Posted: 4/5/2009 6:49:28 PM EDT
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Hello all.
I am almost finished with college and I am in the process of researching a variety of departments/agencies at the federal and local/state level. With that being said, I am trying to understand how the pensions works. When it says "2.75% at 55" or "3.0% at 50" what exactly does that mean? I have an idea, but I think you all would explain it the best... Also, is there anything to look out for with pensions good and bad? I know a few people that claim they will make 90% of their highest yearly salary for the rest of their life after working for 30 years...How likely is this? Are all department's pensions at the state/local level similar? Also, I noticed that at the federal level the pensions are quite low...like 40% of your highest yearly salary...Is that because they set you up with a 401K? Thanks for your help! I appreciate it... John P.S. I know I shouldn't be thinking about retirement before my career even starts! Ha, I guess you have to cover everything before you go to work... 
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3% at 50 means you can retire at 50 years old and collect a pension of 3% for every year you worked.
Therefore, if you retire at 50 with 30 years on the job, you will have earned of retirement of 90% of your highest year paid for the rest of your life. Some departments will vary the retirement age to 55, some will vary the percentage paid per year worked, and some will do both. Furthermore, some states have a much lower maximum on retirement pay. Many states allow a maximum of 60% of your pay, no matter the number of years worked. Edit: Federal LE has pension maximum of 60% of your pay. |
| ours is 2.8 for 27years and / or age 52 with ten yrs on. So at 27 yrs it doesn't matter your age, you get 75% of your FAC( final average comp). Or as long as your over 52 and have at least 10 yrs on you get years times 2.8 plus your full medical insurance. Since most guys stay the full time plus and we are a seniority promotion dept., you get out at Capt. or Batt. Chief pay, and 75% of that is pretty good. |
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3% at 50 means you can retire at 50 years old and collect a pension of 3% for every year you worked. Therefore, if you retire at 50 with 30 years on the job, you will have earned of retirement of 90% of your highest year paid for the rest of your life. Some departments will vary the retirement age to 55, some will vary the percentage paid per year worked, and some will do both. Furthermore, some states have a much lower maximum on retirement pay. Many states allow a maximum of 60% of your pay, no matter the number of years worked. Edit: Federal LE has pension maximum of 60% of your pay. Is there a website that lists state by state the maximize pensions allowed? For example, in California 90% is the max, what about the other 49 states? Thanks... John |
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3% at 50 means you can retire at 50 years old and collect a pension of 3% for every year you worked. Therefore, if you retire at 50 with 30 years on the job, you will have earned of retirement of 90% of your highest year paid for the rest of your life. Some departments will vary the retirement age to 55, some will vary the percentage paid per year worked, and some will do both. Furthermore, some states have a much lower maximum on retirement pay. Many states allow a maximum of 60% of your pay, no matter the number of years worked. Edit: Federal LE has pension maximum of 60% of your pay. Is there a website that lists state by state the maximize pensions allowed? For example, in California 90% is the max, what about the other 49 states? Thanks... John Some Departments in California have 100%. |
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First off, it is NOT a bad thing to check out pensions before your career starts. We all work so we can retire, what a shame it would be to work a job for several years and then find out that you will make pitifully low pension wages?
Keep in mind, the difference between defined contribution and defined benefit pensioins. DC is like a 401K, DB is what has previously been discussed. Check out New Mexico. If you start before July30, 2010 you can retire with 70% at 20 years or 80% at 22yr10mo. of the highest three year average. Law just changed, after that date, you will have to do 25 to retire, not sure of benefit at that level. BTW, lots of agencies hiring a few at a time, Albuquerque PD, NM State Police, Las Cruced PD, Farmington PD, not so much Santa Fe or Rio Rancho tho. check it all out, if they match 401K, get in on it. If they offer a 457, max it out as soon as you can. Do your homework, good start here, but keep looking at it. |
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3% at 50 means you can retire at 50 years old and collect a pension of 3% for every year you worked. Therefore, if you retire at 50 with 30 years on the job, you will have earned of retirement of 90% of your highest year paid for the rest of your life. Some departments will vary the retirement age to 55, some will vary the percentage paid per year worked, and some will do both. Furthermore, some states have a much lower maximum on retirement pay. Many states allow a maximum of 60% of your pay, no matter the number of years worked. Edit: Federal LE has pension maximum of 60% of your pay. Is there a website that lists state by state the maximize pensions allowed? For example, in California 90% is the max, what about the other 49 states? Thanks... John Some Departments in California have 100%. Over 100% "pension" - as in the check you get each month or over 100% including medical benefits on top of the 'salary' check? Brian |
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Well I can really only tell you how mine works.
We Vest at 10 years and have 20years and out (you can stay longer if you want) We pay 10% gross into an annuity that we get back when you leave in a lump sum to do with what you want. Then our actual monthly pension payments are based on a 3% multiplier for years of service (3% for each year on). We use the average of the best three years of our final 10 years to determine. Sound complicated, but it is not. For example: If in your career you gross 1million dollars, your annuity lump sum is 100K. If your average of the best three years is 100K and you retire at 20years you would get 60% (3%x20years) of 100K, which is 60k per year or 5000 per month till the day you die. Now stay till 25years and you get 75% and it goes up incrementally from there. 99% of us also kick into a 457K defered comp program which other than the past 18months has been doing great. J- |
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3% at 50 means you can retire at 50 years old and collect a pension of 3% for every year you worked. Therefore, if you retire at 50 with 30 years on the job, you will have earned of retirement of 90% of your highest year paid for the rest of your life. Some departments will vary the retirement age to 55, some will vary the percentage paid per year worked, and some will do both. Furthermore, some states have a much lower maximum on retirement pay. Many states allow a maximum of 60% of your pay, no matter the number of years worked. Edit: Federal LE has pension maximum of 60% of your pay. Is there a website that lists state by state the maximize pensions allowed? For example, in California 90% is the max, what about the other 49 states? Thanks... John Some Departments in California have 100%. Over 100% "pension" - as in the check you get each month or over 100% including medical benefits on top of the 'salary' check? Brian That's right, I forgot about the medical. I got medically retired at 49 years old and 25 years service. I received about 74% of my annual salary plus the medical. |
You're going about it in a smart way. Most applicants (myself included) just want a fast car and a gun. Years later they think of the important stuff like retirement plans, etc. By that time they have too much time vested to change departments so they end up staying where they started. If I could rewind the clock I'd probably go Federal. Get paid a lot more for doing a lot less but a lot of System BS to endure though. 
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| My department, and all of our counties employees, fall under a "Rule of 75" system. Your age plus years of service must equal a minimum of 75 to start drawing retirement. Each pay check they withhold 7% to put in our retirement account. By law the account earns 7% interest a year. The day you retire the county deposits their 225% matching, for every $100 held out on my check for retirement they deposit $225. I started at 25 so at 50 can retire and start drawing a check for life the next day. Retiring at 50 I would be a little over 110% salary replacement. If I wait till 55 it goes up to over 150%. These systems are much better than a pension in my opinion. |