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Author: DeeMGee2024 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: Buy years or buy stocks Date: 9/12/2013 11:14 AM
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Here are the numbers. It currently costs 27k to purchase 1 year. She plans to retire in 7-8 years.
The purchase price is based on current salary, 75K, and the pension benefit is based on highest average salary(HAS). She recently had raise/promo to 115k which should grow modestly over the next 7-8 years by 1-3% per year.

By purchasing years, she increases her pension benefit payout percent as follows
no purchase, pension = 27.5% of HAS
purchase 3 yrs, pension = 37.8% of HAS
purchase 6 yrs, pension = 50% of HAS

One essential consideration is the risk that she will not be able to or want to work in the system for 7 years. If a better opportunity presents itself, we would hate to be locked into this commitment.
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