Withdraw from Pension?

[Bryan P.]

I am 29 years old and a teacher in a rural PA public school. I've started investing in real estate. I had 34,000 in equity in my house so I took out a HELOC for a 22,000 property. It's working out well. But soon I won't have equity to use to buy a few more properties.

The Ponzi scheme pension plan bothers me. I know we're going to soon hit a pension crisis. You have to be living under a rock not to know it. I'm looking at the numbers, and even with the 10% penalty plus income tax, I'm thinking I can make more by withdrawing my pension and investing in rental properties in the 20,000's.

For example I have 7,500 in my pension currently. If I withdrew and took the 33% hit (taxes plus 10% penalty) I could make that money back in 3 years based upon my current rental property numbers. Cash on cash return would be around 20% per year. After I made the money back from the 10% penalty, those numbers look decent.

Any thoughts would be appreciated, is this good or bad thinking?

-Bryan

[DAVID GAGE]

I cashed out a pension last year and had a dozen nay sayyers tell me I was crazy. I have never second guessed my actions and would do it again if I could get my hands on my 401k. The home I bought was discounted 40 to 60% plus having control of your own interests is a bonus. I thought about the self directed IRA but chose to cashout instead.