nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
Nine years ago I started work for a state government and chose a DC plan over the state DB plan because I'm at the tail end of my career and didn't know if I'd stay in the job to get to the 10 year DB vesting. Both the plans are funded identically - 11% employee contribution and 4.5% state contribution. Well it looks as if I'll make 10 years now so I compared the relative size of my DC to the DB benefit.
Over the nine years my DC plan has averaged 6% annual return. It's in a 50/50 mix of low cost index funds.
If I project the principal in my DC plan to age 55 (the age that I would have be eligible for the DB income) using 6% return and 3% inflation for the COLA I would need a WR of 6.5% to match the annual income I would have been eligible for from the DB plan. The DC plan goes to zero balance after 26 years and of course the DB plan lasts until I die.
Over the nine years my DC plan has averaged 6% annual return. It's in a 50/50 mix of low cost index funds.
If I project the principal in my DC plan to age 55 (the age that I would have be eligible for the DB income) using 6% return and 3% inflation for the COLA I would need a WR of 6.5% to match the annual income I would have been eligible for from the DB plan. The DC plan goes to zero balance after 26 years and of course the DB plan lasts until I die.
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