This post is part of a series. To get a fuller story, feel free to read:
I am stiving for the option to retire early with a pension. In order to receive that pension at my earliest age, I need 30 years of service. Eighteen of those years have come from full-time service at my current employer. A few more have come from part-time work from my employer and other schools in my retirement system. Last year, I found out I could “purchase” a few more years of service; being able to purchase service time is the “good” part of the problem. I decided to pay for a year and a quarter of service time for 10K, by having it taken out of my paycheck over the course of just 1 year. The cost? 400.98 per check. Having so much taken out of each check is part of the current “problem.”
To be able to have that much taken out of each check and have enough left over for myself each month, I decreased the amount I was putting in my 403b. Before I had decided to pay for my year of service in 1 year, I was putting aside 378 twice a month into my 403b. I forget how I came up with that number—oh yeah, it was when I was seeing what I’d do if I had my husband’s child support payment at 555 a month and his student loan payment 754 a month. The 555 is what I was putting in extra towards the mortgage and so the 754 was what I was putting in for my 403b. I receive 2 checks a month so if I wanted to put in 754, I’d divide it by 2 which is 377. Somehow I must have added another dollar because I was putting in 378.
I decided I’d see how things went if I changed my designation to 278 two times a month. Would that leave enough cash for me each month?
Nope. My latest paycheck showed me it’s not enough. After putting money towards my bills my and my husband’s shared checking account, I had 137 left. Double that becomes 274 per month. Since 250 comes out per month to be put into my personal emergency fund, car fund and house décor fund, I’d have 24 cash. I don’t feel comfortable only having that much put aside for clothes, eating out, yarn, my blog costs, etc. Plus, what if it’s possible to go on vacation this summer?
What wouldn’t be too much to be taken out of a check? What should my new designation be? Part of my issue is that I’m unsure because I’m unsure about how much I will want to spend on house projects this summer. I know I want my handiman to build me a raised garden and we have to purchase a new fence. Besides these 2 projects, I’m not sure what I’ll work on this summer, but I do know that if I’m inspired, I need to have money put aside for whatever project comes to light.
What about trying to keep 200 more out per month, so instead of 278 twice a month, I’d put in 178 twice a month? Two hundred twenty-four dollars cash may feel more comfortable. I’m going to try it.
There’s a bit more work I need to do to figure out my future money situation, though. I want to ask my financial planner her thoughts on me putting this much less into the 403b. When I briefly talked with her about our taxes, and she mentioned she wanted to double check our fiannces to make sure we’d meet our retirement goals. I told her I was putting less into the 403b, though I didn’t say how much less, so I want to update her on that.
I also haven’t talked with her about purchasing this year of service—or the previous year I purchased, so she also doesn’t know I will have the opportunity to retire earlier, which means less time to accumulate funds and interest. I believe purchasing the time was the right decision to make. I am just not 100% sure how they’ll affect my future financial situation. Once I find out more information, I may have to solve other “good” problems. I’d prefer some “good” news that does not have problems attached. I’ll hope for that.
Peace Out (and In),
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