My wife works as a teacher in Illinois. She is forced to pay 9.4 percent of each paycheck into the Illinois teacher retirement system. We have no choice to opt out and put the money into our own retirement fund. We worry about whether or not the money will be there when she retires.
Any thoughts on whether or not we should count this money when figuring our retirement?
Pensions, to count or ignore?
Does she plan on working long enough to collect it?
If so, I would multiply it's value by whatever probability you feel comfortable putting towards the likelihood of it being around (my guess is it's pretty likely) when it comes time to collect and use those figures in your estimates. I would also calculate what your situation would look like without it and have fall-back plans.
If so, I would multiply it's value by whatever probability you feel comfortable putting towards the likelihood of it being around (my guess is it's pretty likely) when it comes time to collect and use those figures in your estimates. I would also calculate what your situation would look like without it and have fall-back plans.
Yes, you should count it. Illinois has a state constitutional provision that requires the state to honor pension obligations -- which is also probably a reason you would not want to live there long term or retire there, as they will eventually have to raise taxes to pay for the pensions (if they have not already).
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George the original one
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She should be getting an annual pension statement. The cash value you see on that statement is what you can count.
Most pensions convert that cash value to an annuity for you at retirement or give the option of withdrawing it (allowing you an IRA rollover).
Often the annuity is worth more than the cash value (for a variety of reasons). You may or may not be able to collect the annuity at the rate it is currently calculated to be worth by the time your retirement age rolls around.
For myself, since my full retirement age is only 8 years in the future, I have three scenarios: cash value, half annuity value, and full annuity value. If I were younger, I would probably only work with the first two scenarios due to the political wrangling surrounding government pensions. Currently it looks like my pension will be more htan half annuity value, but not the full annuity value as it is calculated today.
Most pensions convert that cash value to an annuity for you at retirement or give the option of withdrawing it (allowing you an IRA rollover).
Often the annuity is worth more than the cash value (for a variety of reasons). You may or may not be able to collect the annuity at the rate it is currently calculated to be worth by the time your retirement age rolls around.
For myself, since my full retirement age is only 8 years in the future, I have three scenarios: cash value, half annuity value, and full annuity value. If I were younger, I would probably only work with the first two scenarios due to the political wrangling surrounding government pensions. Currently it looks like my pension will be more htan half annuity value, but not the full annuity value as it is calculated today.
Thanks for the replies. She has no plans of leaving very early. She needs the insurance (yes, she actually does need it 
), plus she wants to have a kid at some point. Our early retirement plan is 50 (currently 28 and 29). She will get a decent pension assuming everything stays the same. We still have to research it a bit more, but I believe she can wait to collect her pension until a later age to get her full benefits. I'm not sure what we'll do yet. All of our planning is dependent on her insurance.
There's always a chance that I will try to find a job working 9 months of the year at some point so we can just take long vacations
), plus she wants to have a kid at some point. Our early retirement plan is 50 (currently 28 and 29). She will get a decent pension assuming everything stays the same. We still have to research it a bit more, but I believe she can wait to collect her pension until a later age to get her full benefits. I'm not sure what we'll do yet. All of our planning is dependent on her insurance.There's always a chance that I will try to find a job working 9 months of the year at some point so we can just take long vacations