Interesting situation involving possiblity of taking a new job. In Colorado, teachers are covered by the PERA (public employees retirement association). However, Denver school district is not covered by PERA, but has a similar retirement plan.

Person Age 42 currently has 18 years service under PERA, the value of the account is approximatly $70,000.

Option 1. person stays with a PERA employer until 40 years of service pension benefit would be 100% of HAS (higest average salary, 3 years).

Option 2. person leaves PERA covered employment, would receive a pension of approx 45% of current HAS ($40,000) so 45% of $40,000, plus the proceeds from a Denver pension, assume 22 years, and perhaps an income of $80,000.

Option 3. same as option 2, except the person takes the $70,000 roll over to an IRA and manages the funds themselves.

It would seem that the proceeds of the the IRA could be considerably better than the 45% of $40,000, the real question is how much better or worse off would the person be than with OPTION 1.

My wife is a teacher in Colorado, and I have tried to understand the PERA system, but your scenarios require a pension specialist who is familiar with the details (devilish that they are!). Buy some time from an expert on this issue.

If you roll the 70K into an IRA, you can expect it to grow to about 570K in 22 yrs if you average 10% annually. That asset base could yield a flat $60,000 each year after 2022 for three decades.

Initially, you may want to keep the funds with PERA in case of a change in mind, since a return to PERA covered employment boosts the HAS.

John,

Thanks, we have decided to try to find a financial planner to help us out with this. I think PERA is a pretty good deal, certainly better than most private sector pensions, at least the ones I have seen. Denver has a very similar plan, so there will of course be proceeds from that too.

Thanks again,
Dave