Were you offered a lump sum for your pension and turned it down?

[runwad]

Thank you DCFROMVA, that is exactly the kind of calculator I needed. The others are too complicated with all their questions!ha

 

[runwad]

So I have another question. If I take the lump and invest it what interest rate would you say is a safe % to put in the compounding calculators? 5%, I want to stay conservative. I think I might be leaning towards taking the lump and investing.

 

[Dakota731]

most of these teachers in exchange for the pensions accepted lower pay

That used to be true but not any more. Starting teachers in our area make way more than other professions with a four year degree (social workers, police officers, business majors etc) yet they can retire in 35 years at age 57 with 80% of their income. There is nowhere in the private sector that has that gravy a deal. I'm not saying take away what was promised but changes need to be made for future. Most middle class families can't afford to continue funding their own retirement plus retirement for a whole segment of the population just because they have a huge union buying many of our politicians. They need to switch to 401ks like most corporations have realized is the only way to make sense financially.

 

[tvguy]

That used to be true but not any more. Starting teachers in our area make way more than other professions with a four year degree (social workers, police officers, business majors etc) yet they can retire in 35 years at age 57 with 80% of their income. There is nowhere in the private sector that has that gravy a deal. I'm not saying take away what was promised but changes need to be made for future. Most middle class families can't afford to continue funding their own retirement plus retirement for a whole segment of the population just because they have a huge union buying many of our politicians. They need to switch to 401ks like most corporations have realized is the only way to make sense financially.

Very much a regional thing. As I have learned on this board there are places that teachers are not well paid. This is an area with well compensated teachers, starting $43,196,topping out at $87,219 after 10 years. 9 month contract. Stipends for teaching summer school and for coaching a sport or leading band etc. Retirement is maxed out after 30 years service, and while you have to be 50 to retire, not sure how it's possible for most teachers to start work before about age 22 if they finish their degree in 4 years.

 

[vacationer1954]

So I have another question. If I take the lump and invest it what interest rate would you say is a safe % to put in the compounding calculators? 5%, I want to stay conservative. I think I might be leaning towards taking the lump and investing.

A lot of people read the word "conservative" and think it means "assured" or "better". In investing, the more conservative investments are generally the ones most likely to lose value against inflation. While there is more of a chance of losing the money entirely, with more growth-oriented investments, there is also more of a chance of keeping up with inflation, especially with growth choices made within reasonable criteria. Also, it seems a little weird to look at one bit of money, like the lump sum from a pension, and think about the compounded future value of that bit of money. Managing your retirement is about managing the whole thing. If this pension is all you have then it makes more sense, but it also makes sense that you're going to invest this money in different parts, each a different way.

 

[eliza61]

Very much a regional thing. As I have learned on this board there are places that teachers are not well paid. This is an area with well compensated teachers, starting $43,196,topping out at $87,219 after 10 years. 9 month contract. Stipends for teaching summer school and for coaching a sport or leading band etc. Retirement is maxed out after 30 years service, and while you have to be 50 to retire, not sure how it's possible for most teachers to start work before about age 22 if they finish their degree in 4 years.

Very true. average Philly elementary teacher is at a very low 55,000K. which for the 5th largest cities in America and a expensive Northern city, i have no idea how they survive on that salary. My job which I'll admit is a stem field industry, we sttart our beginning technicians at 63,000k. that's starting

That used to be true but not any more. Starting teachers in our area make way more than other professions with a four year degree (social workers, police officers, business majors etc) yet they can retire in 35 years at age 57 with 80% of their income. There is nowhere in the private sector that has that gravy a deal. I'm not saying take away what was promised but changes need to be made for future. Most middle class families can't afford to continue funding their own retirement plus retirement for a whole segment of the population just because they have a huge union buying many of our politicians. They need to switch to 401ks like most corporations have realized is the only way to make sense financially.

I agree with that but that's not what's going on in nj. now as far as unions go, if you get paid overtime for working more than 40 hours you can thank a union. so once again be careful what you ask for. many of the things we consider normal work practices were negotiated by unions. we don't have one at my site but holiday pay, sick pay, maternity leave, all those benefits that allow families to work and balance life are direct results from unions.

And if you change the teachers benefits why are police excluded? it would seem to me that they have huge "unions" also and getting fat perks also?

Do you think your property taxes will go do if state employees have to contribute to a 401K? (serious question)

LOL if politicians are being brought, then it would seem to me that the solution is to not punish the worker but how about not electing people you know are paid for?

 

[eliza61]

So I have another question. If I take the lump and invest it what interest rate would you say is a safe % to put in the compounding calculators? 5%, I want to stay conservative. I think I might be leaning towards taking the lump and investing.

Once again it depends on your age and situation. did you say you've got about 12 years before using the money? be careful, you don't want to be too conservative. Do you have other vehicles? also remember that annuities generally have higher annual fees. that's the trade off. I have an annuity and it carries a 2.5% investment fee. now I accept that because it gives me some guarantees that I like BUT it is one part of my total retirement portfolio?

you've got 20 years to go before taping it you don't want to be too conservative. remember with that kind of time you've got to beat inflation.

lol, but to answer you original question, yes 5% would be conservative

 

[tvguy]

Very true. average Philly elementary teacher is at a very low 55,000K. which for the 5th largest cities in America and a expensive Northern city, i have no idea how they survive on that salary. My job which I'll admit is a stem field industry, we sttart our beginning technicians at 63,000k. that's starting

LOL. That is more than I have ever made in my life, but I am not in Philadelphia.

They must have a lot of new hires, because that is only step 3 of 11 pay steps for teachers in Phillie. Starting Salary is $45,360
http://webgui.phila.k12.pa.us/offic...resources/information-center/salary-schedule2

Looking at housing prices, with the median price of a 3 bedroom house is $118,000, doesn't look like an expensive city to live in.
http://www.trulia.com/real_estate/Philadelphia-Pennsylvania/market-trends/

at least compared to the median of $235,000 here in Sacramento.
http://www.trulia.com/real_estate/Sacramento-California/market-trends/

 

[ibob52]

Deleted ...

 

[kaytieeldr]

Does this link help? https://www.immediateannuities.com/

It helped me. I had to decide between lump sum or annuity earlier this month, and the calculator showed that the annuity would be based on a 25 year life expectancy. That just doesn't happen in my family.

 

[vacationer1954]

lol, but to answer you original question, yes 5% would be conservative

I wouldn't be so sure. The most conservative investments are likely to pay less than 3% based on recent trends. Our own growth allocation, which is arguably aggressive rather than conservative, has an average return over the last century of less than 9%. If anyone knows of investments that pay conservatively 5%, please let us know.

 

[Judique]

LOL. That is more than I have ever made in my life, but I am not in Philadelphia.

They must have a lot of new hires, because that is only step 3 of 11 pay steps for teachers in Phillie. Starting Salary is $45,360
http://webgui.phila.k12.pa.us/offic...resources/information-center/salary-schedule2

Looking at housing prices, with the median price of a 3 bedroom house is $118,000, doesn't look like an expensive city to live in.
http://www.trulia.com/real_estate/Philadelphia-Pennsylvania/market-trends/

at least compared to the median of $235,000 here in Sacramento.
http://www.trulia.com/real_estate/Sacramento-California/market-trends/

Did you pull your listings as single family detached homes or as condo/townhouse listings?

The teaching profession is subject to a lot of new hires. There is a lot of turnover in the early years. Some don't want it and some don't make it. It's a tough profession.

 

[Dakota731]

And if you change the teachers benefits why are police excluded? it would seem to me that they have huge "unions" also and getting fat perks also?

Definitely and politicians too! Why should certain groups get special perks because they have a huge union buying politician's votes? We have several cities near us going bankrupt because of government pensions. And our family certainly can't afford any more school or local taxes to pay someone else's pension that they don't even contribute to -it's nuts! Everyone needs to go to a 401k plan like most of the middle class has had for decades.

 

[vacationer1954]

I doubt switching everyone to 401k plans will solve the problem. While my spouse and I are probably going to be fine, I know many of our friends who are going to run out of money in their 401k before they run out of time.

 

[eliza61]

LOL. That is more than I have ever made in my life, but I am not in Philadelphia.

They must have a lot of new hires, because that is only step 3 of 11 pay steps for teachers in Phillie. Starting Salary is $45,360
http://webgui.phila.k12.pa.us/offic...resources/information-center/salary-schedule2

Looking at housing prices, with the median price of a 3 bedroom house is $118,000, doesn't look like an expensive city to live in.
http://www.trulia.com/real_estate/Philadelphia-Pennsylvania/market-trends/

at least compared to the median of $235,000 here in Sacramento.
http://www.trulia.com/real_estate/Sacramento-California/market-trends/

I think unfortunately you have to take medians with a grain of salt in cities. You're right house medium is about 118K but at that price point it's a good chance you're going to end up in some not so nice areas. I live in fairmount which I always think of as firmly middle class ville, lol starting 3 bedroom condo's and homes hang out around 300K depending on sq footage. a couple of blocks away and I mean literally 3 blocks a developer just gutted and refurbed some townhouses. gorgeous except for the 900K starting price.

remember the thread we had a couple of months ago on the community board, I think it was something like " what do you consider a comfortable salary"?
that was an eye opener Lol, I keep saying I want to do an Ana Nicole Smith and meet a 90 year old uber rich dude, unfortunately there doesn't seem to be a lot of those around.


http://www.disboards.com/threads/what-do-you-consider-a-comfortable-yearly-salary.3448012/

Ironically it's a city with a very large "rental" population (I'm taking a real estate investment class at temple, trying to figure out what i want to be when I grow up). Rents are lower than the average especially compared to major cities close by.

I think California is a "place" unto itself. I saw an article on kiplingers, one of those top ten articles and this one was the top 10 most expensive places to live and California had 5 outta 10. whew.

 

[HeyIt'sMe]

My DH has a small pension from a company he used to work for. That pension is terminating and our options were: lump sum payment, immediate annuity, deferred annuity. He went with the deferred annuity (contract will be purchased from an insurance company) and will take payments at retirement age (he is currently 48). The lump sum was $16,000; the monthly deferred annuity payment is $251/month.

 

[jrmasm]

I doubt switching everyone to 401k plans will solve the problem. While my spouse and I are probably going to be fine, I know many of our friends who are going to run out of money in their 401k before they run out of time.

It won't if the state and school districts continue not to make the payments they are supposed to make.

 

[ilovediznee]

I'm doing the opposite. I've been working two jobs - one FT and one PT for years to pay down my debt accumulated over years of bad choices but most importantly medical expenses for seeing a provider at a non-preferred hospital. What a nightmare! I received a letter in Sept from my old employer and I literally totally forgot about my pension there. After them taking the 20% and me taking another 10% for possible taxes, the amount literally will cover all my old bills and I can start over again. This was totally unexpected but this is the decision I made. I don't want to have to work a second job and only have a few short years left with our daughter until she leaves for college. This debt has stressed me, made my weight go up and has prevented me from doing things I want to do. Again, this was my decison and I consulted a tax person. I've worked by tail off but this will end it all and I know I will have peace of mind. Waiting for my money now and I have a spreadsheet of exactly who I owe, how much, etc. My mind and body need this to start over.

 

[tinatark]

Who knows how to work the annuity calculators? If I took the 22k lump and put in an annuity for 20 years how much would I have? I can't figure out how to work the calculators. Can anyone help?

https://gie.fidelity.com/estimator/gie/gielanding

 

[tvguy]

Did you pull your listings as single family detached homes or as condo/townhouse listings?

The teaching profession is subject to a lot of new hires. There is a lot of turnover in the early years. Some don't want it and some don't make it. It's a tough profession.

I have no idea how they figure it, but since it is the same source, whatever type of housing should be comparable from the two cities.