So I have been learning as much as I can and pretty much have my finances in order (or if not I am sure MMM members will tell me) and had a few loose ends that could be separate threads in themselves, and are likely covered else where on the web. Please answer any area you know or link me in the right direction and thanks!
OVERVIEW: I am a mid 40's govmnt employee making around 70k before taxes, and contributing 9% to pension (no choice) 18k to a 457 (no match) fund a traditional IRA if my AGI is low enough, I want to fully fund my HSA but my current HDHP has a employer funded HRA account attached so I don't qualify for an HSA contribution this year. We also are required to contribute to social security so for whatever it's worth when I reach the appropriate age I will be "fully" funded / payed into the system.
PENSION: If I stay with this employer I must fund it. I can start it as early as 55 ("normal" retirement age for the plan is defined as 65), but if I start it early I must take a penalty of 25% of the accumulated payout value (2.5% for each year before 65, for reference full payout if I left at 55 but waited until 65 to start payments would be $38600). The plan pays 2% / year X years of service and is based on the average of your last 36 months of pay. I will have 20 years at 55 and estimate my payout $31000 / year until death if I started it at 55. The present value in the plan I have contributed is supposedly around $71k (employer matched this too but I have no cash out access to their portion). If I leave I can only take my contributions. I should mention at the time of retirement / pension activation there is NO COLA on this pension. It is forever the same payout.
- Based on these figures my question is should I leave this employer and cash out my portion of my pension and invest it or just leave it there? I can always goto another employer with same or more $ and a slightly more generous pension.
HEALTH CARE: The employer offers 2 plans. One is a PPO that I am on this year which has the HRA attached to it, the employer puts in $1k / year. Unfortunately if I leave or don't use it for medical expenses I have no access to this. Based on previous posts to MMM and research / links provided (thank you all), I have learned I need to ask about suspending the HRA or attempting to get it recharacterized for Dental/Vision only. I found out there is a second plan I can subscribe to as well, without an HRA, but I think the deductibles are higher and the coverage is not as good, I have to wait until the end of the year to see what the plans are for 2016. Currently the employer charges about $180 / month for my premium.
- My question is do you know if I can refuse employer health plans and go to the open market? If so based on the current market setup are market plans remotely cheap enough to justify this? My whole point here is to try and find a way, if it makes sense financially, to fund an HSA.
FUNDING / INVESTING: Based on MMM again and other sources most of my funds are in IRA or taxable Betterment accounts currently, and my 457 is serviced through Principal (no choice on the 457 provider). I have close to 0 experience investing or fund understanding other than from MMM and others I know I should fund employer accounts first, then IRA's if possible, and last taxable accounts. My 457 has to be funded by payroll deduction only, not a problem, however I would like to understand more about how to interpret fund returns, costs and fees associated with funds and how to make some semi-intelligent decisions instead of leaving my funds on auto-pilot. I know this is a huge piece of knowledge but if there is some links or courses that are for beginners please send them to me.
SAVINGS: Currently I have about 165k between taxable, savings, IRA's, Lending Club accounts, etc and no debts.
EXPENSES: My current expenses are reasonable, I have found ways thanks to MMM and you all to reduce some costs, but overall I am around 2k / month currently and was already there basically before I became enlightened to MMM. I also have found a way to do some side work and make an additional $800 to $1k a month.
Thanks for your time and critical analysis.
