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Old 09-14-2017, 04:58 PM
 
Location: RVA
2,174 posts, read 1,274,025 times
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Exactly. How odd to roll all govt pensions as superior to private ones. Some are, some aren't. As to the original OP question: Their mortgage is so small based on their income, and they are young enough, it makes little difference which order they do. If they are passing up free matching funds to pay off the mortgage earlier, then that is indeed boneheaded.
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Old 09-14-2017, 05:02 PM
 
Location: Eastern Washington
14,290 posts, read 45,005,274 times
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Quote:
Originally Posted by bungalowdweller View Post
One thing that comes out in all of these posts is how fortunate government workers are with their pensions. I've known several people in the corporate world, working for companies with b-i-g names, whose employees didn't fare as well at all.

IBM, AT&T, the Bell Telephone Companies, etc all had fabulous pension plans. Then later on the plans were stripped to nothing and retirees expecting X dollars wound up with anywhere from 1/3 to 1/2 of what they were promised. I know of someone who received 1/4 of his promised pension.

We're the fortunate ones.
Consider Pan Am Airlines. IIRC, when they folded, their pensioner's checks just stopped.
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Old 09-14-2017, 06:06 PM
 
Location: Staten Island, NY
8,782 posts, read 7,139,882 times
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Quote:
Originally Posted by Perryinva View Post
Exactly. How odd to roll all govt pensions as superior to private ones. Some are, some aren't. As to the original OP question: Their mortgage is so small based on their income, and they are young enough, it makes little difference which order they do. If they are passing up free matching funds to pay off the mortgage earlier, then that is indeed boneheaded.
Honestly my opinion is biased because I'm vested in one of the strongest pensions and best public unions in the nation. Our pensions in NY are guaranteed in the state Constitution. Short of an amendment, all changes can only be affected upon new hires (as has been recently accomplished).

We have full medical for life, including children to 27 years old. That's prescription, hospital, optical and dental for less than $200 a month (upon retirement, I pay $7 per check now).

Half pay, +$12,000 at 20 years, with increases for every year over 20. For example, at my current rank/salary, each year over 20 adds roughly $1000 per month to the pension.

Tax free in state.

Option to add 5% to pension at guaranteed 8.25% interest, which can be left in upon retirement to increase pension or taken as a lump sum.

Banking of the $12,000 for each year over 20 should one choose to stay on the job. That's another lump sum (no interest) payment upon retirement.

As a veteran I was also able to purchase 3 years into the pension which counts up front (and for the $12,000) for $9000. So $9000 got me $36,000 or three years earlier retirement.

A buddy just retirement at a lower rank than me with 28 years on the books. He's bringing home more now than he did working. Considerably more.

I plan to work at least another 12 years but I could leave in 21 months if I wanted to. Tough decision. So tempting!
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Old 09-14-2017, 06:07 PM
 
Location: Tennessee
23,700 posts, read 17,660,009 times
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That's just mind-boggling to me.
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Old 09-14-2017, 06:30 PM
 
Location: Staten Island, NY
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A friend of mine one rank above me just withrew $960,000 from his pension upon retirement and still brings in 5 figures every month.
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Old 09-14-2017, 06:52 PM
 
Location: Tennessee
23,700 posts, read 17,660,009 times
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Originally Posted by Airborneguy View Post
A friend of mine one rank above me just withrew $960,000 from his pension upon retirement and still brings in 5 figures every month.
Was this a general or similar rank?
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Old 09-14-2017, 07:40 PM
 
Location: RVA
2,174 posts, read 1,274,025 times
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That is indeed mind boggling, and far exceeds any pension I've ever heard of. How can that possibly be sustained?
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Old 09-14-2017, 08:13 PM
 
Location: Staten Island, NY
8,782 posts, read 7,139,882 times
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Quote:
Originally Posted by Serious Conversation View Post
Was this a general or similar rank?
Lol I wish.

We're NYPD police officers. My friend with 28 was a PO, I'm a Sgt and the 5-figure guy was a LT.
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Old 09-14-2017, 08:21 PM
 
Location: Staten Island, NY
8,782 posts, read 7,139,882 times
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Quote:
Originally Posted by Perryinva View Post
That is indeed mind boggling, and far exceeds any pension I've ever heard of. How can that possibly be sustained?
There is a pension tier under mine with less generous benefits. They have to work 22.5 years and cannot count most overtime towards the pension or make the extra contributions. Basically, we are funded by those under us. Its always been that way.

NYC runs a few billion surplus every year. Unless it drastically changes, the economic engine of the city itself, which relies on 36,000 cops to keep it safe enough to attract millions of tourists, will continue to easily fund our pensions for decades.

That said it is always prudent to take what we call the "final loan" (that $960,000 my friend took) to reinvest in the event of a problem.

If I do 30, my banked variable (the $12,000) will buy my vacation home and the final loan will roll into a fund for when I'm in my late 60's or so.

I plan to retire at 50.
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Old 09-15-2017, 02:44 AM
 
Location: Knoxville, TN
1,300 posts, read 602,886 times
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Quote:
Originally Posted by TheShadow View Post
Yes, but being vested doesn't mean you will get a pension large enough to live on. And they don't "pay out" until you achieve the minimum retirement age (usually 55, although at some employers it's age 50, others 60, or even 65) Most pension amounts are based upon years of service, average of some number of years of highest salary, and a multiplier expressed as a percentage. The multiplier, in turn, may be based upon age at retirement. At ten years (or whatever is the minimum vesting at that employer), you won't get much of a pension. Generally 25 to 35 years are needed to have a pension you could live on.

As an example, my employer had a 2% at 55 formula. At 55 years old your pension is 2% of the average of your salary your highest paid three years, times the number of years you have worked there. If you retire earlier or later than 55, your percentage multiplier will vary a little.

So if you made $100K per year in your highest paid 3 years, and you worked there 30 years, and you retired at 55 you would receive $60K per year. The same person retiring after working there 10 years (minimum to vest), retiring at 55, would only receive $20K per year.

Also, many of the pension plans have a medical insurance component and the longer you work there after vesting, the higher the percentage of your insurance premium would be paid by the employer. In our case you had to have a minimum of 25 years to achieve a 100% paid medical insurance premium. After 10 years (minimum to vest) it would be something like only 25% of the premium would be paid by the employer.
Does not pay out and pays out less are two very different things. If a person is building a 3-legged stool, 20 percent of the salary you earned for 10 years, guaranteed for life, would be a valuable component to supplement other retirement income. Plenty of people hang on just to get the 10 year vesting in before moving to jobs in the private sector where they can earn more money and, presumably, work on building a 401K account.

In my system, you have to be 60 or have 30 years to retire. I will retire at 61 having 20 years in, for a 40% pension, plus medical at the employee rate until I reach Medicare age. I would not be retiring at 61 if the pension was all I had and I would not be retiring at 61 if I didn't have a pension.

BTW, new employees are on a sliding scale for how much subsidy they get for medical insurance, based on years worked. That was implemented about 5 years ago and has made the medical benefit much less valuable. Previously, you only had to be vested and retire as an active employee to get a 75% subsidy.
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