Some back story- Like I said, I'm 47 and had 20 years 3 months and 7 days of service under my belt when I got injured on a fire last October. After 4 neck and back surgeries, the docs said I have to retire. My medical retirement took effect November 8th of this year.
I received my pension letter from the fire department yesterday, and I was somewhat relieved to learn that I will be receiving 60.25% of base pay, tax free (the % is based off my impairment, and I had been told it could have been as low as 45%).
My questions. My pension papers clearly say that I am allowed to work, however, I have heard that if I make over a certain amount of money, it can make part or all of my disability taxable. The only thing I've found online so far concerns Social Security benefits, but I'm assuming my pension fund has similar rules. I'm not all that concerned about this, as of now I don't plan on filing any w2's in the near future.
However, I am considering taking a large chunk from my deferred comp (457b) plan, and paying off all my debt (Mortgage, last remaining credit card, and a home equity loan).
First of all, is this stupid? Becoming debt free would put me in a position to continue building a savings near the same rate I was able to before I retired (and that's not counting any side income I earn). It also would be a huge stress relief, especially after all the uncertainty of the past year...and that alone seems like the biggest selling point to me.
My concern is, while there is no penalty for withdrawing the money, it says it will be "taxed as income", which has me worried that it would count against my disability income, like income from working a job would (if that is indeed the case), and I'd have to pay taxes on some or all of the disability income as well, which doesn't seem correct, but unfortunately I'm pretty ignorant with all of this.
Everything lately just seems like such a huge decision, I just don't want to do anything stupid.
Thanks in advance for any insight or advice, and let this be a lesson for you young whippersnappers, you're never too young to start preparing and educating yourself about retirement! Now let me see if I can do this right, I've been practicing-
GET OFF MY LAWN!
Submitted December 27, 2018 at 08:00AM by IFDRizz http://bit.ly/2ThzGlb
