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You also have to factor that your pension, SS & 401K payouts no longer have SS withdrawn from your check (6.2% of your income) and since you are retired you can't contribute to the 401K anymore you now have what you normally invested as available income (up to $19,000 or $25,000 for age 50 & up currently--although it would be taxed now).
That's potentially freeing up to $33,200 ($8,200 SS + $25,000 401K) that you have available during retirement you didn't have during your working years. That isn't including whatever % of your pay you also contributed to your pension as well while working (which normally is a very small amount anyway). Conceivably your take home with pension, SS & 401K could exceed what you took home working--even though the total dollar amount may be lower.
Still working (I have a LONG way to go, I'm just doing some forward-thinking)
In my role, hourly, with overtime paid at 2.0x once we cross 49 hours, we play a game with coworkers called "who can stop paying SS the earliest in the year" once you hit the cap, something like $118k, it is a temporary reprieve until the next calendar year.
I teach in a public elementary school. This is my 27th year. The formula has changed a few times for newer employees. Our state pension (VRS) uses an average final compensation which is the average of your 36 consecutive months of highest compensation. The service retirement multiplier is 1.7%. Avg final compensation x retirement multiplier x total years service = annual benefit.
Example:
Avg compensation. $100,000
Multiplier. X .017
Years service. X 33
Annual benefit. $56,100
We have a supplemental retirement pension provided by the county. I’d have to look up how it is factored, but it basically provides an additional 25% of the average compensation amount.
I teach in a public elementary school. This is my 27th year. The formula has changed a few times for newer employees. Our state pension (VRS) uses an average final compensation which is the average of your 36 consecutive months of highest compensation. The service retirement multiplier is 1.7%. Avg final compensation x retirement multiplier x total years service = annual benefit.
Example:
Avg compensation. $100,000
Multiplier. X .017
Years service. X 33
Annual benefit. $56,100
We have a supplemental retirement pension provided by the county. I’d have to look up how it is factored, but it basically provides an additional 25% of the average compensation amount.
This sounds a lot like NC's formula. Ours was very close, I remember doing the math and 27 years was the mark where you qualified for 50% of your high 3.
This sounds a lot like NC's formula. Ours was very close, I remember doing the math and 27 years was the mark where you qualified for 50% of your high 3.
You become eligible for an unreduced retirement benefit at age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service. (Has changed for newer hires.)
I will be eligible at 51 and 11 months, but I used the age of 55 in my example because that’s the minimum age for full, I reduced retirement from the supplemental plan.
You also have to factor that your pension, SS & 401K payouts no longer have SS withdrawn from your check.....
That's potentially freeing up to $33,200 ($8,200 SS + $25,000 401K) that you have available during retirement you didn't have during your working years....Conceivably your take home with pension, SS & 401K could exceed what you took home working--even though the total dollar amount may be lower.
Correct. With SS & pension, my potential net spendable income is higher in retirement than when I was working, for the reasons above and because once we reached our “living as wanted” income, all raises and bonuses went to increased savings and investments. Also, many states don’t tax SS and exempt added retirement income, so state tax as well as fed is greatly reduced, which really adds to the bottom line, once SS is received. That is part of the 3 legged stool concept, where the third leg is swapping purchase of portfolio for added growth or savings for that added income now, but only as needed. Our portfolio is plenty large enough for our lifestyle, no 2nd or third homes for us, or extravagant cruises, etc, but we do everything we want and don’t rough it, or have to watch our spending. It happens automatically. We don’t plan to grow our portfolio, but to use it as wanted, or needed if inflation becomes a factor, etc.
We also played the pay off SS game for end of year “raise”. I paid it off every year, starting my 2nd year out of college, as I was always salaried plus paid OT. Earliest I ever made it was July, but Sept or Oct was more usual, with more Novembers in the later years as the amount skyrocketed up, and OT was curtailed. It’s at $132,400 for 2019.
I teach in a public elementary school. This is my 27th year. The formula has changed a few times for newer employees. Our state pension (VRS) uses an average final compensation which is the average of your 36 consecutive months of highest compensation. The service retirement multiplier is 1.7%. Avg final compensation x retirement multiplier x total years service = annual benefit.
Example:
Avg compensation. $100,000
Multiplier. X .017
Years service. X 33
Annual benefit. $56,100
We have a supplemental retirement pension provided by the county. I’d have to look up how it is factored, but it basically provides an additional 25% of the average compensation amount.
Yup - VRS is mine too. No supplemental though - wow that is sweet.
Yup - VRS is mine too. No supplemental though - wow that is sweet.
Yes. I believe VRS basically provides ~51% of the highest three years' average.
Our supplemental plan has formulas that seem to be a bit more complicated for various options, but if I retired with an average annual compensation of $100k at age 55 with 33 years service it would provide ~$3,700/month until SS age and then $800/month thereafter. If the level lifetime benefit is chosen it would be ~$2,400/month from age 55.
It isn’t only the generosity of the formula that puts the rabbit in the hat. It is also the generosity of the salary scale it is applied to.
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