<p>My husband can retire when our daughter is 20 years old, a college sophomore. She's got three years of HS left but we have what I think is an odd Financial Aid situation coming up.</p>
<p>Most people would say put off retirement until at least after school, right? (Oh yeah, and we've got another daughter 4 years behind the first). But here's the catch: my husband works in what most would say is a dangerous public sector job. When he retires, he is guaranteed 50% of his last years income as retirement pay, per year, for life and I get this for the rest of my life as well if I outlive him. We each get health insurance until 65. But if husband doesn't retire and passes away (god forbid) while still on the job there is no retirement that is passed on to me or health insurance. </p>
<p>Husband will be 50 when he can retire, so this retirement and health insurance will add up to a large sum of money, especially because we plan on living to be very old. :) It would be a fixed amount for life which is one reason husband took this job, it has great benefits, which also includes life insurance above and beyond the retirement benefits.</p>
<p>I figure if my husband and I took out life insurance to cover what we would have gotten in retirement benefits because he kept working and (God forbid) didn't make it to retirement, it would have to be for at least $3 million. That's going to be kind of expensive to take out on a 50 year old man, correct?</p>
<p>Husband says he could retire and get another job for half his old pay and break even for the college years. But even then there's no guarantee he'd find a job like this. Even if he did, college is still going to be a stretch.</p>
<p>What would you do? Retire and take your guaranteed benefits or not? I would hate to lose my husband and my families financial security all at the same time, always thinking we should have taken the guaranteed income.</p>
<p>I would take the guaranteed income, provided that your debt is low. Live within your means and make sure college is affordable on your retirement income. Consult a financial planner to find your best options. </p>
<p>If your H’s occupation is hazardous, (law enforcement) can he get life insurance privately? Is he healthy enough to get coverage if he retires? </p>
<p>PS… While he may not get the same pay for another job, he can still work at something to offset the lost income from previous job.</p>
<p>Retire, take the benefits and find a different job. My H’s ‘retirement’ was not at sweet financially as your H’s in any way but that is exactly what he did as there were longer term benefits. He makes enough to pay his own expenses and some bills and we save a ton of money as we no longer have a housekeeper and he can fix and repair anything so generally don’t have any outside contractor costs. Out 15 year mortgage was also paid off that year he turned 50 and the first one started college. I carry the rest of the burden right now and I took a separation package (unwillingly) in the middle of all this. It’s not fun now for either of us, but over the long haul it was the best solution. I’m 7 years through 11 years of college tuition with an overlap year done and gone and next year to deal with. We’re on the downhill side of some very lean years.</p>
<p>Make sure you work out a budget with a worse case scenario and then figure out a budget for college for both kids.</p>
<p>*But if husband doesn’t retire and passes away (god forbid) while still on the job there is no retirement that is passed on to me or health insurance.
*</p>
<p>???</p>
<p>Are you sure about that? Just because someone doesn’t actually retire (because of death), does not often mean that the surviving spouse doesn’t get the benefits. I know my H thought this at one time, so I had him look it up and he was wrong. My H’s retirement is company-funded; he doesn’t even pay into it. He only pays into his 401k. Yet, if he died today, I would still get half of his retirement until I died or remarried.</p>
<p>Does your H pay into his retirement fund? If so, there’s no way that the money just disappears if he were to die and you’d get nothing. </p>
<p>It sounds like your H is a police officer or firefighter. Many do retire “early” but then take on another profession (security consulting, etc). Has your H considered that?</p>
<p>edited to add:</p>
<p>Husband says he could retire and get another job for half his old pay and break even for the college years. But even then there’s no guarantee he’d find a job like this. Even if he did, college is still going to be a stretch.</p>
<p>It wouldn’t be that hard to find a job at half his current pay. </p>
<p>Keep in mind that most schools do NOT meet need, therefore having a reduced income because of retirement won’t necessarily mean that you’d get more aid.</p>
<p>I’d second the suggestion to double check into your husband’s retirement benefits if he should die before actual retirement.</p>
<p>I have a cash balance plan that my employer contributes to each year. None of my money in it. Still if I died today (hope not!) my DH would get 50% of the balance.
This is separate from the 403b account that I contribute to.</p>
<p>I would think it very unusual that you would not access ANY of his earned retirement balance.</p>
<p>I’d third the recheck. I’ve never seen a pension plan where if you die with your boots on your spouse gets no pension.<br>
(I can believe that there might be a provision in place that provides retiree health coverage only if retirement takes place at a certain age or qualifying event.)</p>
<p>If your husband ends up choosing the age 50 retirement, I hope he finds something else to do – a fixed income of 50% of his salary is likely to leave you tight to begin with, and eating cat food as inflation eats away at that over the next 30 years.</p>
<p>My husband is in the same position as the OP. New York City municipal worker. We face the same dilemma.</p>
<p>First of all , a hazardous job as one gets older can get even more hazardous. Some things in life trump having more money for college. What one chooses as a career when healthy, young and able can become a big issue as one gets older. </p>
<p>So much depends on the specific colleges and your specific financials, so can’t say what it will do for financial aid. Most schools in this country do not meet full need anyways and so it often does not matter whether you have more need or not. One of our cousins got a rude awakening that way. She always bewailed the fact that they made too much money for financial aid other than loans. When her DH was laid off and her business was not doing well at all, she certainly did qualify for financial aid, but her state school didn’t give out a cent to any of her kids. The same loans, the Direct Loans, part of them became subsidized, and the school gave some work study, but the kids were already working part time. They still did not qualify for PELL and the school did not cough up any Perkins or SEOG funds or any of their own money. They were gapped. That’s what it took for them to understand that it is not a gravy train for those with low EFCs. Even at a zero EFC, that is only $5600 in PELL one gets, a drop in the bucket for the more pricey schools. So don’t expect a plethora of money at your feet when your income is lowered.</p>
<p>My BIL was in a similar position 6 months ago when he turned 50. He was a firefighter, and had enough years in to retire, plus he had a bad back from all the heavy lifting. Although he struggled mightily with the decision then, in retrospect it was a no-brainer. Many retired policemen and firefighters here get other jobs after retirement to supplement the pension and end up making as much or more as they did pre-retirement. Many plan on early retirement and get their houses paid off and their debt paid down in anticipation. It’s a sweet deal if you can get it. I would also second the advice to check into how the benefits work. It seems odd that a pension would not be payable to a widow. Good luck with your decision.</p>
<p>Military pensions work the same way - not retired, no pension. I know of some instances in which a military member was severely injured and retired in the hospital to prevent just this problem. But it is worth checking into.</p>
<p>That IS awful.
PART of the reason I’ve remained at same position for 35 yrs is the security for my family if I exited early. It’s a component of total compensation and offsets a less than incredible salary.</p>
<p>My husband doesn’t pay anything into his pension, so we don’t have a large amount of contributions from his pay sitting there. It will be paid out by the State of NY, and others that he works with have left at 20 years because they have been told it will not pay out to the spouse if they were to die after 20 years but still working.</p>
<p>Our house will be paid off a few months before he hits the twenty year mark. He says he would be to bored not working so even if money isn’t a problem he would still want another job. I think the fear on his part is also that he will retire and either not find another job or find one he can’t stand when he gave up one he loves.</p>
<p>He also knows a few retirees that found great jobs, more like second careers with their experience and background, but they had to move out of state. I’m not sure moving at that time would be the best, our other daughter would want to finish HS here and we’re lucky to be surrounded by family and friends. But it’s an option.</p>
<p>Unless I missed something, you don’t mention YOUR employment. Does the combination of your income (or potential job if you are not currently working) , and your husband’s retirement benefit leave you financially solvent? </p>
<p>It sounds like your husband is ready to retire from THIS job and find something different to do. It should work out!</p>
<p>will be paid out by the State of NY</p>
<p>this sounds like a NY gov’t kind of thing. I’ve never heard of this in the other states that I’ve lived in. Frankly, I think it’s terrible and I’m surprised that some widows haven’t put up a huge fuss about this. I realize that there is some kind of “pay out” if the employee dies while still employed, but likely it doesn’t come close to the benefits that a spouse would normally get from her share of retirement. This sounds like some kind of back-handed way to get the “old guys” to retire to keep “young blood” on the force.</p>
<p>My husband has just retired from teaching and I am a teacher, and our benefits are similar. We carry enough insurance on ourselves to cover us in case either of us dies before retiring, but we got the insurance when we were in our mid-thirties, so it was cheaper then. In this retirement process, I also read that if a spouse dies within 30 days of applying for retirement, it is considered a death while working, rather than while retired. This means you can’t file for retirement on your deathbed and get benefits for your spouse unless you can hang on for 30 days. A pension is a great thing these days, but there are many more rules to it than I thought.</p>
<p>My husband has an excellent pension, but it it is a catch 22. Quit as soon as possible in order to collect pension and lifetime medical, but income is cut sharply, or stay working and risk dying without ever collecting. I always felt incredible guilt at being a working mother, but in middle age I am so glad to have my income, which I could live well on if I had to, and I bless the name of my first boss. She told me to always max out my 401 k, especially at that job which had a huge match. I am so grateful for that money because I had around $350,000 by my mid 40s and expect to work and contribute for 20 to 25 more years.</p>
<p>Nancy, that sounds awful! Usually teacher retirements require contributions; does yours? If so, then do they think that they can just keep the contributions? That doesn’t sound right.</p>
<p>In my state teachers need to elect how they will collect retirement. If they elect collecting the full benefit during their lifetime, their spouse does NOT get a benefit upon the death of the teacher. If the teacher elects a certain benefit type…the teacher gets a reduced benefit, and the spouse gets a %age of the teacher benefit for their remaining life. If a teacher has not yet retired, there is a value that is given to the beneficiary upon death.</p>
<p>“this sounds like a NY gov’t kind of thing. I’ve never heard of this in the other states that I’ve lived in.”</p>
<p>I believe the spouse of a NYS gov’t employee who is still working at the time of his death gets a lump sum payment based on their salary (it’s either 3x or 5x’s cant remember which.) Also, my husband has an insurance policy paid for by the state, but I don’t know if every state employee has that. In addition we pay for an additional life ins policy.</p>
<p>My husband works for the city and has exactly what Emilybee discussed. The major problem is that the medical/dental doesn’t survive the worker.</p>