Low Income Retirement

[wrigley]

Did I read that correctly? She just started working as a teacher and only plans on teaching for 7 years and her pension is going to be 36k a year? That is a decent chunk of change for only 7 years!

Mike

 

[jazz4cash]

husband maxed out social security for 35 years his PIA would be $3822/mo and she would get that, minus the GPO offset of $2000. Or, net, $822 month. While her own WEP adjusted benefit is $608 per month. So, when her ex dies, she would improve her position by $214 per month by getting a survivor benefit


Edit

PIA of $3822/mo minus GPO offset of $2000 nets $1822/mo.

 

[Gumby]

PIA of $3822/mo minus GPO offset of $2000 nets $1822/mo.

Oops! Thanks for the correction. I've gone back and fixed the post.

 

[Teacher Terry]

Did I read that correctly? She just started working as a teacher and only plans on teaching for 7 years and her pension is going to be 36k a year? That is a decent chunk of change for only 7 years!

Mike

No she currently earns 36k a year and expects to get half of that between her pension and SS.

 

[RetiredHappy]

No she currently earns 36k a year and expects to get half of that between her pension and SS.

I went back to read and re-read this thread and it is not clear to me whether she earns $36K a year or $36K in pension.

 

[Gumby]

I went back to read and re-read this thread and it is not clear to me whether she earns $36K a year or $36K in pension.

I am also confused about that.

 

[ShokWaveRider]

I think it is all relative. For us low income retirement is living on SS only. Cumulatively for us that is about $5k a month. Could we live of that ..... yes, do we ..... nope. We also draw down on our retirement funds, or a the least peel off the interest. We are 70/65 years old respectively. I am sure there are a lot of folks her who live off considerably more. Am I wrong?

 

[Exchme]

Fully agree with pb4uski that she should wait until 70 to maximize her SS benefits.

A lot of her future finances depends on whether the pension is adjusted for inflation. Without an inflation adjustment, she will eventually have a lean living. With an inflation adjustment, the $36K in pension + ~$10K in SS gives her a lot of guaranteed income plus her IRA could be worth $250K by age 67, so 4% of that would be another $10K she could get from her portfolio. The total is solidly above the median income and she's in a LCOL area. She just needs good enough health to work long enough to make the happy outcome a reality.

As for Roth vs. traditional IRA, given the size of the pension, her SS benefits will already be fully taxed, but with a modest IRA she will likely be in a lower bracket in the future than today, so traditional IRA contributions make more sense than Roth. I would wait until she has a decent size emergency fund before messing with either.

I don't really understand her buying a house. In a LCOL area, homes don't really appreciate in value faster than inflation (or they would no longer be LCOL areas!), owning just gives you repair and upkeep bills, especially if you hire it done as older folks are likely to need. I would have wanted the $100K down payment invested instead.

 

[Route246]

I don't have any specific advice but I want to say what a great sibling you are for helping your sister in this way. Your sister is very lucky to have you.

I second that. Your generosity and thoughtfulness is extraordinary.

 

[Teacher Terry]

I went back to read and re-read this thread and it is not clear to me whether she earns $36K a year or $36K in pension.

I’m not 100 percent sure but I read post 5 by the OP and then his response to mine which I think is # 9 seems to indicate half.

If she was getting 36k plus SS I wouldn’t be as worried as the OP is although it’s definitely tight. Hopefully he’ll come back and clarify.

 

[RetiredHappy]

I’m not 100 percent sure but I read post 5 by the OP and then his response to mine which I think is # 9 seems to indicate half.

If she was getting 36k plus SS I wouldn’t be as worried as the OP is although it’s definitely tight. Hopefully he’ll come back and clarify.

However, the first post referenced $36K as the pension, based on her current salary.