I am interested in the pros and cons on buying service credit to add to my retirement. I am with CAL PERS and have 36 years of service and am just turing 56 in mid January and retiring on the same date... with my sick leave built up, I will get about 76% of my pay and life time medical.
I can buy 5 additional years of service with a tax free transfer from my TIAA CREF account bringing me to about 87% of my pay, or about another $1,200 a month. But it will cost me about $150,000 from my account of which there is a balance of about 250,000.
I know there are a lot of variables I can't control or predict, but would be interested in opinions of those with experience in this area.
What a bargain! If you go to immediateannuities.com you will see that an annuity for $150,000 for life will return only $779 at age 56.You may get more from the stock market if you like to gamble, but why bother when you would get a great return like that. Nearly all financial experts are downgrading what the stock market might return in the foreseeable future. If you think you can get by on $100,000 in savings for large unforseen expenses then additional service years seems a good deal to meThe only other issue I can think about is Calpers cannot be passed on to heirs, but TIAA Cref retirement savings could be if you dont spend it all before dying> but hopefully you have a house and other assets you can pass on, so maybe thats not an issue for you
It looks like that you can recoup your investment in about the same time if you would have taken retirement at 66. You will have to decide whether you will live longer than that to get your money out or to stay with what you have.
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