I am 31 yo RN with a pension plan (7 years in so far) and if I stay with my position could retire at 57 with 70% of my avg top salary of 5 years. However, I put in 14% to my pension which doesn’t leave much room to invest anywhere else (rn I’m mainly a SAHM and work just enough so that it counts towards my service credit years). If I stay at my place of employment and go full time eventually, the most I’d be able to make one day is probably around $115k in today’s dollars. If I left this government job I could take a pharmaceutical job (and we could also move states instead of being tied down to this one) and start making that amount now, but would then only have a 401k.
I really don’t know what is the financially smartest move, and honestly don’t know how to even begin to research that. Hence… Reddit lol jk. But seriously would appreciate others’ opinions or if they have places to point me into figuring this out I would appreciate it thank you!
Pension or start over?
byu/Ill-Meringue-2096 inpersonalfinance
Posted by Ill-Meringue-2096
10 Comments
Just my two cents, but I feel like you might be missing an important piece of information. Sometimes government positions or pension plans also include a healthcare benefit in retirement. That can actually be huge, but it depends on if the benefit exists and what the coverage looks like. In retirement you generally use a ton of money on health care, so that can help tremendously.
26 years is a long time to be tied down in 1 place for a part time job. As an RN, you can get a good job anywhere. So just work the job you want and where you want, and invest at least 15% in your IRA and 401K.
Edit for typo.
Your pension, at retirement, will likely give you about $80k/year in income. To achieve that yourself you would need a retirement account worth at least $2MM
Frankly, getting a qualified year for part time work and SAHM is quite great. I’d stay for the experience and go full time to ensure your top 5 is adequate for retirement.
Also the addition of health care benefits in retirement is quite valuable.
I’d do the math on what you could make in pharmaceutical companies and what you would need to put away into your 401k, IRA, and HSA to match that.
One key thing to think about is the ability to move and what value you place on that. In other words all else being equal, what would be the maximum you would be willing to pay/forego to move somewhere else… in today’s $
You probably vest at 10 years, correct? Don’t leave before vesting.
How long until you are qualified for any pension? If you leave and come back will you get credit for your 7 years? If you leave can you cash out your pension and get your contributions back? How much would you be making/could make in the private sector? Does the $115k increase with inflation? Because in 26 years that will be worth about 65k in today’s dollars. Does the pension increase with inflation? 70 percent is great when you are 57, but unless it increases with inflation, it will be worth a lot less when you are 77.
You might consider testing the waters to see how you like working in the private sector.
Note If you got a 75k pension today that increased with inflation, an annuity for that amount would probably cost you 1.9 million.
You need a lot more info.
When does the pension actually vest?
Does it come with health insurance benefits?
Does it come with Cost of Living adjustments?
Does the 401k have a match?
Can you do the more demanding schedule?
Do you want to be in a different state?
Are bills there higher or lower?
Hello,
A lot to digest in your question there, is the 14% the mandatory contribution? Is 70% the highest or is that the option with suriviorship? Honestly seems like a lot of this is just a questions of what you want to do personally.
I’ve got to learn the answe from some wise comments here.
resharing this dilemma in r/ifinance . hope that’s okay!