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June 19, 2007


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As one who worked for a school district in payroll for 30 years before I retired, I saw many teachers buying time for previous experience when it came time for retirement. Sometimes a person only needed a little time, a few sub days or one summer school to increase their pension. It was not always easy to go back in the records 15+ years to document past experience. And the money they needed to pay now to buy previous experience had increased because of the interest accrued.

Buying into the pension plan is a great idea if you know for sure you will be receiving that pension later in life. However, if you are not certain, then it is tough to say.

Another consideration: If he does not have a Roth IRA, then fully funding a Roth IRA until he reaches retirement age will give him tax diversification in retirement.

Are you sure you are going to stay with the state? My friend's DH thought he was going to stay with the state but left after 11 years for a new job. Things happen, so it really depends are you committed? If so then buy it, if not then no.

I think you need to work out what sort of retirement income $88,000 would bring you. Using a 4% return in retirement would give you about half what buying the extra years would. Its often the case that if you assume that everything will remain as it is, that buying extra years is more valuable than saving the money yourself.

For actually making the decision, you need to think about whether you'll be working for them in nearly 30 years time and what would happen if you weren't. I bet that the longer you stay with them the more valuable the extra years will become.

Agree with plonkee, 100%

I have no plans to stay with the state I work for. But sadly, I have to pay into the pension system.

Of course, judging by how state budgets are going these days, I don't really plan on HAVING a state pension in 25 years...

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