Wednesday, June 15, 2011

I'm Never Leaving My Job!

Mark my words Internet, I am here to stay. Today I got my annual pension statement and it's just awesome.

I've been a public employee for almost five years but I didn't officially join the retirement system until April, 2007. I am currently in the process of buying back the service credit from the period in which I wasn't a member. I will be done paying that off in a couple of months. This means in April of next year I will be vested in my pension since it will have been five years since I joined but I will have 5.6 years of service credit.

Vesting in HUGE since, in the five short years since I've been a public employee, the state has created one new tier and is about to create another one with a lot less benefits than the tier I am eligible to vest in. Two major things the new tiers won't have that I currently have are the ability to retire at 55 without penalty and the fact that after ten years I will no longer have to make any contributions to my pension.

Thus, I get out so much more than I put in. Here are some numbers:

As of April 1 of this year my pension contributions total $5,999.95. Assuming I make the same salary for the next six years I will have contributed about $14,000 to my pension. Then I stop contributing but keep working for at least ten more years. How much do I get?

Using a final average salary of $49,312, when I am 57 years old I will have 30 years of service credit. I will thus be eligible for a Single Life Allowance of $29,587 a year. That's 60% of my final average salary. All for contributing just $14,000! This is totally morbid but even if I only collect for one year I am getting 2x my money back! Note that I'll probably elect one of the Joint Allowances because I'm married and then it's a little less ($24,900).

Will I make it to thirty years of service? I don't know. I hope so. We're still child free so I assume I will work until my hypothetical kid is in college. Being that they're not born yet that's another 24 years or thereabout. Even if I only worked twenty years I am still eligible for a sizeable pension as well (just not sure how sizeable).

So....twenty six more years to go!

12 comments:

cuteellaisbold said...

I, too, made that tier and am so glad I did! You know you can move around and keep your service years right? So in theory, if you wanted to do your job, but not where you are now, you can just move to another agency that participates in the retirement system! Like if I wanted to leave where I am and be a teacher or go to a State office I'm still in. In my mind, options make that 30 years more palatable.

Anonymous said...

Wow, i've been worked for public agency for 4 yrs and haven't even bothered to think about my pension allowance...maybe because i think they'll be some legislative changes or that i don't think PERS will invest it wisely. I have another 25+ yrs too...

Sallie's Niece said...

Constitutionally they can't reduce benefits after you're vested. Sure they can change the constitution but I'm hoping that creating the two new tiers means they're not going to try that. (This is for New York state).

Bluezette said...

Given the current political climate towards government employees on every level, do you think it's prudent to publish the benefits and the numbers? I think it can only inflame the masses. Public employees are having a tough enough time being attacked from all sides by the people they serve. (And, no, I'm not a public employee.)

Sallie's Niece said...

You raise an interesting point, Bluzette. I'm not going to censor myself however and my pension is a big factor in planning for my future so of course I'm going to write about it on my personal finance blog. Anyone who feels I'm not worthy of this benefit is welcome to voice their concerns to their elected officials. I, for one, think devoting my career to public service should and does have its benefits and anyone who is jealous is welcome to apply for a job.

Garnishments said...

I was surprised that you detailed your retirement allowance on this blog…I concur that it’s your blog, so you should feel free to write as you will. While I do think about what my ret allowance will be, I do have a feeling (at least in CA) that something will happen to public pensions. I am not counting on the contributions to uphold the cost of my retirement (the tax payers will have to pick up the tab I am sure). I sometimes I wish they’d allow us to invest the money!

Bluezette said...

I share your feelings, SN. I didn't intend it as criticism. I guess I'm just extremely tired of listening to my fellow citizens, along with my state and federal representatives, try to turn "Public Servant" into "Public Enemy #1". (New diagnosis: Tea Party Fatigue?) I hate to give them any excuse to go on another rant. :)

Living Almost Large said...

This is why pensions are not financially sound. That you can contribute $14k and get $29k/year for the rest of your life? How is that sustainable with those contributions?

I am not upset because the dumb NY state government promised it and they should stick to it, trust me my mom is the same way. Public worker getting great retirement and she still doesn't get that she gets a lot more than she ever contributed.

But the truth is that in her state they started curbing pensions around 20 years ago, grandfathering in retirees. They currently are changing things as we speak. Can that happen in your state?

I think the longer this economy goes on, the more unsustainable it will be.

Living Almost Large said...

Wait the numbers aren't working. If you work 10 years you only get 20% or 2% per year of service i assume? Because 30 years of working you would get 60% of $49k/year?

But you have to calculate your contributions for 30 years...so calculate what you contribute to be a realistic amount, a lot more than $14k, but not enough to cover the pension I guarantee.

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I, for one, think devoting my career to public service should and does have its benefits and anyone who is jealous is welcome to apply for a job.

Sallie's Niece said...

Hi LAL I'm sorry I never responed to your comment all those months ago but under my tier I only have to contribute for 10 years, not 30 years.