No. of Recommendations: 1
I will soon be eligible for a very modest pension from a previous career and am wondering if it may be wise to purchase additional service credits.
I have 25 years in WA's PERS2 plan where the retirement benefit is calculated by # years multiplied by 2% of the average of your 5 highest-paying, contiguous years. I separated 14 years ago and began a new career.
I intend to work 2 more years in my current job (which has provided a 457b and 401a), hopefully retiring at 67. There appears to be no reason to delay the PERS2 pension past age 65 as it does not increase after that as SS retirement does. There is an option to purchase an Annuity at time of retirment, which I'm pretty sure would not be for me, but I had not considered the idea of purchasing more service credits.
Purchasing 5 more years of service credit would cost an estimated $58,638 and would increase my monthly benefit by $334.
Thus, it would take 176 months to break even - around the age of 80.
BUT - how do I apply the cost of that missing $58k lump sum (I have both IRAs, 457/401 and non-tax advantaged accounts to pull from if need be) to this calculation? Is there any ballpark rule-of-thumb to simplify this, just as a reality check?
I'm not particularly afraid of rabbit-holes (so to speak) but if it's clear this would be a really bad or a really good idea, it'd be lovely to devote energies elsewhere.
Thank you in advance for any thoughts, observations or guidance!
