Retirement...

[ScrimpAndSave]

Joan...thanks for mentioning that...you are right...it does not include my health insurance exactly...this is what my contract says:

The benefits provided herein shall be for the retiree and if applicable, his/her spouse, and will continue until the retiree becomes eligible for Medicare. The District’s contribution to the annual retirement allowance for providing health insurance and prescription drug coverage for each retiree shall be $5000 deposited into a health reimbursement account.

Any health insurance refunds made available to the retiree through PSERS shall remain with the retiree and shall not offset or diminish the District’s obligation to provide the full amount of their annual retirement contribution for each retiree as defined in part 3 of this section.

The retiree shall receive written notice from the District of the cost of the health insurance by October 1st of the fiscal year in which the cost occurs and will be required to reimburse the District upon receipt within sixty (60) calendar days.

In the case of married couples employed by the Eastern Area School District where one is retired, the retiree may select health insurance, prescription drug coverage, dental insurance coverage, etc. as a spouse under the terms of the employed spouse’s benefit package. Upon the retirement of the last employed spouse from the District, both the retiree and his/her spouse shall each be entitled to their respective retirement allowance and may apply said amounts toward the cost of individual health insurance and prescription drug coverage as provided herein.


Is this a crummy deal?

[MYOM]

I can give you one piece of advice. Consider having half of your savings in a qualified plan such as a 403b plan and half outside of your 403b by the time your retire. It will give you more flexibility to pick the amount of income you wish taxed in any given year after you are retired. Mutual funds work best inside a qualified plan and bonds work best outside a qualified plan.

Congratulations on the principal certification.

Dan Clemons, author and retired Certified Financial Planner

[jIM_Ohio]

I can give you one piece of advice. Consider having half of your savings in a qualified plan such as a 403b plan and half outside of your 403b by the time your retire. It will give you more flexibility to pick the amount of income you wish taxed in any given year after you are retired. Mutual funds work best inside a qualified plan and bonds work best outside a qualified plan.

Congratulations on the principal certification.

Dan Clemons, author and retired Certified Financial Planner

Dan- I think the red portion is BAD tax advice.

A qualified plan will be taxed at ordinary income rates. If you put stocks inside the plan, you are taking something taxed at 5% and converting that to 10-15% taxes or taking something taxed at 15% and converting it 25-28-33-35% taxes. Not including state taxes either.

If you held the stocks outside the qualified plan, you could get either the 5% or 15% tax rates which are much lower (3X lower in some cases) tax rates than if held inside the qualified plan.

In addition bonds will be taxed at ordinary income rates whether inside a plan or outside a plan, so if holding bonds, holding them inside a plan makes more sense relative to other portions of portfolio.