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To expand on a point JLC made, can you let us know if you are provided any COLA adjustments on the pension income?

I assumed you had some COLA so I did not add inflation to my calcs but if not, you have to discount the current and future income for potential inflation. I would use 3-4%. That would make them significantly less attractive. $670 adjusted for 3% inflation over 18 years would reduce the purchasing power down to $394. 4% would take it down to $330.

Note, even at 4% inflation, I still might take the the pension at $330 a month inflation adjusted dollars versus the $35,000, invested at 6% for 18 years, and then take 4% of that, for $333 a month. That is a lot of risk over 18 years to get an extra $3 a month. There were a lot of people in 2007 five yrs from retirement that had to change their plans based on faulty assumed rates of return.
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