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Author: jgc123 Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76395  
Subject: Re: Buy years or buy stocks Date: 9/11/2013 10:33 AM
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It is impossible to answer such a question in a void. The first thing I looked up, which may or may not be reliable, listed Colorado as the 37th most secure state pension fund, about 66% funded:

http://www.chicagobusiness.com/article/20130110/NEWS07/13010...

Another factor is your age and job security. In Virginia, pensions start making sense if you reach the 20, 25, and 30 year marks. If you have to retire before that, the pension is very modest.

In my wife's case, she is one or two years away from the 20 year mark, at which point the monthly number jumps from about $1000-1100 per month to $1700, and if she makes it to the 25 year mark it jumps to over 2300 per month, and at thirty it jumps to over $3000 per month.

My wife bought 4 years about 15 years ago. In my wife's case it may work out because she is nearing the 20 year mark and her pension provided a nice hedge against the crashes of 2000-2, and 2008-9. At the moment, the money she put into the pension will produce more income than an equal amount of money in her IRA based upon a withdrawal rate of 4%.

Whether that will be true five years from now, is unkown. And of course she owns the corpus of the IRA and not just the monthly income, which provides a measure of flexibility that the pension does not offer.

If possible, I recommend both - buy the years and max the 403(b).
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