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24d
Could I outlive inflation retiring at 50? That’s my worry.
I would normally never suggest this, but you might want to look into diversifying away from the dollar into precious metals and international commodity companies with a potion of that lump sum. Aside from that money, literally all of your income will be dependent on a stable US economy and government.
That said, if we ever get to the point where the US is unstable where 200k/year isn’t enough, there’s probably bigger issues. Unfortunately, the fact that you will bring in $1M every 5 years for the rest of your life by way of being a public servant is rather concerning for our country’s future. That can’t be sustainable. And you will get SS benefits— wow. Good for you, bad for my generation. That’s pretty astonishing
I do not get social security. It’s a 33 yr police pension that we’re required to contribute 11% to if that makes you feel any better.
Interesting. So I assume you don’t pay the 6.25% SS tax, and pension contributions are taken pre-tax. That is a pretty sweet deal.
In NY, most fire and police departments have an unspoken rule that all of the OT goes to those retiring in the next few years(as pension is calculated by a percentage of the average of the 3 highest years of take home) to increase their pension in perpetuity. Not saying you’re planning on doing that; maybe you are a chief with a high base. Do you see this happen? I think it’s a huge problem
I know of plans that do that but ours is based on salary alone. I’ve been on midnights for 20 yrs on rotating days off. No shift diff in retirement.. salary alone with no colas.
I am very grateful for it but 30 yrs of work king graveyard shift working weekends and being shot at, stabbed, run over.. I think I earned it.
You are correct. I don’t pay anything into social security. I’ve done some part time work and earned enough quarters but it was all pretty low wages and then WEP so social security will probably be about $400
My biggest fear is at 50 yrs old 150k is pretty good but 40 years later with no cost of living increases that retirement will be eaten away at.
That 800k is my security against outliving it.
OK, this is ridiculous. Just saw you said your expenses are 6k with a mortgage. So you must be currently putting away 50k+ annually in addition to your pension contributions and equity in your house, right?
Something isn’t adding up. How could you possibly be concerned about retirement
You are correct tho. Mostly the money goes into education n opportunities for my kiddos and house projects. My wife is disabled and requires some care etc.
We live well. I am not trying to underplay that.
It was more about advice on the drop payout.
No one in my industry seems overly concerned about it and seem to be happy with Nationwide’s 3% guaranteed return on govt 457b plan.
I figured there were some pretty smart people in here that could say where to park it and do maybe slightly better.
I would be thrilled with a 5-7% return on that money with a very low risk
Wait so you’ve never paid into social security, yet you will receive a check each month from it? Meanwhile everyone under 30 pays into social security and may never see a dime back from it? Pretty sure this will be the cause of the next civil war. Obviously this is not your fault OP, and I would absolutely take the checks if they were being given to me.
Edit: Just read the part where you don’t receive social security… does that mean right now or ever?
So I was in the army reserve and did security work for 15 years on the side.. those jobs I paid into. Made just enough at those part time jobs to qualify for Social security. The police department you don’t pay into social security where I work. So my social security quarters were 10 years paying in on income that was approx 25k. My statements say about $400 monthly at 62 years old. It’s really pretty insignificant relatively speaking.
Or am I being too paranoid.
Your wife gets none of your pension when you die. A tiny bit if you contribute to SBP.
Wow that’s scary. This should be OP’s biggest worry. Need to figure out the right life insurance or what have you because it sounds like she wouldn’t have anything to fall back on besides the $800k. I suppose $32k/year at 4% withdrawal which is doable if she gets the house, medicare, and budgets well. But peanuts compared to the $200k+ lifestyle otherwise.
Op just needs to work on not dieing
She gets my govt pension n military disability. Widow benefit is free for 50% of it and cost 10% of benefit to give her 100%
There is a surving spouse option. 50% free and I could pay 10% and she would get 100%
Is that what the 800k is for?
I would hope. But that’s not a lot of money in 2024 unless you live like a church mouse.
I don't know how it works that he's opted out of social security, yet there's no mechanism to keep paying the surviving spouse?
800k and a paid off house could work for plenty of people, without social security, but the 150k pension is so big, it doesn't seem like 800k compensates for nothing to the surviving spouse including no social security for the surviving spouse.
I didn't really think through the math.
She will get the pension. 50% is free and I have to pay 10% for her to get 100%.
Ok, good!
Dude.
You’re fine.
Enjoy.
Stay away from marriage.
You’re good to go.
Married with a couple kids. 17 yrs married n it only gets better. She’s a stay at home mom so no Income or social security on her end.
She should have went to work after the kids went to school. Now you will need very expensive term insurance assuming you can qualify unless you plan on her selling there house after your dead or living with the kids.
100k pension and 50 k from va =150k your saying ? is the 800k from the tsp ? vets that are permanent and total there wives can collect a portion if you pass, other then that buy some life insurance.
It’s a civilian police pension of 150k n 50k va disability. 800k in police drop payout. We have no colas in police retirement pension.
Could inflation slowly erode that police pension over 30-40 yrs?
How do I fight that using the 800k?
Put that 800k into cheap index fund like VTI and reinvest the dividends. Historically it beats inflation , it will likely double every 10 years
Thanks. This is the advice I am looking for.
You're doing great. Since you have such a sweet pension, I would put most of that $800K into a stock market index fund like S&P 500 or total stock market and just let it ride. Maybe keep some in cash for splurges and unexpected expenses but for the most part you don't need the safety of bonds or a HYSA because you have a steady stream of income.
T-Bills are looking good now.
Not that nationwide shit. Insurance companies are not where you want to invest your money.
If you want the money to grow your going to have to put it in the stock market. If you have faith in the American economy then VTI. If you want more diversification then VT is the entire world.
Do you have your drop now? I think most people would agree now is a decent time to buy into the 20 and or 30 year bond funds. They are primed for appreciation over the next 5 years and you will keep your yield on cost from the purchase date
In your situation i would just park it all in an S&p 500 fund and let it sit.
If you pass away early your wife will have that money to continue on with if she will no longer have that pension, and if you live to 90 your family will be well taken care of from 40 years of growth.
These pension deals bankrupt the communities that they are meant to serve.
Just based on what I've read, my inclination would be to put your 800k into a S&P500 (VOO) or total market (VTI) fund and live off of your other income sources.
It sounds like you have plenty of time to decide, however, if you want more confidence I would find a fee-based CFP (Certified Financial Planner) that can look at all of your financials holistically, give you advice and a number of options for a flat fee.
Will you get healthcare coverage through the VA? That's another issue (health insurance) to think through for early retirees. Also, if your wife will work at some point and have coverage through her job, is another possibility.
Thank you for your service.
Much appreciated
What kind of job is this?
Police pension
These pension deals bankrupt the communities that they are meant to serve. Blue state policies are the worst.
We do pay 11% into the pension.
The drop program. Essentially we work 5 years longer and the community doesn’t need to pay my healthcare in retirement and a new hire.. they set my salary aside for those 5 years that they would pay my replacement and save on healthcare n their part of the pension contributions.
The drop is meant to be a cost saving measure for the community.
At 20 years I could collect a 50% pension but working to 30 years plus saves the citizens money in hiring n training and healthcare and afford me more money % wise in a pension.
Plus my department is 400 short with surging crime….. literally all you need is a heartbeat to get hired.
If it was so great everyone would do it.
I do work in an absolute train wreck of a place but the pension is probably the reason many stay after the allure of service wears off after a few decades.
Example. The organization pays 30k towards my healthcare plan.
If I retired and they hired a replacement they would pay my healthcare in retirement plus mine.. they also need 200k to train my replacement. This again is all in a time where absolutely no one wants to do this job.
The new hires get cars and sign on bonuses and 3 weeks vacation day 1 and 2 personal days a month and a 6 figure salary with ot after training and absolutely no one applies.
I am sorry you feel that way but right now it’s supply n demand.
There’s a public safety tax and citizens recently asked to increase the size of our department at a time we’re shrinking through attrition.
The thing is for 30 years your working swing shifts or midnights. Working holidays n weekends. Forced overtime and bs politics. You never know when the career ending injury is coming or a bad citizen complaint puts you in a hot seat. I am recorded from the time my shift starts until my shift ends…. It’s a bad time to be a cop…
The last thing we have is our pensions so I’m not going to apologize for that.
Looks like you had that ready to go. One other thing, someone who is getting $50k disability shouldn’t be able to work a full time job. You’re scamming the system, plain and simple.
missing piece: your actual cost of living / expenses. i am sure (i am hoping) it’s not 100% of your income. i would put the lump sum into low cost index funds. no guarantee but avg annual returns historically of 8-10%, you just have to ride the waves and NOT PANIC-SELL. whatever you put into low cost index funds you could safely withdraw 4% of per year for life and never run out.
Currently my expenses are right at 6k monthly. That’s includes a $2600 monthly mortgage I’m paying that will be paid off in 10 years.
I would estimate 4k monthly living really high on the horse without a mortgage in retirement.
so with just your disability, you are so close to being work optional right now anyways. If you were to take the lump sum and use part of it to pay off your house, you could retire right now, just on your disability. But I imagine that you are sticking it out to get your pension. It must just be nice to know that if you can’t stand your job anymore one day, you could pay off the house and retire whenever you want now!
At 25 years the surviving spouse n employer paid health care in retirement kick in… thats hurdle 1… drop program starts then too.. so 5 more years and then I get the 800k.
If I wasn’t married no kiddos I would retire right now and grab 80k in govt pension + 50k in disability pension.
I worry about the govt pension bc there’s no colas. I know intellectually that my disability is close but I also see housing market issues for my kiddos in 20 years and feel a need to have to make enough to be an umbrella to them while also enjoying a high quality retirement for 40 years.
It’s super 1st world problems n obviously I’m trying to create wealth for my kids.
just food for thought, I wonder if retiring early and being more present with your kids would be more valuable to them than a handout later on? something to weigh, and possibly even ask them.
You are right.
How are you calculating that you will get a $150K pension from a government job that pays $180k? If you worked at a federal job for 30 years and retired at age 50, then the calculation would be one percent of your salary times 30, which adds up to only $45k per year. Is this some sort of state or local job with different pension rules? Fire department or police?
most likely 100 k pension from state and 50 k from 100 percent va not sure where the 800k is coming from
It’s a police pension. 25 yrs is 60% and 3% for every year after
Why do you get 800k and the pension? Isn't the 800k the number you can take instead of the pension? Sorry just confused at how your state/city can afford this.
It’s a police 👮♂️ pension benefit. I have 23 years now and plan on another ten years. It’s a way to keep us working and avoid paying for someone else’s expensive benefit packages.
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24d
What are the biggest n best known/trustworhy companies?
My union recommends NY Life but I think it’s bc the rep pays the bar tab (appreciated) but I see why we like him and it’s not his brains. LoL
800k is a good lump sum. However suggest investing in a desired mix of US, international, gold, reit and bond ETFs combination over the next one year. Vanguard, Schwab and Fidelity all have targeted index ETFs for all thes.
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24d
I would.consult a financial planner, not an.advisor