Hi CMF, been a very long time since I posted or frequented this forum, lurking for about a week now.
Question is about whether to buy back service, but with a twist I haven't seen mentioned yet. I am in a typical gold-plated DB plan, payment is 70% of best 5 consecutive years, indexed to inflation, etc. I will soon have the option to buy back a few years of service, maybe 3 or 4 years max.
I plan or hope to have the ability to stop working in about 5 years, having accumulated 10 years of service (without buyback), and would be able to leave the monies in the plan untouched until 65 yrs to receive the 'full' amount. The twist is that the value of "70% of my best years" will be calculated on my current salary, and that figure will be 'decimated' by inflation over 25 years. Actually with a basic 2.5% inflation estimate, the FV of my current salary would be projected to be half what it is now.
I these gold-plated pension estimates always assume you work the last 5 years earning your maximum salary, however, this is likely not the case for me. In any other scenario I fully believe buying back time is always beneficial, but does my early retirement plan change this? Also, how realistic is the fear that these public pension plans will be severely underfunded 25-30 years from now, and 'austerity' measures will be put into place further reducing the value of the plan?
Question is about whether to buy back service, but with a twist I haven't seen mentioned yet. I am in a typical gold-plated DB plan, payment is 70% of best 5 consecutive years, indexed to inflation, etc. I will soon have the option to buy back a few years of service, maybe 3 or 4 years max.
I plan or hope to have the ability to stop working in about 5 years, having accumulated 10 years of service (without buyback), and would be able to leave the monies in the plan untouched until 65 yrs to receive the 'full' amount. The twist is that the value of "70% of my best years" will be calculated on my current salary, and that figure will be 'decimated' by inflation over 25 years. Actually with a basic 2.5% inflation estimate, the FV of my current salary would be projected to be half what it is now.
I these gold-plated pension estimates always assume you work the last 5 years earning your maximum salary, however, this is likely not the case for me. In any other scenario I fully believe buying back time is always beneficial, but does my early retirement plan change this? Also, how realistic is the fear that these public pension plans will be severely underfunded 25-30 years from now, and 'austerity' measures will be put into place further reducing the value of the plan?