Is it a good investment to purchase ‘permissive time in a government pension plan?
In 2008, I retired at age 60 with a government pension. My agency offered the option of buying extra years of service. After weighing the advantages, I shifted about $116,000 from a tax-deferred account to buy five extra years of service credit toward retirement. The ‘multiplier’ for retirement (at that time, but it may change) was 3 percent, which gave me an immediate additional income of around $10,900, guaranteed for life. The pension plan is indexed, but the agency isn’t able to offer increases every year. And, of course, none of the overall investment will be left after I die (I do not have a survivor’s benefit on the pension). I made the investment during a small window of time in 2008 when the stock market was still high, so I do feel good about that part. What’s your thought on such investments? Some agencies use a lower multiplier than others, and it is generally based on the individual’s average income during employment. So was this a good investment? Can you talk a bit about
