Skip to main content
No. of Recommendations: 0
I'm posting this in hopes of getting some feedback on my thoughts of using a bonus that I'm being offered for retirement.
Here's the background data first off:

I'm a government employee, age 35, who is being offered a $30k bonus (taxable) 5 years prior to retirement at 20 years of service.
If I accept the bonus, my retirement pay will be reduced from 50% of base income to 47% of base income. Normally it is reduced to 40%, however I have a weird circumstance where I broke service for a short period of time, but my pay counter continued. So at retirement of 20 years of service, I'll actually be getting 22 years of service in pay.

At the age of 62, my retirement pay will go back up to where it would have been, had I not taken the bonus. This will be reflected in an increase of 8% to 55% of base income. From there it will remain at 55% adjusting for inflation.

My plan so far, consists of dropping the money in to a mutual fund with the expectation of a 5% return rate. With the bonus taxable, I'm expecting somewhere around $22k. At the end of 20 years, with a 5% return rate, I estimate that the amount will then be $28,078.
For the first 5 years POST retirement, I plan on dropping the monthly retirement pay back in to the same account. At which point, at the end of 5 years, it should come out to around $140,269.

From there, I plan on just letting it sit and grow.

My questions are as follows:

Is there a better way?
Is there a way to deposit the money in to an account that is tax deferred, or non-taxable?

I welcome all suggestions.

Thank you

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.