Author Topic: Would a $5000 raise make up for losing a pension/403b?  (Read 3852 times)

Gin1984

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Would a $5000 raise make up for losing a pension/403b?
« on: October 03, 2014, 02:04:16 PM »
I have the opportunity to apply for a grant.  If I do, and then I get it (small chance), I would get a $5000 raise, and not have to pay student fees (about $200/year), however, I would lose access to my 403b, lose the pension before I vest and lose $600 in FSA for daycare. However, I also would not have to pay 2% of my salary in union dues (right now $500).  Would you go for it?

Gone Fishing

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #1 on: October 03, 2014, 02:11:19 PM »
Need more information.  How much are you contributing to your 403(b)? Can you make it up in an IRA?  You also need to calculate the current net present value of your pension and the annual contribution value.  Not the easiest thing in the world to do.  Maybe you can call HR and find out?

Rural

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #2 on: October 03, 2014, 02:34:47 PM »
Also: will you  lose job security beyond the grant period?

Gin1984

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #3 on: October 03, 2014, 02:57:29 PM »
Need more information.  How much are you contributing to your 403(b)? Can you make it up in an IRA?  You also need to calculate the current net present value of your pension and the annual contribution value.  Not the easiest thing in the world to do.  Maybe you can call HR and find out?
My HR is crap, so that won't work.  I could make it up in the IRA but lose the EITC credit.

Gin1984

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #4 on: October 03, 2014, 02:58:19 PM »
Also: will you  lose job security beyond the grant period?
No, I plan to be done by the time the grant will be, but if not I roll back to the money I am on now.  If anything, I make my job even more secure.

Must_Stash

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #5 on: October 04, 2014, 09:00:06 AM »
If it makes your job more secure, there's a big plus.  What are you planning for the extra $5000 per year + $500 per month= $11,000 per year (is this right)?  If all that will go to savings/IRA, I would be stunned to find your pension comes close to that.  For a rough estimate, how long you've contributed to the pension x the amount contributed to it per paycheck (on your pay stub I hope), x the typical 1.07 for stock market return.  That would probably even be generous, since so many pensions are conservative or falling short/underfunded.  Pension is an egg, not a chicken to be counted.

Gin1984

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #6 on: October 04, 2014, 11:20:34 AM »
If it makes your job more secure, there's a big plus.  What are you planning for the extra $5000 per year + $500 per month= $11,000 per year (is this right)?  If all that will go to savings/IRA, I would be stunned to find your pension comes close to that.  For a rough estimate, how long you've contributed to the pension x the amount contributed to it per paycheck (on your pay stub I hope), x the typical 1.07 for stock market return.  That would probably even be generous, since so many pensions are conservative or falling short/underfunded.  Pension is an egg, not a chicken to be counted.
Sorry, the $500 is per year, not month, but yes it would go to savings but, I won't be able to shelter all of it from taxes/FICA so not 100% would go to savings.

Dee18

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #7 on: October 04, 2014, 12:09:28 PM »
How much is the pension, and does it have COLA?  I gave up a pension when I was young; 50 seemed so far away!  I have another one vested now and am really happy to have it as part of my retirement stache.

Gin1984

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #8 on: October 04, 2014, 01:25:30 PM »
How much is the pension, and does it have COLA?  I gave up a pension when I was young; 50 seemed so far away!  I have another one vested now and am really happy to have it as part of my retirement stache.
The amount of the pension depends on how long I stay with the school, or go work for the state somewhere else and no COLA.  I expect it to be a small sum. 

teen persuasion

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #9 on: October 05, 2014, 09:34:19 AM »
Need more information.  How much are you contributing to your 403(b)? Can you make it up in an IRA?  You also need to calculate the current net present value of your pension and the annual contribution value.  Not the easiest thing in the world to do.  Maybe you can call HR and find out?
My HR is crap, so that won't work.  I could make it up in the IRA but lose the EITC credit.

How much EITC do you lose w/o 403(b) contributions?  If you are NY, don't forget to include the state EITC, too.

If I had to make the decision, I'd try to crunch the numbers both ways to find the larger after tax total.  I know our situation would change radically if we added $5000 AND lost 401k access, but DH is maxing, we get lots of EITC + another 30% state EITC, and we have two in college whose aid would be impacted by a higher AGI.

Gin1984

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Re: Would a $5000 raise make up for losing a pension/403b?
« Reply #10 on: October 05, 2014, 11:15:48 AM »
Need more information.  How much are you contributing to your 403(b)? Can you make it up in an IRA?  You also need to calculate the current net present value of your pension and the annual contribution value.  Not the easiest thing in the world to do.  Maybe you can call HR and find out?
My HR is crap, so that won't work.  I could make it up in the IRA but lose the EITC credit.

How much EITC do you lose w/o 403(b) contributions?  If you are NY, don't forget to include the state EITC, too.

If I had to make the decision, I'd try to crunch the numbers both ways to find the larger after tax total.  I know our situation would change radically if we added $5000 AND lost 401k access, but DH is maxing, we get lots of EITC + another 30% state EITC, and we have two in college whose aid would be impacted by a higher AGI.
I'm not 100% sure, to be honest.  Partly because they don't have the 2014 EITC table up yet and also, if I applied it would not change anything till Sept 2015 and since we are only planning on putting aside $18600 (though if I lose the pension we'd want to put aside the $750 annual amount I contribute to the pension pre-tax) and since my husband does have access to a 403b, our plan was to deposit enough in mine that we could put the full amount in the 403bs for 2015 so this really would only affect our 2016 income, and the pension vesting.  If I plug the numbers into the 2013 tax table I get $126 for feds and since I am in NY, I get the additional $37 from the state for a total of $163, but I assume it will be a little higher for 2014.