Help me understand my pension numbers

[Anonymous]

Help me understand my pension numbers. I want to know how I am doing compared to those who have a 401k. I don't think I am doing that great, but I am thankful for the "safer" job. It just means I need to start investing in other type of investments because as of now I just have a 529 for my son (I have never been married I am single), an 8 months emergency fund, and my pension. My only debt is a monthly car loan. And I rent. As far inheritance, I guess I will inherit my parents home. I am their only child. But thankfully they are in amazing shape both 70, so they will be around for awhile crossing fingers.

So I am 46 and I have been with my employer for 14 years. For example, If I leave this summer and take cash the amount will be $200k or if I defer and take the pension at 62 the amount will be 25k/year pension. But If I take the pension instead at 60 or 65 respectively, the yearly pension amounts will be $59k/year or ($27k year and $327k lump sum), and at 65 the yearly pension amounts will be $65k/year or ($31k/year and $425k lump sum)

I am just trying to figure out if I had a $401k instead, what would be the equivalent amount? Most people have a 401k, so I am just want to know how I am doing compared to most.

My guess is perhaps the $200k cash amount would be the 401k equivalent. If yes, that's a disaster and either I leave NOW and take a higher paying job elsewhere if I can find one at my age , or stay until 62 (assuming of course I am not laid off by then) and take the lifetime pension.

[Anonymous]

Anonymous wrote:Help me understand my pension numbers. I want to know how I am doing compared to those who have a 401k. I don't think I am doing that great, but I am thankful for the "safer" job. It just means I need to start investing in other type of investments because as of now I just have a 529 for my son (I have never been married I am single), an 8 months emergency fund, and my pension. My only debt is a monthly car loan. And I rent. As far inheritance, I guess I will inherit my parents home. I am their only child. But thankfully they are in amazing shape both 70, so they will be around for awhile crossing fingers.

So I am 46 and I have been with my employer for 14 years. For example, If I leave this summer and take cash the amount will be $200k or if I defer and take the pension at 62 the amount will be 25k/year pension. But If I take the pension instead at 60 or 65 respectively, the yearly pension amounts will be $59k/year or ($27k year and $327k lump sum), and at 65 the yearly pension amounts will be $65k/year or ($31k/year and $425k lump sum)

I am just trying to figure out if I had a $401k instead, what would be the equivalent amount? Most people have a 401k, so I am just want to know how I am doing compared to most.

My guess is perhaps the $200k cash amount would be the 401k equivalent. If yes, that's a disaster and either I leave NOW and take a higher paying job elsewhere if I can find one at my age , or stay until 62 (assuming of course I am not laid off by then) and take the lifetime pension.

My friend stay where you are. $31k/year and $425k lump sum even without social security or any type of IRA account, you will be able to live a very basic retirement in a LCL area. In that scenario the $425k lump sum, you can put the proceeds after paying for taxes into safe investment accounts and live off the monthly interest.

And if you start a ROTH this year and max it for the next 20 years that's going to be even better.

I'll say if you stay in place until retirement, as of today you are closer to folks who have about $1.2 million in their 401k

[Anonymous]

Are you a man or a woman? How old were your parents or grandparents when they died?

[Anonymous]

Is your pension COLA adjusted? That will make a big difference. Also how secure is it…ie federal government or a private company.

[Anonymous]

So, most people value assets using the 4% rule which is that you can safely withdraw 4% of your 401k (or whatever nest egg) annually in your retirement. The idea is that if you have a million dollars nest egg, you can see that as 40k "income" per year.

You can reverse that to 40k x 25 = 1 million

So in your case, if you stuck around to get the 30k income per year, you could multiply that by 25 to get a rough estimate of the "cash value" of your pension.

30k x 25 = equivalent to a 401k with 750k in it.

It's just a rough estimate. PP asks good questions about whether your pension adjusts for inflation and is secure (backed by government).

I would definitely NOT cash out the pension if you leave the job (at 14 years I assume you are vested). The choice should be in sticking with this job until retirement or in finding a higher earning job and taking the pension at 62.

Whether you stay or not, you should probably start funding a Roth IRA on your own as well.

[Anonymous]

Anonymous wrote:Are you a man or a woman? How old were your parents or grandparents when they died?

OP here. I am a man. My grandma on my moms side is still alive. I think she is 95. My Grandpa died when he was 85. On my dad's side though both his parents died by 80.

[Anonymous]

Anonymous wrote:Is your pension COLA adjusted? That will make a big difference. Also how secure is it…ie federal government or a private company.

Yes the pension is COLA adjusted. I am at an international organization.

[Anonymous]

I refer to this site for questions like this: https://andrewmarshallfinancial.com/what-is-a-pension-worth/

Applying this to the retire at 65 scenario you described, the pension is worth $1,137,500.

If you have prospects for future advancement at your current employer, the value will increase.

Third contributing to a Roth IRA to the maximum amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand my pension numbers. I want to know how I am doing compared to those who have a 401k. I don't think I am doing that great, but I am thankful for the "safer" job. It just means I need to start investing in other type of investments because as of now I just have a 529 for my son (I have never been married I am single), an 8 months emergency fund, and my pension. My only debt is a monthly car loan. And I rent. As far inheritance, I guess I will inherit my parents home. I am their only child. But thankfully they are in amazing shape both 70, so they will be around for awhile crossing fingers.

So I am 46 and I have been with my employer for 14 years. For example, If I leave this summer and take cash the amount will be $200k or if I defer and take the pension at 62 the amount will be 25k/year pension. But If I take the pension instead at 60 or 65 respectively, the yearly pension amounts will be $59k/year or ($27k year and $327k lump sum), and at 65 the yearly pension amounts will be $65k/year or ($31k/year and $425k lump sum)

I am just trying to figure out if I had a $401k instead, what would be the equivalent amount? Most people have a 401k, so I am just want to know how I am doing compared to most.

My guess is perhaps the $200k cash amount would be the 401k equivalent. If yes, that's a disaster and either I leave NOW and take a higher paying job elsewhere if I can find one at my age , or stay until 62 (assuming of course I am not laid off by then) and take the lifetime pension.

My friend stay where you are. $31k/year and $425k lump sum even without social security or any type of IRA account, you will be able to live a very basic retirement in a LCL area. In that scenario the $425k lump sum, you can put the proceeds after paying for taxes into safe investment accounts and live off the monthly interest.

And if you start a ROTH this year and max it for the next 20 years that's going to be even better.

I'll say if you stay in place until retirement, as of today you are closer to folks who have about $1.2 million in their 401k

stay until 65 and take 65k/year. you will lose so much of 425k lump sum payment to tax since it will be taxed like your normal income

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Help me understand my pension numbers. I want to know how I am doing compared to those who have a 401k. I don't think I am doing that great, but I am thankful for the "safer" job. It just means I need to start investing in other type of investments because as of now I just have a 529 for my son (I have never been married I am single), an 8 months emergency fund, and my pension. My only debt is a monthly car loan. And I rent. As far inheritance, I guess I will inherit my parents home. I am their only child. But thankfully they are in amazing shape both 70, so they will be around for awhile crossing fingers.

So I am 46 and I have been with my employer for 14 years. For example, If I leave this summer and take cash the amount will be $200k or if I defer and take the pension at 62 the amount will be 25k/year pension. But If I take the pension instead at 60 or 65 respectively, the yearly pension amounts will be $59k/year or ($27k year and $327k lump sum), and at 65 the yearly pension amounts will be $65k/year or ($31k/year and $425k lump sum)

I am just trying to figure out if I had a $401k instead, what would be the equivalent amount? Most people have a 401k, so I am just want to know how I am doing compared to most.

My guess is perhaps the $200k cash amount would be the 401k equivalent. If yes, that's a disaster and either I leave NOW and take a higher paying job elsewhere if I can find one at my age , or stay until 62 (assuming of course I am not laid off by then) and take the lifetime pension.

My friend stay where you are. $31k/year and $425k lump sum even without social security or any type of IRA account, you will be able to live a very basic retirement in a LCL area. In that scenario the $425k lump sum, you can put the proceeds after paying for taxes into safe investment accounts and live off the monthly interest.

And if you start a ROTH this year and max it for the next 20 years that's going to be even better.

I'll say if you stay in place until retirement, as of today you are closer to folks who have about $1.2 million in their 401k

stay until 65 and take 65k/year. you will lose so much of 425k lump sum payment to tax since it will be taxed like your normal income

+1. So in this case then OP will do really well if he starts investing in a roth today because within 20 years he will $220k+ tax free and a $65k/year pension. So many options with that income spree. Of course you won't have a lavish retirement, but one big bucket list every 3 years or so is not impossible. And OP has only 1 child. They are okay. They should ABSOLUTELY stay where they are.

[Anonymous]

Someone correct me if I am wrong. If OP were to leave for the private sector today, in order to generate that yearly pension of $65k per year, they will probably need to make at least $250k/year no?

In this economy (and honestly for years to come) $250k salary are not going to be handed to whoever shows up.

[Anonymous]

Anonymous wrote:Someone correct me if I am wrong. If OP were to leave for the private sector today, in order to generate that yearly pension of $65k per year, they will probably need to make at least $250k/year no?

In this economy (and honestly for years to come) $250k salary are not going to be handed to whoever shows up.

That's why pension is hard to walk away from unless you are relatively young worker

[Anonymous]

Anonymous wrote:

Anonymous wrote:Someone correct me if I am wrong. If OP were to leave for the private sector today, in order to generate that yearly pension of $65k per year, they will probably need to make at least $250k/year no?

In this economy (and honestly for years to come) $250k salary are not going to be handed to whoever shows up.

That's why pension is hard to walk away from unless you are relatively young worker

+1. OP is 46. Ageism is real and disgusting, but its a reality. Depending on their field work, if they don't leave by next year, their chance of getting a private sector job and a high paying one at 50 will be very hard. They are already considered "old" now, but they still have a chance under 50.

[Anonymous]

OP here. Thank you so much guys will all the info.

I am using a free net worth tracking app, and what amount should I put under retirement? Maybe the $200k cash I will get if I leave now?

[Anonymous]

Anonymous wrote:OP here. Thank you so much guys will all the info.

I am using a free net worth tracking app, and what amount should I put under retirement? Maybe the $200k cash I will get if I leave now?

Don't know what you are asking here.