Stick with State Pension or move to Employer 401(a)?
Related to my recent post on which 401(a) fund(s) I should invest in, a co-worker is causing me to pause and reassess if I should move to the 401(a) plan at all.
The story is, I have moved job classes with my promotion. My old position offered me the state pension plan-- I put in 5.5% of my salary (my employer puts in money as well, but only to support the pension system, it does not go into my "account"). This new job offers a 401(a) plan-- I put in 5.5% and my employer puts in another 10% in my account the total of which I get to invest in as I wish (from a good size list). The trick is, as I am moving from one job class to another I get a ONE TIME choice of which retirement system I want to be in. I can never change again, regardless of future position changes.
Currently, in addition to the 5.5% I am mandated to put into retirement, I do $5500 in a Roth IRA and 7% in a (not very diverse) mix of 403(b) funds. Which ever employer retirement system I am in, I would continue to contribute to these at these levels.
At this point I have 20 years in the state pension. Even if I switch to the 401(a), I will get a reduced pension when I retire (35% of my "high five" salary, which would stop computing at the time I switch). At my co-worker's urging, I ran the Vanguard retirement calculator and the results are in the screen shots below. I tried to be conservative when running them. As you can see, the "full pension" looks to give me quite a bit more over the reduced pension with 401(a) going forward.
Reduced Pension with 401(a) going forward
I have one week to make my choice! What do you all think? Does it make sense to stick with the state pension plan? I am in the upper mid-west, I don't think we're going to do the way of Detroit, but a lot can happen in the next 20 years.