Military Service credit towards Pension?
So I work for a municipality in Illinois. I have a pension plan through the IMRF which is one of the last well funded, non raided, pension plans left in Illinois. At any rate, I want to retire at 60. At 60 I will have 20 years in and can start taking my pension. This is based on my years and final pay. But they offer prior military an option to buy their service years. I have 4 years of service. IMRF wants $47500 for this 4 years so I would then retire with 24 years on my pension. Doing some simple math if I invest my $47500 at 6% return for 12 years I would have about $95000 Well, $95000 while retired earning 5% will provide me with about $400 per month. The pension plan extra 4 years would give me about $750 per month.
My problem is that giving away $47500/$95000 seems counter intuitive.
Would anybody here take this deal? Would I be passing up a good deal?
Any other thoughts I should be having on this?
Re: Military Service credit towards Pension?
rktect1,
What would the IMRF give you a month after 20 years?
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
rktect1
Would anybody here take this deal? Would I be passing up a good deal?
Any other thoughts I should be having on this?
Based on your performances in your signature line I would say no. But I'm not sure why you would even use after tax dollars for an annuity....wouldn't it be smarter to invest in other things?
UNLESS, you need to pad your annuity (egg) numbers in your retirement nest?
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
nasa1974
rktect1,
What would the IMRF give you a month after 20 years?
If i was able to retire today with 20 years my pension would be $2800 per month but add 4 extra years onto that and it would be $3430 per month. And it will always have a 3% cola each year.
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
Frixxxx
Based on your performances in your signature line I would say no. But I'm not sure why you would even use after tax dollars for an annuity....wouldn't it be smarter to invest in other things?
UNLESS, you need to pad your annuity (egg) numbers in your retirement nest?
You just never know. In one hand i have the possibility of $47k going up or down and in the other i have a "gaurantee" of a rest of my life base retirement income that always increases 3% per year.
My tsp average for the past 15 years or so is about 8%. So im ok there. Im looking to adjust upwards.
My vanguard account average is about 7%. So im ok there too. This is where the $47k would come out of.
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
rktect1
My vanguard account average is about 7%. So im ok there too. This is where the $47k would come out of.
So you are looking to pad the guaranteed income portion of your retirement. Is the $47K the total withdrawal? or do you have to take out a bigger number?
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
Frixxxx
So you are looking to pad the guaranteed income portion of your retirement. Is the $47K the total withdrawal? or do you have to take out a bigger number?
No. That is the total. I can even pay it off monthly with some small interest or i can even just buy 1, 2, 3 years worth for less.
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
rktect1
No. That is the total. I can even pay it off monthly with some small interest or i can even just buy 1, 2, 3 years worth for less.
So if I'm reading it right, the $47K buy gives you an EXTRA $750.00/month? If that is the case, if you estimate that leaving the $47K might yield $95K where you have full control. I would estimate that @ 95,000 / 750 =126 months which is 10.5 years to get your money back out of the annuity. which means you have to live to 70.5 to get to the break even point. Plus you don't have any control of that in their annuity. How much control do you want/need?
Re: Military Service credit towards Pension?
Quote:
Originally Posted by
rktect1
If i was able to retire today with 20 years my pension would be $2800 per month but add 4 extra years onto that and it would be $3430 per month. And it will always have a 3% cola each year.
rktect1,
Not doubting your math but the difference in the above statement is only $630. So maybe over the next few years that would increase to the $750. I agree with Frixxxx on the break even part. The other thing is you stated; "I have a pension plan through the IMRF which is one of the last well funded, non raided, pension plans left in Illinois." What will the pension plan look like in 15-20 or less? I wouldn't put all my eggs in one basket. It sound like your TSP and Vanguard accounts are doing well. It's my opinion but I wouldn't move your money into the pension fund.
