Author Topic: Pros and Cons to a PERA account  (Read 1451 times)

chris316

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Pros and Cons to a PERA account
« on: March 22, 2017, 09:47:40 AM »
I'm looking at applying to a job offering a PERA account

I have friends that claim it's amazing and helps set you up very well for retirement...

I've done little research and I can't tell how actually good it is... certain things like the Windfall elimination provision and Social Security make it a little confusing... like,  do you get penalized on your PERA account until Social security age?...

Pretty much asking what are the pros and cons to a PERA account?

Can anyone help me out?

Thanks
« Last Edit: March 25, 2017, 04:42:50 PM by chris316 »

chris316

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Re: pros and cons to a PERA account
« Reply #1 on: March 24, 2017, 08:40:01 AM »
In case anyone wanted more info on what I'm talking about...

http://www.mnpera.org/index.asp?SEC=07955927-9979-4258-A426-E7760311C3C1&Type=B_BASIC
« Last Edit: March 25, 2017, 04:43:13 PM by chris316 »

birdiegirl

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Re: pros and cons to a PERA account
« Reply #2 on: March 24, 2017, 10:28:33 AM »
Posting to follow.  I know my parents had these accounts but I don't know much about them. I'm hoping to downshift in my next position and am curious if it might make sense to look at a gov't position for the "better" retirement plan. 

C-note

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Re: pros and cons to a PERA account
« Reply #3 on: March 24, 2017, 03:15:56 PM »
I'm a state government employee who pays into PERA instead of Social Security.  When I retire, I won't get Social Security benefits but I'll get PERA benefits if I meet their retirement requirements.

If I retire at 64 with 20 years, I'll receive 50% of my highest 4 years of pay.  I can also invest in traditional 401K plans and Roth 401K plans through PERA.  I'm fine with the options PERA provides for investment as PERA is not my sole investment tool.  As with other pension programs, there are some concerns about certain state PERA programs going broke.

PERA positions are typically state government employees - education, fire, police, medical, etc.  I don't know that I can really do a pros and cons list - it is what it is - and I'm not relying or depending on the benefits for my retirement.   

chris316

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Re: pros and cons to a PERA account
« Reply #4 on: March 25, 2017, 02:35:23 PM »
So I think its different for every state and I don't think it is something you want to rely on but can seemingly boost your retirement situation...

Its a defined contribution plan that in the state im in takes your years of service multiplied by 1.7. then multiply that number by the highest consecutive 60 earning months (5 years). example...

if your aver high 5 years is 60k and you work 35 years and retire at 65...

1.7x35=59.9
.595x60k=$35,700 0r $2,975/month payout until you die...

there is no adjustment for inflation so the strategy is to make the highest earnings your last 5 years.

if you retire before "normal retirement age" or social security age the payout is penalized with a -6% per each year before SS age an  actuarially reduction.

obviously seems like a lot of positives here...
but am I missing something?