Those of you with a defined pension plan (federal, state, or local government), how much are you investing outside of the pension contributions? I keep debating on where and how much to invest outside of the pension plan.
403bs, 457b, taxable brokerage, 529s?
My current position:
33 YO, been with my local government agency for about 8 years.
Retirement plan:
2%/yr of final average salary (30years of service & 55 years old minimum) + 2% COLA per year + full medical/dental benefits for self and spouse.
Ramps up to 2.1% at 63 years old.
At 55 yo = 60%
At 63 yo = 80%
My currently base salary is 185k.
I also have a primary home and rental properties that should be fully paid off by retirement age.
Retirement Planning with a pension?
byu/Triple_DoubleCE inpersonalfinance
Posted by Triple_DoubleCE
3 Comments
Get the match if offered in your 403b. I’d still put away 10% so I could leave for another job if I wanted to and not be behind the eight ball. At some point it will be obvious you can cut back some because you’re a lifer but save now so you have options.
I know that government-sponsored defined benefit plans seem very safe, but at your age and income I think it’s wise to save as though you did not have a pension plan in your future. All kinds of crazy shit could happen over the 22 years between now and when you can retire. Aside from a pension fund collapse (doomsday scenario), you could get married and later divorce. Your former spouse may claim a big chunk of your retirement in that case, so you want to be set up to still meet retirement goals if it happens.
My situation is similar to yours, but I’m 15 years older. Mainly, I max out my 457(b) plan and expect my annual income from that will be worth about 2/3 of what my pension is worth by the time I’ll want to collect.
I think it’s tough to try to figure out what you’ll need/want for income in 20-25 years, but that’s what I’d suggest.
Wife just retired with a pension and I’ll be retiring in a little over a year with a pension. The pensions will cover all of our living expenses except healthcare which is going to be stupid expensive for the 5 years before we go on Medicare.
We have a modest 401k that really just needs to be a bridge to Medicare and then a smaller bridge to me taking ss at 70, at which point, even if ss gets cut, we won’t need to touch the 401k anymore unless one or both of us need ltc.