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I was vested immediately upon hiring. Municipal gov't job.
I'll draw @ $30K a year - but it took 27 years (which includes 8.5 years at the state university) to get here.
I never took the pension for granted - and started this second muni job at $28K per year. Hardly big bucks.
I'll leave at about $60K. And all throughout my employment I shoveled 15-20% into retirement savings.
We won't be hugely rich - matter of fact what we draw will be about what I bring home now.
Similar for me....Besides PERA we have a 457b that I max out and the employer matches dollar for dollar the match going into a 401a. we also have a program which any vacation time accrued over x amount goes into a HSA retirement account. I'll have 100k+in that alone to pay for healthcare when I punch out in 5 years....
I retired under the federal government's FERS plan. After working 21 years, I retired, but prior to retiring, I bought back my 13.5 years of Active Military Service to add to my final retirement computation, which brought me up to 48% of my high-three years of earnings, which was in the low six figure income range. Being in law enforcement, we had a slightly better retirement plan than non law enforcement federal employees... Is that fair... Yes, since I took a chance everyday of being shot or killed while at work and had to, without question, maintain very high public standards in my private life as well, which was easy for me since I'm a boring person!!
Anyway!! For the first seven years, I put about 7% of my pay into our TSP/401K matching plan then bumped it up to 10% then again to 15% for the last ten years of work. I'm not touching that income at all EXCEPT when I retired, I took out a good size chunk to put down on a house since I live in a high cost area... For now. BUT!! The money I used as a down payment basically has earned a very good rate of return since the housing market in my area is really strong and will basically remain that way for many more years. I'm currently thinking about moving to Texas, Georgia or north Florida within the next 4 years.
Also, under FERS and being in law enforcement, we get what is called "supplement income," which is approximately 40-ish percent of your SSA payments since WE HAVE TO retire no later than your 57th birthday... By law. Note: I've heard that the federal government will be stopping this part of the FERS pension plan for new retirees starting in January 2018.
I also retired from the Miltary Reserve at a senior enlisted rank and will be drawing monthly payments from them on my 60th birthday. So that's another decent chunk to add to the monthly pension pot.
Currently, I work for another law enforcement agency (Non federal govt.) and putting 10% of my salary into their TSP/401K matching plan, but will bump that up to 15% in 2018. I'll work there for a little over five years to get vested into their retirement plan, but the monthly payments will not be that great, but enough to cover my monthly cable/internet and water bills.
Once I'm finished with my current employment, I'll combine both of my TSP/401K plans into one long term investment vehicle and "add" only the earned interest rate to my monthly retirement income.
Even as a 17 year old "kid" when I enlisted into the military, I knew that I would only take jobs that had a good retirement plan and with other attractive retirement benefits. I clearly remember all the older men in my neighborhood, including family members, regretting that they never took that lower paying job that had a good retirement package, but instead taking the job(s) with only minimum benefits, but at a higher hourly rate. Basically, to get what I got, every job that I've had involved me carrying a firearm, which also had a very high chance of me being shot, blown up or killed. So far, I've been lucky and I just hope my luck will hold out for another 3.5 years... I'll be in my mid/late 50s when I fully retire and if I stay my current course, I'll take home more in retirement than I did while I was working.
If you're not saving/investing a minimum of 15% of your gross income now AND do not have a solid pension plan, early retirement isn't going to be very comfortable. The best advice I can give anybody is to start saving as soon as possible... Not five years from your retirement date since $50Ks and a SSA check will not cover anything beyond your very basic needs. But!! Start in your mid/late 20s or in your early 30s, if not sooner.
In my case, the only regret I have is that I will not have a house that is fully paid off when I fully retire in the next 3.5 years... If you can pay off your house... And live in a moderate cost of living location, than you're looking really good in retirement!! To me, even with a modest pension and SSA AND with a fully paid off house is a huge win-win!!
I wouldn't worry too much about the house not being paid off. With your retirement income, a mortgage shouldn't be that big of a deal. I choose to keep my money invested where it earns much more than my 3.75 percent mortgage interest.
If you decided to pursue a private sector career knowing that the salary might be good while the benefits might not be so good, you have nothing at all to whine over regarding the situation of people who made a different choice when they came to that same fork in the road.
If you decided to pursue a private sector career knowing that the salary might be good while the benefits might not be so good, you have nothing at all to whine over regarding the situation of people who made a different choice when they came to that same fork in the road.
If you decided to pursue a private sector career knowing that the salary might be good while the benefits might not be so good, you have nothing at all to whine over regarding the situation of people who made a different choice when they came to that same fork in the road.
The catch is, and I've said this repeatedly, is that for many career fields and in many geographic areas, there is essentially no wage gap between private sector and government workers. In some cases, government workers even make more because government positions often have a minimum pay level. That minimum pay level may be more than what the worker can command in the private sector.
I live in an area with a generally poor economy. Three years ago, I worked as an IT support contractor for a local contracting firm that has the local Fortune 500 HQ as its client. I was paid $11.68/hr, was only part-time (36 hours/week), and with no benefits. There was no pay raise in going full-time, but there was a poor selection of benefits.
Recently, some of those contractors were fired and the client company created similar positions in its Hyderabad, India office. Two of my former colleagues got on with the city government. The one I talked to said the city pays better than what they made contracting, AND with the additional protections and benefits of government employment.
In general, lower paid fields and areas with poor economies are where government employment will be more "preferable," relatively speaking. Some highly paid, high end private sector worker in a major metropolitan area may very well be better off remaining in the private sector.
I think they are heading toward a problem. Inflation is one. The ability of the government to continue giving good pensions is the other. Remember most tax payers will not have pensions.
As a minimum they should be putting money in a ROTH
1. At their stage in their life, they are probably incurring too little risk. They can achieve a higher rate of return with a balanced portfolio than they can by paying down their mortgage to zero.
2. As teachers, their future pensions will most likely come out of the same bucket of state money. That introduces some risk that would have been better to diversify away.
3. One is a HS teacher; the other is elementary. Is it a so-called "Unified" school district? That is, they they both employees of the same district? If so, that also introduces some risk that it would have been better to diversify away. Even if they are not in the same district, their respective districts might be subject to the same macroeconomic forces, which of course then introduces some risk that would have been better to diversify away.
Fear is a wonderful motivator. I'd encourage them to look at a few alternatives.
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