Mom's Retirement...amazing

Today was my Mom's offical last day of work 3/30/2007. She is 55 years old and has been a state employee for 33 years. She has stuck with her job because of the amazing medical and retirement benefits. Earlier this week I discussed early retirement, well here I'm going to examine her benefits in detail and determine if it was worth it.

First she has contributed to her pension plan 7.8% for the duration of her career. This money has gone into a community pot which will generate her pension. Her pension is determined as follows 2% x years of service x highest 3 years of salary. That means she will get at least 66% of her salary, but because she also accrued while working over 2 years of sick leave, she is able to add that to her years of service. Thus her final benefit is 70% of her salary, which is amazingly about $4200/month gross or $50,400 annually.

Now to have generated this pension my mom would have had to have saved $1.3-1.4 million dollars in retirement accounts. Which she didn't do. This benefit is guaranteed for life. But first she uses her contributed portion up, which you wonder is how much? Well only a measly $200k which will take my mom less than 5 years to use up before she is living off the state's generosity for the rest of her life. And in my family the women live a long, long time my great-grandmother is 97 years old, grandmother is almost 78, and then my mom is 55.

However the second retirement bonus is that she will have free medical premiums paid for her and my dad for life. What that means is that she is retiring at 55 with a primary medical plan in place. She does not need to depend upon Medicare nor buying her own medical insurance at 55. When she turns 65, Medicare will become her primary insurance and this state insurance will become secondary. So if anything happens to her, my mother is 100% insured and pays zero out of pocket costs. The same for my father. The cost of this benefit, well it includes prescription coverage, vision, and dental insurance as well. And is approximately $1000/month. So my mom has right there "earned" another $12k/year in income in retirement benefits.

So turns out my mom get quite a retirement deal. Of course incoming workers and even people who started working 10 years after my mom did not have this sort of pension available to them. This pension and benefits were as she calls it "last of the mohicans." The state has been trying to "downsize" her for about 5 years so they wouldn't have to give her such a generous payout. But they hadn't been successful until now.

Anyway happy retirement mom! Wowzah! Amazing goals. I can't believe she did it. My MIL is also considering retiring at 54. DH and I are nowhere near completing that goal, main reason we still don't have kids unlike our parents who already were done childbearing by our ages. There is something to having kids young.