I'm interested in any info you guys can provide on the better retirement payout approach - TMRS or more traditional employee match scenarios.



For those unaware, TMRS is the Texas State Retirement System. Employees put in 7% of their pay unmatched. No more no less. That amount accrues interest. Then, upon retirement, an employer may choose to double your balance. So say at the end of your 20 years, you have $100 in the account. They'll add $200, giving you $300 total as your benefit






Compare this to an employee match situation where an employer may match dollar for dollar, say up to 6%. That money is matched immediately and grows interest also






Which is the better payout?  Where is the break even point? Obviously salaries and growth amounts impact this but you know what I'm going for.






Thanks for any help.




 

No clue all I have are 401k's here in Texas. Although have some state retirement when I worked for the senate for six months.

From what I understand this is limited to local, state, county employees and the like. Not offered to private businesses or the general public

 

Can you clarify?

If i have 100. They choose to double it, i have 200 not 300.

They choose? When is that decision made? I work for 20 years and hope they like me enough to do that? If they really choose to do that upon retirement then that has no value. Only a moron would work for 20 years for a maybe.

From the details offered, there is no decision. There is a defined plan and some sort of whimsical fairy thing with no numbers.

We'll conjure some math for you, but we need numbers.

They double what you already have and add that to the pot. It's a 2:1 match but not until you retire

 

Sorry that wasn't clear. It's a definite, some places do a 1:1 match, others 1.5:1, others 2:1

They double what you put in, or what you put in + interest? What is the interest rate or is this money invested in whatever you want like a 401k?

They double what's in the account at the time you retire, including whatever interest

They don't let you pick the investments from what I understand. Assume whatever growth is considered normal on an annual basis for each scenario

All depends on what the growth opportunity is. If in the system it's only .5% of growth, probably not. Let's run a couple scenarios. For ease we will use a salary of 100K and 20 years until retirement.

Scenario 1A: 7% of salary into account for 20 years (583/month) at .5% interest (bond/stable value). After 20 years your value will be $147,124.05. Then add their portion - Total = 441K
Scenario 1B: 7% of salary into account for 20 years (583/month) at 6.5% interest (stocks/you pick). After 20 years your value will be $285,919.06. Then add their portion - Total = 861K

Scenario 2A: 7% of salary into account for 20 years (583/month), they match that 7% (x2= 1166/month) at .5% interest (bond/stable value). After 20 years your value will be $294,246.99.
Scenario 1B: 7% of salary into account for 20 years (583/month), they match that 7% (x2= 1166/month) at 6.5% interest (stocks/you pick). After 20 years your value will be $571,834.46.

Unless my math is wrong, I would go with the state offered system, if you are OK with allowing your retirement be controlled by the state, and think it will still be there when you need it.