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Author: flooct Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5082  
Subject: Re: Buy out pension? Date: 1/18/2004 10:59 PM
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My original question.
DH is set to retire in April. We received info from his pension plan that if he goes out with 25 years his pension is xxxx. If he wants to buy out his 26th year we have to pay in $5200 by April 1. Paying the money increases his monthly check by $82.50.

So would this be a good thing or not? I would take the money out of the e fund currently earning 2% if we decided to do it. It would be paid back (in the form of the increased pension) in 5 1/4 years.


A little more info on DH's pension.


Not guaranteed, but seems to be a pretty sure thing (Teamsters)

Pays his entire lifetime, no COL increases that I am aware of.

He refuses to take the spouse benefit, which would cut his pension by 15%, but guarantee ME 1/2 of his benefit after he dies for the rest of my life. He insisted instead (because all the other guys at work do it) that we buy life insurance on him. We did, but it is a 20 year term, and after that the premiums jump to over $1000/mo. (duh, makes sense to me, who wants to sell life insurance to a 77 year old
man?).

DH thinks because his parents died at 69 and 71, he too, will die about that age, so I'll be OK with the life insurance money and my SS. (He plans on spending all the 401 and IRA money while he is alive).

So he would collect his pension for approx 14 years--according to his thought process.

Does this help at all, or just confuse the issue?
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