Planning on a government pension

[FireDAD]

I am in a unique scenario I never anticipated and would really like some guidance.
I now work my primary career as CFO for a government organization in Colorado.
This means that I am subject to the CO PERA plan.

According to their calculators if I get below average increases and work another 10 years to age 43, quit and leave the money alone, it would pay me $5,000 a month beginning in 2045 (this is the reduced amount that would continue to pay my spouse in the event of my death). Since that amount is more than I need to retire and would cover about 140% of my retirement expenses I think that means I really only need to save enough to cover me from 2029-2045 at which point this pension would kick in. Add in to that I worked over 10 years paying into Social Security so I would also eventually get that benefit as well.

My question is: Has anyone made a calculator or plan to only need 16 years of expenses? It's a really strange situation because even if the math says I would reach my number sooner than 10 years from now; every year I quit earlier than 10 would exponentially reduce that benefit I would start getting in 2045.

If my current numbers help we have about $200k invested now with a retirement goal of $50k a year in expenses.
We are currently saving about $60k a year in 457s, 401k, IRA and after tax accounts.

thank you in advance for any insight!

[Cassie]

That seems like a high pension for your years of service but maybe you are a very high earner. By the time you collect your pension 50k/year won’t be enough.

[the_fixer]

Double check the PERA and social security requirements. We looked into it when my wife was getting her current job as they had the option to hire her through the college or directly as a Fed and if they went with the College she would be under PERA and would have lost her ability to get social security unless she worked for like 30 years or something crazy under social security along with her PERA time.

We are in Colorado as well so double and triple check.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.copera.org/sites/default/files/documents/5-36.pdf&ved=2ahUKEwikss-qkcThAhVDXK0KHfpWCjYQFjABegQIDBAH&usg=AOvVaw1fo5yV3P_c9cBX_ARwESOe

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[FireDAD]

That's super interesting about the PERA and social security rules. I had not heard that before.

As far as the concern for the funding we are about as good as can be. The laws passed pretty much ensure it will be funded as I need it. The state took some pretty major steps last year to plan for the best and the worst.

To the other: yes, fairly high earner, at least for a public employee.

[BicycleB]

Does PERA adjust for inflation?

I have a small future pension in another state's plan. We don't get any inflation adjustment. My payout doesn't begin until a specified future year; the amount is now fixed because I have stopped working (FIREd, more or less). If your plan works like mine, 26 years compounded at 2% would reduce the value by about 40% by day 1.

[FireDAD]

Do you have access to a tax deferred government 457 plan? If so it could bridge the gap since you can start making withdrawals at any age penalty free once you leave you current gov job.

Also check out the Soc Security Windfall Elimination Provision (WEP) with regards to government pensions and Soc Security. Basicly if you have a gov pension you do not pay SS on but have earned a SS benefit from another job, your future SSS benefit will reduced by a certain amount - currently around $450/month. Spouses who collect ontheir current or former spouses record get cut even further with something called the GPO (government pension off set) which reduces spousal benefits by 2/3rds your pension amount after the 50% spousal benefit reduction


I retired at 42 with a small ($900/month at 50) CalPERS public safety pension I could get as early as 50. I planned to use my 457 to.bridge the gap but had enough in cash (bonds and laddered CDs) to cover my low expenses so left it to grow.

I do currently max the 401k and the 457

[Valvore]

If you don't need your savings to sustain you, wouldn't you only need your spending 50k x 16 years?

So you need 800K to last your 16 years if you withdraw 50K/year. Again you will draw down the savings to zero so the 4% rule or SWD doesn't apply.

Or you could account for 7% growth each year even when you withdraw 50k/year. Then you would only need ~475K

Year   Base Stache   withdraw    base stache@7% Year end stache
1    $475,000.00    50000    $33,250.00     $458,250.00
2    $458,250.00    50000    $32,077.50     $440,327.50
3    $440,327.50    50000    $30,822.93     $421,150.43
4    $421,150.43    50000    $29,480.53     $400,630.95
5    $400,630.95    50000    $28,044.17     $378,675.12
6    $378,675.12    50000    $26,507.26     $355,182.38
7    $355,182.38    50000    $24,862.77     $330,045.15
8    $330,045.15    50000    $23,103.16     $303,148.31
9    $303,148.31    50000    $21,220.38     $274,368.69
10    $274,368.69    50000    $19,205.81     $243,574.50
11    $243,574.50    50000    $17,050.21     $210,624.71
12    $210,624.71    50000    $14,743.73     $175,368.44
13    $175,368.44    50000    $12,275.79     $137,644.23
14    $137,644.23    50000    $9,635.10     $97,279.33
15    $97,279.33    50000    $6,809.55     $54,088.88
16    $54,088.88    50000    $3,786.22     $7,875.10

[rubybeth]

I got some advice on pensions in this thread: https://forum.mrmoneymustache.com/post-fire/how-did-you-factor-in-a-pension-or-other-income-streams/