Yea my wife stays home with the kids now and we put money into a Roth IRA for myself and one for her as well. Only requirements are that
It said she would get roughly 24k a year. 65% of 65k is 42250. Divide 24000 by that and you get 56%. So I’m being generous when I say they cut 40%.
Because she can’t retire with 87.75. Age 55 plus 32.75 service. Not sure where you got 34.75.
I am in PERA in Minnesota. They stopped automatic paper benefit updates (were only annual) before Iowa did. Now you have to opt out of electronic access and I'm not sure if you can even opt out anymore. Their quarterly newletter which used to be one fanfold glossy sheet front and back is now electronic too. In addition they only have a few "retirement planning" sessions around the state each year. There are generally 5-6 of them spread around the state each year.
Take 65K, divide it by .6275 and you get $40,787.5 , that is pre tax per year. Now divide that number by 12, months in a year. That give you $3,398 a month pre tax. Depending on the plan she takes, she will either get that, which is plan 1 or less if she wants to be able to give money to her beneficiary. Like I said before, we took plan #5, which give each of us less money per month, mine was figured on an average of $58K a year and I clear after taxes $2557. Your wife is going to be closer to 3 grand than 2 a month, depending on which plan she takes. When she gets to age 62 and starts drawing her SS, between the two of them IPERS and SS she will be making more retired then what she cleared while teaching.
Every additional cost reduces the benefit that can be paid to retirees. It is reasonable to expect there to be a few meetings spread out around regions of the state that people can attend. I think it is unreasonable to expect them to hit every town in every county and it would be just one more cost dragging down the benefits that members have earned.
If you go to the IPERS website they have a virtual meeting that you can sign up and ask questions every month. How much easier do they have to make it for some people. I can see why they do not go from school to school and city to city, unless it's mandatory, most people would not attend. I mean if I am in year 5 and 30 years away from retiring, why would I attend a meeting like that?
You second part is basically my point. They sent her info saying when she hits rule of 88 at this point (which she would not be there) she would get 2k roughly. Why not put info when she actually meets the 88 instead of saying she is there but she isn’t and give a number that is way off?
Because the number they gave her, she does not have her rule of 88, only the required age of 55 to be able to draw. She is only looking at her age, and thinking "I can retire at age 55" not factoring in, that she will not have her rule of 88 at that time. Like I stated before, I know of only one person that actually retired at age 55, and he started back that fall, taking a half time position. Some do bounce out of the state, and teach in a neighboring state while collecting their IPERS in Iowa, so they are double dipping. Just have her teach an extra semester or a year, and she will be fine, it will actually add more time to her IPERS count.
Probably meant to multiply by 0.625 instead of divide by 0.625 . . . .
A real consideration that needs to be looked at with semi recent legislation (not going politics just citing there have been changes) is it better to be a Roth or pre-tax? A Roth was a no brainer forever, but with Iowa not taxing retirement income and the federal level even having discussion of a reduced rate in the past, pre-tax may be getting more attractive
My takeaway after years of hearing both sides....everyone is different. There are so many different factors that there isn't one right answer. For me, it's to retire with about 30% Roth/70% Traditional. One example, it's going to allow me to get ACA discounts from 60-65 by making my income look somewhat low.
That is the reason I threw it out there. When Roth’s first hit, the prevalent statements were that everyone would be in a higher tax bracket when they retired. One of the biggest selling points. Now it’s kinda swung the other way.
My tax advisor put it this way for us. You have all of your pension, 401k, regular IRA, 457, etc. that were pre-tax and you will be taxed on at withdrawal for your regular living expenses. You then have your Roth that was filled with post tax dollars for big irregular purchases like buying a car or taking a big trip. That way the out of the ordinary big withdrawal and spend doesn't bump you into a higher tax bracket that year.
Ain't that the truth. I think they looked at Warren Buffet's 2023 tax return instead of mine.
IMO the vast majority of people that are saving for retirement aren't eligible for the tax deduction for Trad IRA contributions anyway (combo of household income + being covered by a work retirement plan)
I'm with you on the low grade fear of a market collapse due to war / famine / bad government policy / etc
I would double-check the ACA discounts-it's my understanding that those subsidies may be going away as a part of the recent "big beautiful bill". Health care coverage in the marketplace is going to get very interesting in the next few years.
