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Originally Posted by MikeWaters
I dont' understand your last paragraph.
If I have the traditional (i.e. non-pension), I do better if I live past 79, given your assumptions? I don't understand point #8 either.
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Basically, what I was saying on the last paragraph is that according to the variables I outlined (below) its better to have the traditional pension if you think you will live past 79. As for #8 I just assumed that whatever the pension gave you plus 50k is what disbursement you would need if you took the IRA route. FYI as variable 7 increase the better it is fro the IRA route. If you make 11% average on your money 82 years old is the break even point. 12% make the breakeven 86 etc.....
Basically the more you think you will make in the stockmarket and what age you think you need to be covered to will determine which option you should choose. One more caveat if you think it is highly unlikely that you will work for the state for less than five years then the IRA route is the best. Boardmail me your email and I will send you the excel file so you can play with the numbers.
Assumptions
1. You will work for the state till you are 65.
2. You will be 35 in 2007 (just a guess)
3. You will get an average of 3% raise ever year
4. Your salary in 2007 is 85,000
5. You save the full 6.5% of your salary
6. You retire at 65
7. You make an average of 10% on your money till you retire. After you retire you make 3%
8. to live after you retire requires what you would get with the traditional retirement plan plus 50k a year.