Redoing retirement- cash out pension or stay in?

[BFive55]

I'm moving to a different state and because I work for the state government I get a pension. Since I am working for a new state government I do not get to buy back any time, so I have to start from 0 to earn a full pension at my new workplace... not a big deal, I was planning to work 25ish more years anyway.

I am vested in my current pension so I get my contributions plus my employer contributions. It's approximately $152,000. This is not a 457, but a "typical" government pension.

Because I would have to wait until I'm 60 to draw the state pension I earned, it would be worth something like $400 (assuming inflation halves it) per month.

I was considering taking it out and rolling it into a 457 plan in the new state so I do not incur penalties and fees. I'd probably invest it in a T Rowe Price Blue Chip value fund or Vanguard 500 admiral shares.

Does taking it out and re-investing it sound better than leaving it?

Finance was like "I can't offer you suggestions but I'd leave it..." which wasn't too helpful since they didn't run numbers or do anything. And if I stayed a full 30 the pension would have been amazing but life changes things, so... *shrug* There is the potential for much higher gains but also losses versus a guaranteed pension.

[Financial.Velociraptor]

Which state?   Does that state have a fully funded pension or is it at risk?  If you might lose it, withdraw and roll to vanguard.

[reeshau]

You should be able to roll it into a traditional IRA.  While there are a few states that could be in OK shape, the chances are not likely.  Particularly if you are planning to build up *another* state pension, take the diversification and the assurance that you own that money.

[Retireatee1]

How many years to retirement?  I had a similar situation with a MegaCorp pension and went with the lump sum so I could invest it properly (10 - 20 years to retirement)

[FIPurpose]

Considering $400 per month is about a 3% withdraw of it's current value. That's pretty lousy. Unfortunately, a lot of pensions don't really start to make sense until you get to the very end of a 30 year career.

You could just about withdraw that and start withdrawing $400/month today with just CD's. Or you can buy annuities that provide a better return than that. I think they're running about 4% right now.

Either way, looks like the best option is withdraw to me.

[CarolinaGirl]

How many years to retirement?  I had a similar situation with a MegaCorp pension and went with the lump sum so I could invest it properly (10 - 20 years to retirement)

Same.  I didn’t trust that my old MegaCorp would manage it’s pension plan correctly or that there would be a plan when I retired.  Since making that decision, they have been in the news the past few years for a TON of inappropriate behavior and fined out the wazoo over and over and over.  I feel good about my decision and am glad that I am the one managing the money.

[BFive55]

How many years to retirement?  I had a similar situation with a MegaCorp pension and went with the lump sum so I could invest it properly (10 - 20 years to retirement)

15 years based on my age but will work for at least 25 more years if able.

[Retireatee1]

How many years to retirement?  I had a similar situation with a MegaCorp pension and went with the lump sum so I could invest it properly (10 - 20 years to retirement)

15 years based on my age but will work for at least 25 more years if able.

If you can model it as a basic defined benefit pension, you can run some simulations with this tool (in advanced mode):

https://forum.mrmoneymustache.com/share-your-badassity/launch-of-the-2019-retireator!/