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Pension + 403b?

October 6th, 2009 at 06:47 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?

Posted in Retirement | 3 Comments »

3 Responses to “Pension + 403b?”

  1. creditcardfree Says:
    October 6th, 2009 at 07:36 pm 1254857807
    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:
    October 6th, 2009 at 09:26 pm 1254864385
    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:
    October 7th, 2009 at 03:37 am 1254886634
    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.

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