My queston is concerning buying pension
service credit.
Through my husbands Washington state pension plan he can
purchase up to 5 years of service credit. In looking at the cost for him, the
cost is $21,204 for 24 months of service. This would give him a payment of
$153.64 a month (single life) or $117.84 for the 100% survivor option. His
pension comes with an inflation protection of up to 3% per year based on the
CPI in Seattle. I've tried comparing this to an annuity on Vanguard and for
$20,000 with a 3% increase each year their payout would only be $90 (joint &
100% survivor). It seems like a good deal to purchase the credit, but it's hard
to know whether to cough up that much money. We could move 457 assets to pay
for it. We already have these pensions:
$3100 monthly my pension (joint and 100%
survivor)
$1370 monthly husband SSI
$400 monthly Air Force retirement
In 1/2 years when my husband is 65 he will get $1400 a month (joint
& 100% survivor) from State of Wash pension
When I turn 66 (5 years away) I will get about $1800 a month in
SSI
We have about $550,000 in IRAs/457 plans combined. We're
retired and are currently using some of our IRA money to live on until my SSI
and husband's pension kick in. It seems like we'll have enough monthly income
then and maybe it's just better to leave the money in the IRA. Most of the IRA
money isn't Roth (only about $40,000 is Roth). My husband is saying - what we're going to give them $20,000 in exchange for $117 more a month? What is your take on this?
