments, if you're still putting money away into an IRA, 401k, or even an after-tax account. Then there's health insurance. If your company is currently paying your health insurance, that's a bill you're going to have to pick up, unless you're old enough to go on Medicare. But even there, there's gap insurance. Also, if you're expecting to receive SS, an extra year of work will increase that payout if you're replacing a low-paying year or a "zero" year with a year's worth of higher wages, for their calculations.

Agree with all of the points above. These are several factors that are for consideration besides the simple $2700/yr pension increase.

 

[gooddog]

Depends on your age at retirement. $225/month for 40 years makes the extra year worth it. $225/month for 20 years, maybe not.

 

[badatmath]

Yeah I would be 55.

 

[Irishgirlyc58]

I think it depends on what percentage of your income that $2700 would be.

 

[Koolau]

I think it depends on what percentage of your income that $2700 would be.

Yeah, if it's 10% or more, maybe. Less than that, forget it and just be ready to make cut backs or do gig-w*rk if need be. YMMV

 

[old medic]

If your pension is only 23K. . . Probably not making a lot of sense but you folks always make me think.

Makes total sense to me....I have pondered the same question at length , playing with numbers... pros and cons...
As noted, the extra year is more than just the added 225 month, or almost 12% increase.. Same as me, it would have built my 401 savings, save my insurance costs, a year closer to SS, ECT.
My increase would have been about 5.5% increase... not worth it in my book. I used your 12%... and still would not have done it.... I can work one day a month and make that same money.... IF I need some extra cash. From what other Info you posted, it doesn't sound like you need the extra 225... I'd jump.
GOOD LUCK TO YA

 

[brett]

So many personal and financial factors to consider.

It may be one more year of work.

But it is also one less year of retirement, and hopefully one more year of healthy retirement. That is something you cannot buy.

There is a cost. But looking at that cost and not looking at the benefit may lead you to make a decision that you could regret in the future.

Money may not be the best decision criteria for you.

 

[Koolau]

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.

Back to basics for a moment: (I hope this doesn't violate the spirit of your question.)

If you have calculated what your various expenses will be and how much money you will have to meet those expenses (IOW if you have run FIRECalc and other rather exhaustive retirement planners) AND the answer is "you have enough" why is one aspect of retirement income (in this case pension) a significant driver of one-more-year vs pulling the plug?

Sorry if this seems off topic in relation to your question. YMMV