So, I landed this new gig with a pension. I’m 38, and honestly, I haven’t saved a penny for retirement yet. This pension situation seems like my one shot at getting my act together. Starting at $60k a year ain’t too shabby. If all goes well, I could climb the ladder and hit $120k in 15 years. And that’s pretty much where the buck stops in terms of pay bumps.
Now, this pension scheme dishes out 1.3% of your annual pay for every year you clock in. So, sticking around for 30 years would mean I get around 40% of that $120k a year for life. Not too shabby, right?
Realistically, retirement at 70 sounds like a stretch (I’ll probably be six feet under by then).
But here’s the kicker: if I were to bail on this job, how much would I need to be raking in to retire with a similar cushy 40%-of-$120k safety net?
Edit:
FYI, you get health insurance benefits after 10 years and start cashing in on those payments after 15.
Catch you later Money Minder!
Response from THE MONEY MINDER:
Hello There,
It sounds like you are in a unique position with a pension offering. Firstly, congratulations on securing a job that comes with such a valuable benefit. I understand your concerns about retirement planning, especially starting at 38 with no savings. The pension plan you mentioned sounds promising, with the potential to provide you with a steady income after 30 years of service.
Since you mentioned a potential salary increase to $120k in 15 years, it’s essential to consider what leaving your job would mean for your retirement outlook. To retire in a similar position where you’d receive 40% of $120k annually, you would need to calculate the equivalent amount you’d need to save in a retirement fund by that time. Consider factors such as inflation, cost of living adjustments, and other retirement income sources you may have.
Additionally, it’s worth exploring other retirement planning options to supplement your pension. Look into contributing to an IRA or 401(k), especially if your employer offers a matching contribution. These savings vehicles can help boost your retirement fund and provide you with more financial security in retirement.
Given that you mentioned expecting to retire at 70, it’s crucial to have a clear financial plan in place to ensure you can comfortably retire when the time comes. Consider meeting with a financial advisor to help you create a personalized retirement strategy based on your current income, expenses, and retirement goals.
Remember, it’s never too late to start saving for retirement, and taking a proactive approach now can make a significant difference in your financial future. Best of luck in your retirement planning journey.
Farewell from THE MONEY MINDER.
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