When it comes to understanding your finances, a good place to start is by calculating your net worth.
Net worth is the total value of everything you own, minus the money you owe. It is a measure of your wealth and an indicator of your financial condition. It can also provide you with valuable insight as you start developing your financial plan for retirement.
How to Calculate Net Worth
The formula for calculating your net worth is simple:
Assets and Liabilities
Your assets are items of value that you own, including:
Other real estate (a vacation home, rental property)
Money in checking and saving accounts
Retirement savings, such as a 401(k) or Deferred Compensation account
Stocks, bonds and other investments
Your car and other vehicles
Jewelry, furniture and household items
Your liabilities are your debts. Your mortgage, credit card debts and loan balances factor into your total liabilities.
If you owe more than the value of your total assets, you have a negative net worth. A negative net worth may not necessarily mean you’re in financial trouble — it just means that at the moment you have more debts than assets.
If you’re just beginning your career and still have student loans, you may find yourself in negative territory. But your net worth is likely to increase over time as you pay down debts and save money.
Knowing Your Net Worth Can Help You Get a Handle on Your Finances
Your net worth shows your current financial status. When you know where you stand, you’ll be better prepared to make decisions about spending, saving and investing, which will help you achieve your short- and long-term financial goals. Your net worth can show you where you’re doing well and where there’s room for improvement. For example, it may indicate a need to curb your spending or reduce your credit card debt.
Your net worth is likely to change over time, so it’s a good idea to calculate it periodically. With this updated financial information, you’ll be able to track trends and make adjustments if necessary.
The COVID-19 pandemic has prompted some NYSLRS retirees to return to work in the public sector. If you are one of these retirees, we want to make sure you know that the post-retirement earnings limit of $35,000 a year for retirees in a public sector job who are under age 65 has been suspended through much of 2020, 2021 and 2022 by executive order. Additionally, if you work for a school district or BOCES, legislation has suspended your earnings limit through June 30, 2023. Read more in our blog post, Update Regarding Retiree Earnings Limit During COVID-19 Emergency.
Some retirees have considered ending their retirement to rejoin NYSLRS. While rejoining the Retirement System is an option, you should understand how this decision could affect your pension benefits.
Rejoining NYSLRS may increase your total service credit, allowing you to reach certain milestones that would increase your pension. An increase in earnings could also result in a higher pension. However, depending how long you work after rejoining, your new pension may not be higher than your original amount.
Note: This post applies to service retirees of the Employees’ Retirement System (ERS) or the Police and Fire Retirement System (PFRS) who are rejoining the same system. Different rules may apply to retirees of other retirement systems, retirees joining a system other than the one they retired from, and disability retirees.
What Happens to Your Pension When You Rejoin NYSLRS?
If you rejoin NYSLRS, your pension will be suspended. If you are in Tiers 2 through 6, and you earn less than two years of new service credit after you rejoin, your original pension would be reinstated when you retire the second time. Any new service credit and earnings would not affect your pension. (Tier 1 members would receive an additional benefit even if they earn less than two years of service in their new membership.)
If you earn two or more years of new service, you can either receive your original pension or you can receive a recalculated benefit that includes your additional service. If you choose the recalculated benefit, you would have to repay the entire pension amount you have already received, plus interest. (The pension amount you repay would be based on the Single Life Allowance rate.) You may repay that amount in a lump sum or by installments before you retire again — or request a permanent reduction to your new pension.
Here are other things to consider before you rejoin NYSLRS:
If you are in Tier 1 or 2, rejoining may affect your death benefit.
Where to Go for Help
If you are seriously considering rejoining NYSLRS, we strongly recommend you speak with a customer service representative to discuss how rejoining would affect your benefits. You can call them at 1-866-805-0990 or email them using our secure contact form.
What makes special beneficiary designations so special?
As a NYSLRS member, it’s important for you to name beneficiaries. Your beneficiaries may be eligible to receive a death benefit upon your death.
You can choose anyone you wish to receive your death benefit; it does not have to be a family member. In fact, it doesn’t even have to be a person. You can name your estate, a charity or a trust.
But before we talk more about these special beneficiary designations, let’s quickly go over the two main types of beneficiaries. These are important to know as some special designations may affect who you can designate.
About Primary and Contingent Beneficiaries
A primary beneficiary is someone you choose to receive your benefit if you die. A contingent beneficiary would only receive the benefit if the primary beneficiary dies before you. If a beneficiary dies before you, you should update your beneficiary information to ensure that your benefit is distributed according to your wishes.
As a reminder, Retirement Online is the convenient and secure way to view and update your beneficiaries. If you don’t already have an online account, you can learn more on our website.
About Special Beneficiary Designations
Here are some examples of special beneficiary designations and the rules for each one:
You may name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as your primary beneficiary, you cannot name a contingent. If a benefit is payable, the executor of your estate will distribute it according to the terms of your will.
With this type of designation, the trust is the beneficiary, not the individuals who will receive the trust. If you revoke the trust or it expires, you will want to make new beneficiary designations as soon as possible to ensure benefits are paid according to your wishes.
You should talk to an attorney if you’d like more information on trust agreements.
You may name any charitable, civic, religious, educational or health-related organization as a primary or contingent beneficiary. Be sure to include the organization’s full name and address in your designation.
If your beneficiary is under age 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may instead choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Custodians can be designated in Retirement Online. Before making this type of designation, please contact us for more information.
Please note that some of these beneficiary designations will be subject to a NYSLRS legal review.
Financial advisers say you will need to replace between 70 and 80 percent of your salary to maintain your lifestyle after retirement. Your NYSLRS pension could go a long way in helping you reach that goal, especially when combined with your Social Security benefit and your own retirement savings. Here’s a look at how Employees’ Retirement System (ERS) members in Tier 6 (who are vested once they’ve earned five years of credited service), can reach that goal. Members who joined NYSLRS since April 1, 2012 are in Tier 6.
Calculating an ERS Tier 6 Member’s Pension
Your NYSLRS pension will be based on your Final Average Earnings (FAE) and the number of years you work in public service. FAE is the average of the five highest-paid consecutive years. Note: The law limits the FAE of all members who joined on or after June 17, 1971. For example, for most members, if your earnings increase significantly through the years used in your FAE, some of those earnings may not be used toward your pension.
Although ERS members can generally retire as early as age 55 with reduced benefits, the full retirement age for Tier 6 members is age 63.
For ERS Tier 6 members in regular plans (Article 15), the benefit is 1.66 percent of your FAE for each full year you work, up to 20 years. At 20 years, the benefit equals 1.75 percent per year for a total of 35 percent. After 20 years, the benefit grows to 2 percent per year for each additional year of service. (Benefit calculations for members of the Police and Fire Retirement System and ERS members in special plans vary based on plan.)
Say you begin your career at age 28 and work full-time until your full retirement age of 63. That’s 35 years of service credit. You’d get 35 percent of your FAE for the first 20 years, plus 30 percent for the last 15 years, for a total benefit that would replace 65 percent of your salary. If you didn’t start until age 38, you’d get 45 percent of your FAE at 63.
So, that’s how your NYSLRS pension can help you get started with your post-retirement income. Now, let’s look at what the addition of Social Security and your own savings can do to help you reach your retirement goal.
Other Sources of Post-Retirement Income
Social Security: According to the Social Security Administration, Social Security currently replaces about 40 percent of the wages of a typical worker who retires at full retirement age. In the future, these percentages may change, but you should still factor it in to your post-retirement income.
Your Savings:Retirement savings can also replace a portion of your income. How much, of course, depends on how much you save. The key is to start saving early so your money has time to grow. New York State employees and some municipal employees can participate in the New York State Deferred Compensation Plan. If you haven’t already looked into Deferred Compensation, you might consider doing so now.
If you’re planning to retire in the near future, it’s a good idea to take inventory of any debt you may owe. Paying off your debt now can give you more breathing room to enjoy the type of retirement you want.
Where to Start: Repay Your NYSLRS Loans
A high priority should be any loans you have taken from NYSLRS. If you have an outstanding NYSLRS loan balance when you retire, it willreduce your pension.
For example, if a 60-year-old Tier 4 member of the Employees’ Retirement System (ERS) retires this year owing $10,000, the annual pension reduction would be $482.84. And that reduction would continue even after the total reduction exceeds the amount owed. What’s more, at least part of the loan balance at retirement would be subject to federal taxes.
ERS members may repay their loan after retiring. However, if you choose to pay back your loan after you retire, you must pay back the full amount of the outstanding balance that was due when you retired in one lump-sum payment. Following your full repayment, your pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to your date of retirement. Visit our Repaying Your Loan After Retirement page for more information if you are considering retiring with an outstanding loan.
Other Debt to Check
Another priority is paying off credit cards. The average American household with credit card debt owes more than $6,006 in revolving balances and pays about $1,029 a year in interest, according to a recent analysis of federal data.
Fortunately, a federal law makes it easier to get a handle on your credit card debt. Credit card statements must now carry a “Minimum Payment Warning.” This tells you how long it will take, and how much it will cost, to pay off your balance if you only make minimum payments. It also tells you how much it will cost each month to pay off the balance in three years.
If you have more than one credit card balance, many financial advisers recommend you pay as much as you can on the card with the highest interest, while paying at least the minimum on lower-interest cards. Once you’ve paid off the high-interest card, focus on the card with the second-highest rate, and so forth. But some advisers say it might be better to pay off the card with the smallest balance first. That will give you a sense of accomplishment, which could make the process seem less daunting.
Mortgage balances make up 70 percent of the $15.24 trillion in U.S. household debt. But should you strive to pay off your mortgage before you retire? Financial advisers differ on that question. Paying off the house will eliminate a major expenditure and allow you to spend your retirement income on other things. On the other hand, if your mortgage rate is relatively low, you may want to focus on paying off other debts or boosting your retirement savings. What will work best for you depends on your particular financial situation.
Your Member Annual Statement is a snapshot of your NYSLRS account, with information about your NYSLRS membership and benefits. It is based on the information we have on file for you as of March 31, 2022, the close of our fiscal year.
You can view your 2022 Statement now by signing into Retirement Online. (Reminder: Retiree Annual Statements were mailed at the end of February and are not available online.) From your Retirement Online Account Homepage, go to the ‘My Account Summary’ area, click the “View My Member Annual Statement” button and follow the steps to view, print or save your Statement. Don’t have an account? Register today.
Tier 5 and 6 Members: As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. For these members, your Statement ending March 31, 2022 will not reflect this recent legislation. For example, for members who have between five and 10 years of service, your statement will still say that you are not yet vested. To learn about the impact of this new legislation and vesting status updates that will be coming to Retirement Online, please read our Becoming Vested blog post.
Delivery of Your Member Annual Statement
If you chose email delivery of your Statement, you should receive an email informing you that your Statement is ready to be viewed in Retirement Online. All other members will receive their 2022 Statement by mail before the end of June.
Get Up-to-Date Account Information Year Round
Your Member Annual Statement provides information as of March 31, 2022, but with Retirement Online you can access up-to-date information about your retirement account year round. It is also the fast, easy way to conduct business with NYSLRS. Here are some of the things you can do online:
Pension Estimates: Most members can create customized benefit estimates and calculate their pension payment options using Retirement Online. From your Account Homepage, scroll down to ‘My Account Summary’ and click the “Estimate my Pension Benefit” button. You can base your estimate on the salary and service information we have on file or adjust your earnings or service credit to account for possible increases in earnings or service credit purchases. By entering different retirement dates and beneficiaries, you will see how your choices affect your potential benefit. If you are not able to use the Retirement Online calculator, contact us for an estimate.
Employment History: You can view your recent employment history and reported earnings for the past five years in Retirement Online. From your Account Homepage, scroll down to ‘My Account Summary’ and click the “View My Recent Employment Summary” button. Think you may be eligible for past service that’s not included in your employment history? You can request to purchase service credit by returning to ‘My Account Summary’ and clicking the “Manage My Service Credit Purchases” button.
Contact Information Change: Did you move or change your email address recently? On your Account Homepage, in the ‘My Profile Information’ section, you can update your address and other contact information.
Update Your Delivery Preference for Next Year
Want to be notified by email next year when your Statement is ready? Sign in to Retirement Online to change your Statement delivery preference. Go to the ‘My Profile Information’ section on your Account Homepage, click “update” next to ‘Member Annual Statement By,’ then choose “email” from the dropdown menu.
Have Questions About Your Member Annual Statement?
Visit our Member Annual Statement page for answers to common questions or to find out how to correct any errors. Remember that your Statement provides information as of March 31, 2022 — the end of the State fiscal year. However, you can sign in to Retirement Online throughout the year to view current account information.
Planning on taking out a NYSLRS loan? Applying online offers speed and convenience.
NYSLRS loan eligibility is based on your tier, but generally, you’ll need to be on the payroll of a participating employer, have at least one year of service and have a certain amount of contributions in your account. Retirement Online will provide the eligibility information you need as you step through the application process. (Note: retirees are not eligible for NYSLRS loans.)
Retirement Online is the fastest way to apply for a NYSLRS loan. It’s also an easy way to check your current loan balance, the amount you are eligible to borrow and more.
Once you’ve signed in, scroll down to ‘My Account Summary.’ Under ‘I want to…’ click the green “Apply for a Loan” button and follow the prompts.
As you work your way through the online application, you’ll see:
How much you can borrow;
The minimum repayment amount;
The expected payoff date; and
How much you can borrow without tax implications.
A service charge of $45 will be deducted from your loan check when it is issued. The current interest rate is 5 percent. The interest rate will remain fixed for the term of your loan.
NYSLRS loans are exempt from New York State and local income taxes. But the Internal Revenue Service (IRS) may consider all or part of a NYSLRS loan taxable in some cases – for instance, if you borrow above certain limits. The Retirement Online loan application will show you the maximum amount you can borrow without tax implications.
If you already have a loan and you want to take another loan, you can either take multiple loans or refinance your existing loan. Taking a new loan (the multiple-loan option) minimizes your potential tax consequences. Your minimum payment will be higher, but you will pay off your loans faster than you would by refinancing. Refinancing adds the new loan amount to your existing balance and spreads the entire balance over a new five-year term. Your payment will be lower but your tax consequences may be significantly higher.
Repaying Your NYSLRS Loan
Loan payments will be deducted from your paycheck. You can choose the minimum payroll deduction, which would pay off your loan in five years, or you can pay more to pay off your loan sooner. The payment calculator in Retirement Online will provide your expected payoff date if you enter an amount higher than the minimum.
Retiring With an Outstanding NYSLRS Loan
If you retire with an outstanding loan, your pension will be reduced. You will also need to report at least a portion of the loan balance as ordinary income (subject to federal income tax) to the IRS. If you retire before age 59½, the IRS may charge an additional 10 percent penalty. If you are nearing retirement, be sure to check your loan balance. If you are not on track to repay your loan before you retire, you can increase your loan payments, make additional lump sum payments or both.
Note: Employees’ Retirement System (ERS) members may repay their loan after retiring, but they must pay the full amount (that is, the amount that was due on their retirement date) in a single lump-sum payment. Following your full repayment, your pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to your date of retirement.
For more information about NYSLRS loans, visit our Loans page. If you need help with the Retirement Online loan application, click “Help” at the top of your account page, then click next to ‘Requesting a Loan’ and select the step-by-step guide that best fits your situation.
Recent legislation temporarily changes how Tier 6 contribution rates are calculated.
Usually, Tier 6 contribution rates are calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.
The new law removed overtime that was earned from April 1, 2020 through March 31, 2022 from the Tier 6 contribution rate calculation. The earnings from this time period determine the contribution rates that you pay from April 1, 2022 through March 31, 2024.
Removing overtime earnings may result in lower contribution rates effective April 1, 2022 through March 31, 2024. Although Tier 6 contribution percentage rates for those years will be calculated only on annual base wages, Tier 6 members must pay the applicable contribution rate on all their pensionable earnings. This video helps explain how your contribution rate is determined.
Note: Tier 6 members are those who joined NYSLRS on or after April 1, 2012.
When Will Rates be Recalculated?
We are working with employers to review your past earnings to determine whether your rate should be lowered.
Tier 6 is now the largest tier in NYSLRS. With more than 325,000 Tier 6 members, it will take some time to collect detailed earnings information from employers and change rates.
Once information for all Tier 6 members is received and processed, if your rate is lowered, it will be retroactive to April 1, 2022. If you are entitled to a credit of overpaid contributions, you will be notified and your refund will be paid to you by your employer.
Who is Affected by the Rate Change?
Tier 6 members who make mandatory contributions toward their retirement and earned overtime from April 1, 2020 through March 31, 2022 may have their contribution rates lowered.
The rate decrease does not apply to:
Members who are already paying the minimum rate of 3 percent;
Members who did not earn overtime during the COVID pandemic; and
Members who joined NYSLRS on or after April 1, 2020. Your rates are based on an estimated wage provided by your employer when you were enrolled into NYSLRS rather than your actual earnings.
More About Tier 6 Contribution Rates
Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members, that percentage, or contribution rate, is based on earnings and can vary from year to year. The minimum rate is 3 percent and the maximum rate is 6 percent.
Getting hit every year with a larger than expected federal tax bill? Or maybe you received a hefty refund. Either way, it might be time to look at how much federal tax withholding is taken out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you can check with your tax preparer or you can use this Internal Revenue Service Withholding Calculator. Remember, this is only for federal income tax. New York State doesn’t tax your NYSLRS pension and we can’t withhold state income taxes.
You can adjust the amount we withhold from your retirement benefit at any time. Just follow these step-by-step instructions.
Print our NYSLRS Form W-4P (Withholding Certificate for Pension or Annuity Payments) from our website. (This is a fillable form, so you can type in the information before you print it out.)
Fill in the top of the form with your name, address, Social Security number and NYSLRS ID.
Complete the form.
Complete Section 1 if you do not wish to have any federal income tax withheld.
Complete Section 2 to have NYSLRS withhold based on current Internal Revenue Service (IRS) tax tables, your marital status and the number of federal allowances (exemptions) you claim. You can use our tax withholding calculator to estimate how much would be withheld from your pension payment every month.
Complete Section 3 if you completed Section 2 and also want an additional amount withheld.
If you completed the form by typing in your information, print the form.
Date and sign the form.
Mail your form to: NYSLRS 110 State Street Albany, NY 12244-0001
You can sign in to Retirement Online to view your current federal withholding information, including your withholding status, number of exemptions and any additional tax being withheld. You’ll also find your NYSLRS ID on your Retirement Online account page. Visit our Taxes and Your Pension page for more information.
Becoming vested is a crucial milestone in your NYSLRS membership.
You become vested after you earn enough years of service credit. Once you’re vested, you have earned the right to receive a retirement benefit, even if you leave public employment before retirement.
New Legislation Changes Vesting Requirements for Tier 5 and 6 Members
As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. This affects members of both the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). Previously, Tier 5 and 6 members needed 10 years of service to be eligible for a service retirement benefit (the new legislation does not change eligibility for disability retirement benefits that are established by your retirement plan).
You can sign in to your Retirement Online account to view your total estimated service credit. Over the next few months, we will update members’ accounts to reflect any changes to vesting status as a result of these new vesting requirements. If your total estimated service credit in Retirement Online is more than five years, rest assured, you are considered vested and your vesting status will be changed to “Yes.” This will be done by NYSLRS and there is no need to contact us.
In addition, we are working to update the pension estimate tool in Retirement Online. Until vesting status updates are made to the tool, pension estimates produced in Retirement Online will not accurately reflect the vesting status of members impacted by the new legislation.
Effective immediately, if you are a Tier 5 or 6 member with five or more years of service and you meet the minimum age requirements for your retirement plan, you can apply for a service retirement benefit if you wish. We are updating our online services to enable Tier 5 and 6 members to apply for retirement through Retirement Online. In the meantime, you may file for retirement using our paper application. If you have between five and 10 years of service credit and you have questions about filing for retirement, please contact us.
This legislation did not change Tier 5 or 6 benefit rules such as how long you must contribute, your pension benefit calculation, your full retirement age, reductions to retire early or the cost to purchase previous service. However, additional new legislation may affect contribution rates for some Tier 6 members. Information about this legislation will be posted on our blog when it becomes available.
Tier 5 and 6 members who left public employment with five or more years of service and did not withdraw their membership are now considered to be vested.
Tier 5 and 6 members who leave public employment with more than five years of service but less than 10 years, as of April 9, 2022, now have the option to either apply for a retirement benefit once you reach retirement age or withdraw your contributions. You cannot withdraw your contributions once you have 10 years of service. As a reminder, once you withdraw your contributions, you end your membership with NYSLRS and are no longer eligible for a retirement benefit.
If you were a Tier 5 or 6 member and have been off the payroll for more than seven years prior to April 9, 2022, your membership is considered withdrawn and terminated. You would need to return to payroll and reinstate your withdrawn membership in order to be eligible for five-year vesting.
All Members — When Will I Be Vested?
NYSLRS members in Tier 2, 3, 4, 5 and 6 need five years of service credit to be vested.
If you work part-time, it will take you longer to become vested. For example, if you work half-time, you earn six months of credit toward vesting for each year on the job.
If you purchase credit for previous service or military service, that credit can be used toward vesting.
What You Need to Do
Vesting is automatic. You do not need to file any paperwork to become vested. To find out if you’re vested, you can sign in to your Retirement Online account and find your total estimated service credit in the ‘My Account Summary’ section. Again, if your total estimated service credit in Retirement Online is listed as more than five years, you are considered vested.
Vested members will need to apply for a service retirement benefit in order to receive a pension. Applications must be submitted within 15 – 90 days before the date you wish to retire (you must be eligible to retire on the date you choose).
Most NYSLRS members are eligible to collect a pension as early as age 55, but, depending on your tier and retirement plan, benefits may be reduced if you retire before your full retirement age.
You can estimate your pension benefit based on the salary and service information we have on file for you. From your Retirement Online account, under ‘My Account Summary’ click “Estimate my Pension Benefit.”