Today we're doing some pension planning! Diving into the basics and also answering some questions! This video is designed to hopefully help you ask some questions and know your plan a little better!
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0:00 – 1:19 Knowing the rules for your pension
1:20 – 3:40 Overview of pension basics
3:41 – 7:50 Questions to ask to understand your pensions better
7:51 – 8:03 Thanks for watching!
#retirement #retirementplanning #dohstr8
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Thanks for watching! What other questions do you think should be asked? Also, for the most part people tend to link our pension videos. What are some pension-specific topics that you want to see covered?
Nice, Eric!
Thanks Haley!
Firefighter from Kansas here. You are the first (from what I’ve seen)to bring up the PLOP.
Could you mention or cover: if I take a 50% lump – what can I do with that lump to use the dividend to supplement my monthly. Taking the plop is a hedge against the system but what are my options on using the dividends to supplement. Sorry for being wordy. You do great work man. Thank you
PLOP isn’t ultra common from what we have seen with clients, but it is a neat option! Dividends are an option, though if you roll your PLOP to an IRA, everything that comes out is taxable at your ordinary income rate….and eventually you have to start drawing down the account due to RMDs. You can still supplement your pension with the PLOP, just have to find the right portfolio mix for your risk tolerance and income needs!
@@Jazzwealth thanks man, something else to think about.
As an ibew member for 25 years in these are the questions I’ll be asking soon thanks for the great work you guys do
Glad we could help!
Purchasing Service credit for pensions. Aka, buying out a maximum of five more years towards your defined benefit plan (similar to an annuity but not one). The variables would make this topic tricky. My situation: today’s dollars 5 years service credit purchase would cost 80-90k from a pre-tax account. 5.5% of purchase cost would be added to my pension payment yearly until death of myself and spouse. My pension increases by 3% maximum per year for inflation. I guess my question would be, would this be worth it compared to average market returns in a Roth IRA?
Purchasing service credit is another good option that we didn’t mention. Thanks for bringing that up! The question is a tricky one and a bit plan specific… Based on what you’re sharing, if you get a 5.5% return on $90k, then a 3% increase on the 5.5%, your 1 year return would be around 5.665%. You’ll have to weigh out the set pension return vs the possible Roth return. Also, consider whether or not you need the liquidity you are putting into the pension. Up to you, but just a few things to consider!
Cool video! I’d like to add that there are other investment options in copy trading platforms like Eledator as well.
Thankfully, my military pension is simple to understand 🤣 I served 26+ years and I receive $X amount. My wife’s Federal Employee pension will be 1% of her high 3 years of earnings. She’ll work 20 years and she’ll earn 20% on that high three. In the end she’ll probably get around $30k-$35k a year. It’s not huge but it pays the mortgage and then some.
FERS really is weak compared to almost all public sector pensions. Never understood why.
​@@edhcb9359do FERS get a TSP match now?
@@dustindodge5974 Yes, it’s 1 percent. But for example my wife’s public pension is 2.5% pension for every year worked and 3% match on TSP.
​@@dustindodge5974yes…5% match
@@dustindodge5974 FERS gets the first 3% is matched dollar-for-dollar, the next 2% is matched at 50 cents on the dollar. So essentially 4% match as long as you are contributing enough to get the match.
Sometimes cost of living increases do not compound. They are just an annual bonus based on the rate of inflation the previous year.
Great advice thanks Eric
Thank you, Bruce!
Good stuff! Really like the videos with pension information. One thing I have stuggled with was calculating the value of the penion, if it should be added to a net worth statement or just considered cash flow, and if I should account for it in my savings rate for retirement?
I retired early last year, but stuck around enough to get a reduced pension. I was very clear in asking the correct questions and meeting with an advisor with the pension fund beforehand. Due to their funding ratio, they enhanced the benefits just before I retired – that meant an extra $4,500/year!
I’m retiring in ’25. I’m 52. I just reached my (+2) of a (+3) year plan. So that I can take a 3 year PLOP when I retire. I reached the full retirement requirements at age 50 with (30 yrs) service. The PLOP will also help bridge the gap between my full SS age (67) waiting period. Definitely doing a (100%) survivor for my wife. It’s good to see that I’m on track with my strategy. Keep up the great vids. Peace…Net