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Should the present value of your PSERS pension be considered in your investment allocation decisions now and after you retire?

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The present value of your account is the death benefit.  If you’ve been teaching a while, it is likely over a million dollars!  That sum of money is equal to what the state, your school district, and you have contributed to your account over the years.  You are able to pull out your contributions plus interest when you retire.  The remainder must stay in PSERS and that will pay you a monthly FIXED pension.  So if it pays you a fixed pension, should it be considered as part of your fixed investment allocation.  Example:  Without considering present value as fixed allocation –

Stocks                  $200,000
Bonds                   $200,000

You have a 50% stock/50% bond portfolio Considering present value as fixed allocation –

Stocks                  $200,000
Bonds                   $200,000
PSERS                 $1,000,000

You have a 14% stock/86% bond portfolio

Since PSERS no longer seems to provide cost of living adjustments is 14% in stock enough to ensure you don’t run out of money before you die?

We’re now sure for your situation, but, you might want to consider the question, especially when you go to retire.

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