1st post, been lurking for a while so bear with me.
My employer has announced some changes to our retirement benefits coming at the end of the year. They previously offered a very generous pension plan, but it had been paired down to a nominal pension benefit by the time I was hired, and after this year new employees will no longer be eligible for a pension. My current pension amounts to 1% of yearly salary per year. As I have enough time in under the old pension plan they are offering my tier a decision to stay enrolled in the pension plan as is (1% per year) or to opt out, keeping the accrued amount and instead receiving a 3% lump sum 401k match to be paid each Feb or thereabouts. They have advised that additional info will be forthcoming so I just have these basic facts to go by at this time.
My current pension benefit will be approx $500 per month if I opt out, payable once I reach normal retirement age of 62 (I'm almost 37 now). I estimate that if I remain opted in and work until age 62 I should have somewhere in the $25k per year range if I remain at somewhat normal salary trajectory, although I would say this is a lower end figure, potentially more if future earnings rise more than the normal yearly merit increase and promotion schedule.
The 401k plan currently offered is through Vanguard, and the company matches 6% for all employees now $ for $. I currently do not max out my 401k contributions but have been upping my withholdings. I know this is not a full case study so I will not get into too many details right now.
Initially i was leaning toward staying in the pension system figuring it is at no cost to me and will provide a steady income source that may allow me to hold off on collecting SS when that time comes. However, after that initial thought left my mind I remembered that 3% > 1% and in the next 25 years could amount to a significant amount of money if the markets were kind.
Just looking for opinions from people other than myself as to what you would do.
TIA
