Monthly Archives: June 2017

Retirement Fund Enjoys Strong Investment Returns

The New York State Common Retirement Fund (Fund) earned an estimated 11.42 percent on investments during the State fiscal year ending March 31, 2017, exceeding the long-term expected rate of return of 7 percent. The Fund ended the year with an estimated value of $192 billion.

Comptroller Thomas P. DiNapoli, Trustee of the Fund, credited the growth to a diversified investment strategy and strong returns on investments, particularly in the fourth quarter. Domestic and non-U.S. equities (stocks) performed particularly well, with an overall return of 17 percent. The return on real estate investments was nearly 11 percent. All returns are estimates, pending audited data that will be available later this year.

NYS Common Retirement Fund return on investments Fiscal Year 2017

The financial soundness of the New York State and Local Retirement System (NYSLRS) has been confirmed by two independent studies. A report by S&P Global Ratings ranked NYSLRS as the third best funded state pension system in the country for 2015. Only South Dakota and Wisconsin ranked higher. A study by the Pew Charitable Trusts also showed NYSLRS in the top three nationwide.

The Fund is the third-largest public pension fund in the country. NYSLRS provides retirement security to more than one million active state and local government employees, retirees and their beneficiaries. During the fiscal year that ended March 31, 2016, NYSLRS paid out $10.9 billion in retirement and death benefits. More than $8.6 billion was paid to residents of New York State, which generated local spending and provided economic support New York businesses and communities.

Women and Retirement

Saving for retirement is important for everyone, but it’s especially important for women. Women tend to live longer than men, but they may not spend as many years in the workforce and they may not earn as much. Because of this, women tend to lag behind men when it comes to retirement savings.

On average, a 65-year-old man can expect to live to be about 83, while a 65-year-old woman can expect to live to nearly 86, according to data from the Social Security Administration. That means a woman’s savings need to stretch that much further. But in a survey released in March by the Transamerica Center for Retirement Studies, women reported far lower retirement savings than men. The median savings for women was only $34,000, compared with $115,000 for men.

Women and Retirement

The survey also found that the percentage of women who had no retirement savings was higher than the percentage for men. Women also tended to be less confident about their ability to retire in comfort, according to the survey of over 4,000 U.S. workers.

Here are some things you can do to make sure you’re on track:

  • Start saving for retirement, if you haven’t already. Make regular, consistent additions to your savings.
  • If you’re already saving, increase the amount you save. Even a small increase will make a difference over time. (Try adding 1 percent of your salary, then bump it up next time you get a raise.)
  • Educate yourself about retirement savings and investments.
  • Learn more about your NYSLRS retirement benefits. There is a lot of good information in your Member Annual Statement. You may also wish to read the NYSLRS publication How Do I Prepare to Retire?
  • Learn more about your Social Security
  • If you are close to retirement, make a retirement budget.
  • Talk to a financial adviser.
  • Make a retirement plan. Write it down. And revisit it periodically.

A defined benefit plan, such as the NYSLRS retirement benefit, provides a monthly pension payment for life. But, savings are still important as a supplement to a pension and Social Security, a hedge against inflation and a resource in an emergency.

 

Choosing Your Pension Payment Option

When you retire from NYSLRS, you’ll need to decide how you want to receive your pension benefit.

You’ll have several options. All of them provide a monthly benefit for life. Some also provide a limited benefit for one or more beneficiaries after you die. Others let you pass on a monthly lifetime pension to a single beneficiary. Each option pays a different amount, depending on your age at retirement, your beneficiary’s age and other factors.

Pension Payment Option

That’s a lot to think about, so let’s make this clearer with an example. Meet Jane. Jane plans to retire at age 60, and she has a husband, a granddaughter and a grandson who are financially dependent on her. First, Jane needs to decide whether she wants to leave a benefit to someone after she dies. She does.

That eliminates the Single-Life Allowance option. While it pays the highest monthly benefit, all payments stop when you die.

Jane considers naming her grandchildren as beneficiaries to help pay for their college education.

The Five Year Certain and Ten Year Certain options don’t reduce her pension much, and they allow her to name more than one beneficiary. If Jane dies within five or ten years of retirement, her grandkids would split her normal benefit amount for the rest of that period.

However, the Five and Ten Year options wouldn’t be lifetime benefits. Since her husband doesn’t have his own pension, she’ll leave him her pension and look into a tax-deferred college savings plan for her grandkids instead.

There are a few options that leave a lifetime benefit:

The Joint Allowance — Full and Joint Allowance — Half options continue paying all or half of the retiree’s normal benefit amount to the beneficiary for life.

The Pop-Up/Joint Allowance — Full and Pop-Up/Joint Allowance — Half options also continue the retiree’s normal benefit. They reduce the pension a little more, but they have an advantage: If a retiree outlives his or her beneficiary, the retiree’s monthly payment will “pop up” to the maximum payable under the Single-Life Allowance option.

As you plan for your own retirement, you may also want to consider questions, like:

  • Do you qualify for a death benefit?
  • Do you have life insurance?
  • Do you have a mortgage or unpaid loans that will have to be paid if you die?

These and other factors can significantly impact your retirement planning.

To find out more about pension payment options, check your retirement plan booklet on our Publications page. You can also try our Benefit Calculator, which allows most members to estimate their benefits under the different payment options. For tips on developing a financial strategy that works for you, take a look through Straight Talk about Financial Planning for Your Retirement.