I will hit age 62 later this year. I have 2 relatively small pensions that will be part of my retirement income. Neither one has a COLA, so when I start taking them, that will be the amount I receive for the rest of my life. My family has genes for long lives - a couple grandparents lived well into their 90s, my mom is nearing 100. Unfortunately, all have had significant declines in mental ability including memory and were no longer able to live independently by their mid-to-late 80s. I expect the same trajectory for me - very physically healthy, doing all I can to keep my mind sharp (including continuing to work), but am realistic about the cognitive decline made likely by my genes.
It appears that we are in for a year of 5-8% inflation, probably a second year, possibly even longer. And perhaps very high levels of inflation due to our $29 TRILLION in debt plus a continuing deficit. It is not clear to me how that is sustainable. Anyway, I really hate the idea of my hard-earned pensions being eaten up by inflation. In addition, my need for the ability to fund my hobbies and travel to see kids/grandkids will likely decline and disappear starting in about 20 years, so my near-to-mid-term income is more important to me that the very long term income.
Overall, if I actually retired and stopped working today, my retirement is slightly underfunded. At a 3% withdrawal rate, I would have about 85% of my goal which was about 80% of current income. I am max'ing my 401K on current income; if I start taking one or both pensions, I would max an IRA ($7K per year) too. My goal would be to save the entire pension amount, but we would probably spend some on the house (replace 10 year old flooring, replace 15 year old furniture) and some landscaping, so it is possible we would spend the amount in excess of the IRA contribution. But we will be replacing flooring and furniture one way or the other as my wife has been very patient on both fronts, its more a matter of trying to do it as cheaply as possible and scrimping in other areas of our lives and possibly taking some from savings vs getting what she wants and doing it from current income. And her car is 15 years old. And our daughters live 1000+ miles away and we'd like to see them more. So the fact of the matter is, if I take one or both pensions, we would save some, spend the rest, and have a higher standard of living which would make my wife happier.
My current job is definitely worth the salary vs stress ratio, primarily due to the current employment scenario. I am in IT and the current Great Resignation has our management very aware of how easily IT workers can switch jobs. I don't want to switch and would likely just retire if the stress exceeds what I find tolerable. I'm ready to be done, but am willing to continue for a few more years (65?) to keep growing my 401K and not drawing on it. Every year of work makes a significant difference in the amount I will have for retirement.
Company 1 has the following options, I started the paperwork for Option 1, but haven't set it in motion yet, would very much like feedback on the alternatives:
"SSA Leveling": $26,700 in 2022, then $616 for the rest of my life
Straight Amt from 62: $741/month
Straight Amt from 63: $759/month
Straight Amt from 64: $776/month
Straight Amt from 65: $794/month
Straight Amt from 66: $881/month
Straight Amt from 67: $980/month
Straight Amt from 68: $1,094/month
Straight Amt from 69: $1,223/month
Straight Amt from 70: $1,372/month
Straight Amt from 71: $1,543/month
Straight Amt from 72: $1,741/month
Straight Amt from 72.5: $1,838/month and then no further increases
I'm not sure if the increases are typical of pension plans, but the increases from 62 to 65 are quite small, but then they jump up a more meaningful amount and a much more attractive percentage. It appears that if inflation were zero, the choice would be pretty easy -- wait until the maximum monthly at age 72.5. But how to determine the best path with the unknown of inflation and the variation in pension increase?
I will be doing a similar modeling of the other pension, I think it is about 60% the size of the first one, so I started with the larger pension.
I have been a member for years, not sure if I posted before, but am amazed by the knowledge of members, willingness to help others, depth of analysis, and clarity of thinking by the FIRE members! Thanks in advance for your help!
It appears that we are in for a year of 5-8% inflation, probably a second year, possibly even longer. And perhaps very high levels of inflation due to our $29 TRILLION in debt plus a continuing deficit. It is not clear to me how that is sustainable. Anyway, I really hate the idea of my hard-earned pensions being eaten up by inflation. In addition, my need for the ability to fund my hobbies and travel to see kids/grandkids will likely decline and disappear starting in about 20 years, so my near-to-mid-term income is more important to me that the very long term income.
Overall, if I actually retired and stopped working today, my retirement is slightly underfunded. At a 3% withdrawal rate, I would have about 85% of my goal which was about 80% of current income. I am max'ing my 401K on current income; if I start taking one or both pensions, I would max an IRA ($7K per year) too. My goal would be to save the entire pension amount, but we would probably spend some on the house (replace 10 year old flooring, replace 15 year old furniture) and some landscaping, so it is possible we would spend the amount in excess of the IRA contribution. But we will be replacing flooring and furniture one way or the other as my wife has been very patient on both fronts, its more a matter of trying to do it as cheaply as possible and scrimping in other areas of our lives and possibly taking some from savings vs getting what she wants and doing it from current income. And her car is 15 years old. And our daughters live 1000+ miles away and we'd like to see them more. So the fact of the matter is, if I take one or both pensions, we would save some, spend the rest, and have a higher standard of living which would make my wife happier.
My current job is definitely worth the salary vs stress ratio, primarily due to the current employment scenario. I am in IT and the current Great Resignation has our management very aware of how easily IT workers can switch jobs. I don't want to switch and would likely just retire if the stress exceeds what I find tolerable. I'm ready to be done, but am willing to continue for a few more years (65?) to keep growing my 401K and not drawing on it. Every year of work makes a significant difference in the amount I will have for retirement.
Company 1 has the following options, I started the paperwork for Option 1, but haven't set it in motion yet, would very much like feedback on the alternatives:
"SSA Leveling": $26,700 in 2022, then $616 for the rest of my life
Straight Amt from 62: $741/month
Straight Amt from 63: $759/month
Straight Amt from 64: $776/month
Straight Amt from 65: $794/month
Straight Amt from 66: $881/month
Straight Amt from 67: $980/month
Straight Amt from 68: $1,094/month
Straight Amt from 69: $1,223/month
Straight Amt from 70: $1,372/month
Straight Amt from 71: $1,543/month
Straight Amt from 72: $1,741/month
Straight Amt from 72.5: $1,838/month and then no further increases
I'm not sure if the increases are typical of pension plans, but the increases from 62 to 65 are quite small, but then they jump up a more meaningful amount and a much more attractive percentage. It appears that if inflation were zero, the choice would be pretty easy -- wait until the maximum monthly at age 72.5. But how to determine the best path with the unknown of inflation and the variation in pension increase?
I will be doing a similar modeling of the other pension, I think it is about 60% the size of the first one, so I started with the larger pension.
I have been a member for years, not sure if I posted before, but am amazed by the knowledge of members, willingness to help others, depth of analysis, and clarity of thinking by the FIRE members! Thanks in advance for your help!
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