My wife is changing jobs, from city government into the private sector. She isn't fully vested on her pension, but has a couple options and I'm not sure about how to figure out which is best.
Here's the background: She has invested 11k of her earnings towards the pension fund, and in order to receive the minimum pension, she needs to have 37k invested. Because of the vagaries of the pension plan, if she opts out, we'll get back 7k. Therefore, in terms of the math, I don't think this 4k matters at all, as it's a sunk cost.
Option 1: Opt out of pension, Get back 7k, and invest it.
Option 2: Pay 30k to the pension fund, and when we are 57 years old, get back 7k/year until both of us croak. We are both 35 years old now.
I'm not sure what assumptions I should be making to solve this kind of problem (lifespan, avg return on equities, etc). How should I tackle it?