One aspect of retirement planning some members may not consider is how a divorce may affect their retirement benefit. In New York, retirement benefits are considered marital property and can be divided between you and your ex-spouse. While some divorced couples may choose not to divide retirement benefits, it’s important to think about what you will need to do if your pension will be affected by divorce.
Preparing for Retirement: Part Five — Divorce and Your Pension
The Preparing for Retirement 7-part video series discusses the main aspects of retirement planning to help NYSLRS members nearing retirement make good, informed decisions for the future. In Part Five – Divorce and Your Pension, you’ll hear about how if you are divorced, your ex-spouse may be entitled to part of your pension. NYSLRS needs a valid domestic relations order (DRO) on file so we can have the instructions on how your pension benefits should be divided. You’ll also learn what resources NYSLRS has available to help you construct a DRO, if needed.
Where to Find More Retirement Planning Information
If you are close to retirement and have more questions, consider scheduling an appointment to meet with an information representative at one of NYSLRS’ consultation sites in New York State. Don’t forget to check back for the rest of the Preparing for Retirement video series, which includes retirement planning topics like:
Many financial experts believe that you will need at least 70 to 80 percent of your pre-retirement income to enjoy the same standard of living once you retire. A sound financial plan can include your NYSLRS pension, Social Security benefits, and personal savings, but you still may need to supplement your retirement income the longer you are retired. A deferred compensation plan can be another source of retirement income to consider when saving for retirement.
What is Deferred Compensation?
Deferred compensation is a type of plan where part of your earned income is paid back to you at a later date. The money you set aside is tax-deferred, which means you do not pay federal or State tax on it until you begin to collect it.
The New York State Deferred Compensation Plan
The New York State Deferred Compensation Plan (NYSDCP) is a voluntary retirement savings plan created for New York State employees, and employees of other participating public employers. Participants in the NYSDCP have their contributions deducted automatically from each paycheck to their deferred compensation account. They can also choose from different investment options within the plan for their account.
If you work for a local government employer, please check with your human resources office or benefit administrator to learn about deferred compensation plans.
What Does Deferred Compensation Mean For Me?
Deferring income from your paychecks may mean you have less money to spend in the short-term but, in the big picture, you’re planning ahead for your financial future. You can enroll in a deferred compensation plan even if you’re approaching retirement or if you just started working. Usually, the sooner you start saving means you’ll be better prepared for your retirement.
Of course, there are other ways to save for retirement. A good financial planner, accountant or attorney can help you develop a practical plan that best meets your needs and goals.