Free Washington Retirement Planning Community and CoursesPlan 2 is one of the most generous pension systems in the country, but it’s not perfect. In this episode, we break down the real pros and cons of Plan 2 for Washington State teachers, public employees, and school employees so you can understand what you’re gaining, and what you may be missing.
We explain why Plan 2’s 2% per year lifetime pension is such a powerful benefit, how vesting works after just five years, and why many Plan 2 retirees actually earn more guaranteed income than Plan 3 members who saved aggressively on their own. You’ll also learn about lesser-known features like the 5.5% interest credit on contributions after separation.
Then we cover the downsides:
– No built-in savings account
– Rising mandatory contribution rates
– Limited liquidity and legacy concerns
– What happens if you pass away early in retirement
In the second half of the episode, we answer a critical listener question about survivorship benefits and community property rules. We explain why spouses do not automatically receive a pension unless the correct survivorship option is selected, and why this decision is permanent.
If you’re in PERS 2, TRS 2, or SERS 2, this episode will help you avoid costly retirement mistakes and make smarter planning decisions.
00:00 – Intro – Plan 2 for WA State Employees
01:32 – The biggest advantage: 2% per year lifetime pension
02:29 – Why income matters more than account balances
03:32 – Low required contributions vs private retirement savings
04:04 – Vesting after just 5 years
04:26 – Little-known benefit: 5.5% interest on contributions after separation
05:24 – The biggest downside: no built-in savings account
06:01 – Mandatory contributions and why you have no control
06:54 – Liquidity and legacy concerns with Plan 2
07:17 – What happens if you pass away early in retirement
08:13 – Listener question: survivorship benefits and community property
08:32 – Pension option choices and why they are permanent
09:09 – Why spouses must sign and notarize Option 1
10:16 – Real example: how Option 1 can financially devastate a survivor
11:56 – Why survivorship options often break even faster than expected
12:26 – Why this is one of the most important retirement decisions you’ll make
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