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Pension + 403b?

October 6th, 2009 at 07:47 pm

I have a pension with the state that I work for. 6.25% of my gross pay gets automatically deducted for this pension. Once I hit 5 years I'm guaranteed a pension (very small one). At 25 years I get healthcare + a percentage of my pay that I'm not sure of and at 35 years I get healthcare + 85% of my pay. While it would be nice to make full retirement, I can't guarantee it, so I am preparing with a separate account. Currently I am only contributing 2.5% to this 403b (like a 401k).

I have researched and seen a good number to start with retirement contributions is 15% if you're still in your 20's. Can I count what I'm contributing to my pension as part of that 15%? or should I aim for 15% to 403b + the 6.25% pension?

4 Responses to “Pension + 403b?”

  1. creditcardfree Says:
    1254857807

    It never hurts to aim for anything! With student loans and other debt to pay, it would be fine to contribute a total of 15% towards retirement. I wish I had contributed 15% in my early 20's!

  2. LuxLiving Says:
    1254864385

    Yes you can combine them to get the 15%, or if you can easily do the 21.25 together that would be all the better for your golden years.

  3. monkeymama Says:
    1254886634

    I wouldn't rely on a pension at all. I would aim for 15%, in addition. Of course, I would personally aim to start with 10%, and that slowly increase it from there. I think in you 20s, 10% suffices. This assumes you can contribute more with time though.

    Another reasonable way to approach it is to count the pension as part of the 15%, and plan to match it, or "Replace it," with time.

    All that being said, if it is deducted from your paycheck, is it really a pension? I don't understand government pensions, I guess. When I think pension, I think funded by employer and 100% under their control. Which spells trouble in the long run. Though government pensions tend to be more safe, but I am overly cautious.

  4. Spencer Hill Says:
    1254927320

    Put as much as you can comfortably afford to put in now. Once you have children there goes a lot of disposable income. Secondly, in the next few years I believe most states will not be able to afford defined benefit plans (pensions) due to life expectency issues and will convert to defined contribution plans. Look up the history on IBM converting to defined contribution and phasing out there pension plan. You would not want to be in year 20 and have that happen.

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