Planning for retirement with pension via /r/personalfinance


Planning for retirement with pension

I'm currently engaged to a woman who is very much of a saver. With her current level of savings, she projects she'll retire with about a million+ saved. Great!

I divorced a few years ago, and my ex got most of our retirement assets. Long story, it's in my post history, don't really want to rehash that here. That's over.

I work for a public agency, and participate in the pension plan there. I was hired the last month that any non-union employee could participate in that plan. I do make my own contributions to the plan: 10.5% of my gross salary (ouch, I know). When I retire, my pension will pay me 2.25% per year of service of the average of my 5 highest earning years here. I should retire with 24 years of service.

My current plan is to work until I'm 70 to maximize my pension and social security. There is longevity in my family on both my mom and dad's side. I had grandparents who lived well into their 90s. My main concern is to have income for the length of what could be a 20+ year life after I stop working.

I also have a supplementary pre-tax savings account with about 25k. I continue to add funds to that account, but at a pretty modest rate, 2%.

When I've put the various numbers from the story above into retirement calculators, the results generally tell me that I'm preparing adequately, given my pension. Between pension+supp account+social security, I should be reasonably set for retirement income.

I've thought about leaving my current company, and could probably realize a significant bump in salary if I did so. However, to save enough principle to equal to what I'd get from my pension, I'd have to "bank" nearly all of any potential salary difference. I'm not sure I'd be disciplined enough to do that.

Am I missing anything? How do I explain this to my fiancee? She thinks I am underpaid, and doesn't quite get the pension thing. As she is self-funding her retirement savings, she has always chased higher base salaries as they allow her to save more.

Any advice would be appreciated

TL;DR Pension+supplemental account+Social security seems to me to be enough of a retirement plan for me. How to explain?

Submitted September 07, 2016 at 11:13AM by hubbyofhoarder
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J.R. Randall

J.R. Randall is an economist who resides in the Bay Area. He focuses his interest on range of economic topics. He has interest in deep sea fishing and art.