| Buy 5 years service or invest it elsewhere |
|
|
|
|
|
freeheeler
New Poster
Cash: $ 0.45
Posts: 2
Joined: 19 Jan 2013
Location: California
|
| Buy 5 years service or invest it elsewhere |
 |
|
I have an option coming up soon.
I'm 52 years of age and plan hopefully to retire around the age of 62. I recently submitted my applcation to buy 5 years of service credit from Calpers that would give me 25 years of service instead of 20 when I leave
The cost of buying the buying the 5 years will be $71K and this in turn will give me around $400 extra per month in my retirement check. Meaning that i need to stay alive for at least 15 years to get my original sum back.
Or, would I be better investing the $70K now into something else and letting it sit somewhere for 10 years before cashing it in or letting it sit somewhere until I need it?
If you think the second case is more viable, where would you put the $70K that would give me a reasonable return over the next 10 years as my wife and I plan on leaving the USA upon my retirement.
any help would be appreciated
Thank you
Martin
|
Sat Jan 19, 2013 10:52 pm |
|
|
oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
|
The pension annuity is 6.8% - that's not bad. Or you might take more risk and set a goal for a higher return. Personaly I would probably take the $70k and invest it in the SP500 Index, the historical return is 11%/yr. That would make it $200,000 in 10 years (but with more risk). That would give you more flexibility - eg, you could leave it invested for another decade. Or you could leave only half invested. Or adjust the risk by moving from 11% products to 8% products.
|
|
Sat Jan 19, 2013 11:35 pm |
|
|
freeheeler
New Poster
Cash: $ 0.45
Posts: 2
Joined: 19 Jan 2013
Location: California
|
Helleveryone
Thanks for the replies
@ coaster I am well aware of Caifornia's problems which is one of the resons I will be leaving the state when i retire and one of the reasons I am hesitant about buying the 5 years. i should have done it a long time ago when it was a lot cheaper. Gov Brown has decided to do away with it at the end of the last year so i put my paperwork in just to give me the option to purchase when they return the paperwork to me in about 6 months time.
That's why i wondering about other options of investing the $75K as i will be moving to another country rather than just changing States.
Thanks again
|
|
Sun Jan 20, 2013 11:27 pm |
|
|
Anton Martin
Full Member
Cash: $ 15.00
Posts: 73
Joined: 23 Nov 2012
Location: Florida, USA
|
| Re: Buy 5 years service or invest it elsewhere |
|
|
Well I would like to share ,my opinion, you can invest your money in Annuities as it is one good investment option and it guarantees regular income and lot more benefits if you plan it perfectly. You take advice from financial advisor to keep your investment on track and to know what are more options you can have to invest your money.
quote:
Originally posted by freeheeler
I have an option coming up soon.
I'm 52 years of age and plan hopefully to retire around the age of 62. I recently submitted my applcation to buy 5 years of service credit from Calpers that would give me 25 years of service instead of 20 when I leave
The cost of buying the buying the 5 years will be $71K and this in turn will give me around $400 extra per month in my retirement check. Meaning that i need to stay alive for at least 15 years to get my original sum back.
Or, would I be better investing the $70K now into something else and letting it sit somewhere for 10 years before cashing it in or letting it sit somewhere until I need it?
If you think the second case is more viable, where would you put the $70K that would give me a reasonable return over the next 10 years as my wife and I plan on leaving the USA upon my retirement.
any help would be appreciated
Thank you
Martin
|
|
Thu Feb 21, 2013 6:53 am |
|
|
clydewolf
Senior Member
Cash: $ 50.25
Posts: 248
Joined: 27 May 2012
|
| Re: Buy 5 years service or invest it elsewhere |
|
|
quote:
Originally posted by freeheeler
I have an option coming up soon.
I'm 52 years of age and plan hopefully to retire around the age of 62. I recently submitted my applcation to buy 5 years of service credit from Calpers that would give me 25 years of service instead of 20 when I leave
The cost of buying the buying the 5 years will be $71K and this in turn will give me around $400 extra per month in my retirement check. Meaning that i need to stay alive for at least 15 years to get my original sum back.
Or, would I be better investing the $70K now into something else and letting it sit somewhere for 10 years before cashing it in or letting it sit somewhere until I need it?
If you think the second case is more viable, where would you put the $70K that would give me a reasonable return over the next 10 years as my wife and I plan on leaving the USA upon my retirement.
any help would be appreciated
Thank you
Martin
Another issue, will CA tax that pension as it is distributed?
|
|
Thu Feb 21, 2013 3:14 pm |
|
|
|
