You do realize that pension funds often suffer similar losses. At least in this low interest rate environment
Property Tax Increase
- Thread starter spierceisu
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You do realize that pension funds often suffer similar losses. At least in this low interest rate environment
You can take a lump sum. Or less money and make you beneficiary? Many take the lump sum and put it somewhere to be inherited. Am I wrong?
A couple investors I use say they generally have the teachers take the annuity type. They are typically risk averse to the max. There are several options to take. At this point my wife see what the lump sum is. The cash to pass along is more our style than a annuity that might be one year or 40 years.
IPERS invests in equities so it is odd that people say stocks are bad when that is where a good portion of IPERS money is
As for a Roth IRA that my wife started at my insistence when we married 5 years after she started teaching. She has invested roughly half of what goes into IPERS. They say her cash value of IPERS is 104k and her Roth is pushing 200k. Using the rule of 72 means it should double and add 100k for continued investments gives her 500k at 56. At 5% that is equal to what she will earn from IPERS with only interest.
Yes, i have poor education in this.
They just dont see it affect their bottom line or the monthly changes. Plus pensions have been more in bonds than stocks but they absolutely are invested. The big downturn manifests in perhaps higher required contributions but they never put 2 and 2 together.
I think a major difference in what goals are. My retirement investments are always focused on passive income earning whatever amount I desire for that and I account for any taxes and inflation going forward on that. Grandparents wanted my folks to have it better, my parents wanted me and siblings to have it better, I’m building stuff to make my kids standard better. This is why not losing principle through the pension type things is big on my radar.
But does the rule of 72 continue to apply, if we have a market correction like we had under Bush Jr? The value of your wife's IPERS will also increase over time. The difference is there is a lot less risk with a program like IPERS.
Investments have done very well over the past couple years, my last quarter had over a 9% return, but I am not counting on anywhere near that type of return in the next few years, let alone for 10 to 15 years overall.
Rule of 72 always applies. If you are asking if the 8% will hold true for the next 10, I looked and see that the funds she’s in have averaged just over 10 percent over the last ten years. So if that holds, I would be a little light on the Roth IRA.
You seem to want to make this political. I am not touching that. I am just stating why actual investments will be a better retirement strategy than IPERS.
I believe that IPERS has 7 different retirement packages to choose from, once you decide you are locked in to that package. You can take a one time lump sum payment, or max out the annuity part of it. I am looking at level 2, that choice allows us to receive right around $150 a month less than the max, but does give the beneficiary payments at that rate for I think 10 years.
You never did respond to my point that many teacher that have full IPERS and SS make more than when they were teaching. To me, that seems like a heck of a deal.
At what age are they retiring? My wife’s shows she would have to work to around 65 to 67 to get that. I will check to see what that value would be with it invested at 7%. That will tell me if that’s a great deal or not. I don’t remember what the SS tax rate is with that type of income. Are pensions taxes as regular income or passive income, I honestly don’t know.
The is just not true, if we have an economic downturn like happened under Bush Jr, you could lose a lot of those investments. I am not making anything political, just saying I know many that lost half of their investments the last time it occurred. So you have a great return for 5 or 6 years, have a downturn, and you lose half of what you had made. Then you start with your 8% return again. It does not add up of averaging 8%.
If defined benefits are such a horrible deal, then why is every major corporation in the US trying to move away from them , and why is the state of Iowa, trying to do the same thing? Real simple, all of these know that new employees will never contribute to retirement when its voluntary at the same rights, as opposed to when they have no choice.
I just dug out my last IPERS statement, if I retired in Nov. at 31 years, I would receive a monthly benefit in the amount of $2830.30 per month. If I go to 35 years at age 62 the payout is $3,031.93. at 39 years $3,314.92. I plan to retire in 4 more years. I was wrong about the death benefit, my wife would receive $278,390 as a lump sum, I would receive $182,094 if something happened to her. Looking at her statement at the age of 62 and 28.75 years it shows $2,533.69 a month. Your wife should bring in more than 2 grand a month before taxes, if she hits her rule of 88.
Ran the numbers. Wife’s sheet shows 4600 at Medicare age. This number dropped 200/month from last year to this year. If that continues over the next few years it will be getting bad.
At that age, the same money invested at 7% while earning and using 5% for a safe investment upon retirement is 5625/ month. That’s then keeping a lump sum of 1.35MM upon death (not sure what IPERS would be at 65 for a lump sum). So no, that is not a deal. The wife would be making a grand a month more, and that’s if IPERS doesn’t keep lowering her estimate.
Reason IPERS keeps lowering it is they estimate a 3 or 3 1/2 percent annual increase. Once you hit about 15 years, very few schools hit you that much, but hey it makes the numbers look better.
At that age, the same money invested at 7% while earning and using 5% for a safe investment upon retirement is 5625/ month. That’s then keeping a lump sum of 1.35MM upon death (not sure what IPERS would be at 65 for a lump sum). So no, that is not a deal. The wife would be making a grand a month more, and that’s if IPERS doesn’t keep lowering her estimate.
Reason IPERS keeps lowering it is they estimate a 3 or 3 1/2 percent annual increase. Once you hit about 15 years, very few schools hit you that much, but hey it makes the numbers look better.
Do you know what the accounting ramifications are of having a pension plan for a business? A simple yes or no will work for this.
She will actually be at 89 at 56 when she hits. It says 2,050 area. I put it away. It give or take a 20 bucks or so. She started 1/2 year out of college.
She will have 33.5 years of service then.
I could care less about how it affects a business, So no, I worry about the employee and what is the best and safest deal for them.
Your wife if she reaches the rule of 88, and at age 62 should be making as much being retired drawing SS as she is working. Be patent, and it should work out, that is if the state does not screw us over.
Getting out at the earlies moment will hurt her return, I know many that talk about doing it, but very few do. If you can swing it, great for you and her.
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She won’t work until 62. She’s going at 56. She can sub and do other things for those 6 years.
Businesses have to carry those funds as a liability. Schools and businesses have to show any vacation or personal days and a portion of sick days as a liability. Those liabilities can cause a business to have lending ratios that can boost interest rates or even preclude them from gaining funds when needed. Having that hanging out there as a pension is like a boat anchor unlike when it’s “profit sharing” and they throw it into the 401k as stock or an esop program.
If you have a poor year and lay off 10-16% of your work force now the ones pushing funds into are a smaller group, you are throwing a chunk of your reserved cash at people no longer working for you. It becomes a death spiral.
My businesses can absorb it as long as she doesn’t jack up her soending even more. The last kid will leave HS one year before she retires. And with only 3 years to pay for college it will be fine.
You may be correct, but what ever happened to the idea of LOYALITY. I will work for you till retirement, and then you take care of me when I retire? Now everything is figured to the bottom line. I suspect it better for the bottom line for a business, but what about the employee.
Look at this bill that was passed this morning, how is that good for cities and schools? Everyone is complaining about the increases of the property taxes, but what has their home increased in value during that time. I guess the right as convinced everyone that taxes are evil and now we are in a race to get them as low as we can go. But my question is what do people want to give up to get those low taxes?
