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Planning for DH's Retirement

August 12th, 2008 at 10:09 pm

Today DH and I went to a class offered by the public employee's retirement system he belongs to. It was very informative. One good thing we learned was that he can increase his pension by buying service time for the two years he served in the military during the Vietnam War. We are looking into how much it would cost and then we'll determine if it is financially sound to buy this extra service credit. We also found out that his employer will pay for our health benefits after he retires. This is a great benefit considering the high cost of health care today. DH is thinking about retiring at the end of the academic year in 2009 or 2010.

Posted in Retirement, Family & Friends | 6 Comments »

6 Responses to “Planning for DH's Retirement”

  1. nance Says:
    August 12th, 2008 at 10:29 pm 1218576587
    1218576587

    My husband was offered the option of "buying years toward retirement" and did so several years ago. He is also in the PERA system, which is wonderful! He will be able to retire in his fifties, next summer, and also has the option of "transitional" retirement for at least two years. He can work half time, get half time pay, plus his 70 per cent retirement pay. So in transitional retirement, he will make more than he makes now. A great deal for PERA workers, but not such a great deal for the tax payers who pay for this program.

  2. jIM_Ohio Says:
    August 13th, 2008 at 12:12 am 1218582775
    1218582775

    Pensions are a good thing, and paid for health care will also be quite helpful. I know some companies (like GM) took away the paid health care benefit I think. So you might need to have a secondary plan if that is removed before you are eligible for medicare.

    Have you done a tax bracket analysis? One issue with pensions is that if they are combined with SS benefits and withdraws from an IRA, a person can often be in a much higher tax bracket that they expected.

  3. Analise Says:
    August 13th, 2008 at 01:00 am 1218585614
    1218585614

    We are definitely concerned about the impact of taxes on our pensions and need to look for ways to generate write-offs and/or shelter income, if possible. DH is not taking SS until after age 66 and we will wait until 70 1/2 to draw from TSAs and IRAs. Any ideas on reducing taxes in retirement?

  4. jIM_Ohio Says:
    August 13th, 2008 at 02:21 am 1218590463
    1218590463

    See my blog for my detailed plan. I am about 15 years behind you.

    How much income is from pension? How much from 401k? Do you have a Roth? Do you have any money in taxable accounts? Will you be retiring before age 70.5? How much before?

    Your goal should be to stay in 15% tax bracket with ordinary income (under $65100 married filing jointly) and your taxes should be kept to a minimum.

  5. Amber Says:
    August 13th, 2008 at 03:30 am 1218594645
    1218594645

    That's nice you'll have health coverage after retirement

  6. luxlivingfrugalis Says:
    August 13th, 2008 at 03:47 pm 1218638876
    1218638876

    My Mom did a buyback and it turned out to be a good deal for her.

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