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Investing/Strategies / Retirement Investing
|Subject: Re: State pension vs Higher salary||Date: 4/19/2012 2:05 PM|
|Author: Hawkwin||Number: 70562 of 82022|
According to the state website calculator, I could retire at 59 with a monthly income of about $3200 (based on my current salary). I make 78k now and put an additional 7% in a 457 every paycheck. I have about 100K in retirement funds so far, not including the pension account.
OK, some quick and dirty calculations (please check my math). You can try these yourself at any number of websites. I will list one below that walks you through the calculation process.
So first FV. I assumed 5% for 25 years of payments (death at 84) with an annual payment of $38400 with the payments fixed (no increase for inflation). The future value of this income stream at age 59 would be $568,267.84.
Now to discount that to today. FV is $568k, IR remains 5%, number of years is the time until you take it (19). PV would then be $224,882.55.
In other words, taking another job would need to provide you additional income in excess of $225,000 (assuming all else equal like same rate of return) over the next 19 years, or about $12000 more a year in income. You would need to invest all $12000 of that (before taxes) at 5% to replace the lost income.
All else being equal, I think I would stay with the state and collect my fat pension income - that will continue to go up if you get a raise.
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