UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev | Next
Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76420  
Subject: Re: State pension vs Higher salary Date: 4/19/2012 2:05 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
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.

https://www.networthiq.com/people/FinanceMom/tips/determinin...

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.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement