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Pension question: purchase 0.35 yrs of previous service?

Bogleheads • View forum - Personal Finance (Not Investing) - www.bogleheads.org
Hello all,

I’m current working for New York State and have 5.2 years of service towards my pension.

I have the option to pay $1,846.54 to buy back 0.35 years of service.

The $1,846.54 was calculated by: 6% of my previous salary + 5% annual interest (since 2009)

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Some information:

I am 31 and my wife is 30. I believe I will be with New York State for the long term.

I am vested towards my pension after 10 years of service.

I currently contribute around $1400 a year towards my pension.

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My current salary is $47.5K and caps out at $66K in around 8 years.

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Age 55 is the earliest I can receive my pension (with a 52% reduction)

Each year is an additional 6.5% decrease in reduction.

Age 63 = full pension

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If I leave service at age 46 (20 years of service), my pension is $22,152 at age 63.

If I leave service at age 55 (29 years of service), my pension is $33,544 at age 63.

If I leave service at age 63 (37 years of service), my pension is $43,672 at age 63.

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Investments:

$53K in 457B

$70K in 403B

$30K in Roth IRA

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I can take the $1,846.54 tax deferred from my 457B or make payroll deductions.

Would you pay $1,846.54 to purchase 0.35 years of service? Any suggestions would be appreciated.


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