Wow, that is incredibly cheap for purchasing service! I'm surprised that is a sustainable system.

For a teacher in MO with a salary of 50k, purchasing ONE year of service would cost $14,500 and would benefit an extra $1250 per year for the pension. Essentially it costs 29% of your highest three years of salary to receive an additional 2.5% in yearly pension benefits. It is COLA'd.

If your numbers for NJ are correct and you're confident he'll be grandfathered in and receive payment for years to come, it seems like a no-brainer.

They pay half and we pay half so it would have been 50K for 4.5 yrs or just over 11K for each year bought. It costs more the older you are and the more you make. So he makes 91K and is 53--not sure what the calculation is. He can only buy the number of years he worked in a different state. And the denominator is based on his "tier" or when he started--his denominator is 55. So it would be 20yrs/55 times $91K, which is $33K annually forever with no cola. Or if we buy the extra years, 24.5yrs/55 time $91K, which is $40.5K or $7.5K more annually than if we don't buy. Basically he's getting an annual increase of just over 8% of his final salary. Again, no cola.

But that's the price now for getting someinthing in 7 years. $25K in 7 years at 5% would be just over 35K. In ten years when we just be just about breaking even our original 25K would have been almost 41K. At some point about 13 years from now, our original 25K would have been 47K at 5% if we invested it today. In 13 years, when he's 66, he would have received 6 years of extra benefits of 7.5K, or 45K total--a bit less than what we'd have had if we had invested it today at 5%. So if he is retired for 6 or 7 years then it will have been worth it.

If we divorced, I wouldn't sweat the money--I have my own pension, TSP to share, SS benefits, Roth. If he dies before reitrement, I get whatever we put into it so I'd get the extra 25K back, and everything else he owns and his life insurance through work.

Yes, NJ's pension is under funded. But I don't see the state not paying it's reitred teachers thier money. Either way, the more years he has the less he would take a hit if things went bad.