A few weeks ago I receive a really great question from a friend of mine (we’ll call him LJ) regarding whether or not he should take a pension purchase option that his employer is offering him. Here’s the email he sent me: I'm thinking about buying 5 years of generic pension service time. Seems like a no brainer, right? Not quite. I've had the actuarial done and it will cost me $37,800. A good chunk. I have the money in a 457 account and can roll it over to my pension administrator. I plan to retire in 22 years at 60 when I am eligible to draw the pension. I have 13.5 years of service currently. This would make it 18.5 years. The reason that I'm considering this is that my pension multiplier is going to be reduced on Jan 1st from 2 to … [Read more...] about Should I Go for a Pension Purchase Option or Invest the Money? – A Reader Question
pension vs 401k
The Pension vs 401k – The 401k Did Not Kill Retirement
Every now and again when I read through the headlines on my favorite money news sites, I see the same desperate-for-attention headlines proclaiming that “retirement is dead” and that we basically have no hope of ever saving enough money. How do they draw those conclusions? The usual suspects cited are the decline of pensions, the deflating of Social Security and the rise in costs as reasons why none of us can save and why we’ll all need to work until we are 80. And then there is my personal favorite: The 401k. They talk about the 401k like it’s a James Bond villain. When they compare the pension vs 401k, they describe it as a horrible and inefficient means for retirement. Basically, their message is that the 401k killed … [Read more...] about The Pension vs 401k – The 401k Did Not Kill Retirement
