Tag Archives: retirement planning

Retirement Planning: Questions to Ask Yourself

retirement planning - things to think aboutAfter months or years of retirement planning, you’re probably looking forward to the day when you apply for your NYSLRS pension. But before you retire, there are a few questions you should ask yourself. After all, by filing for retirement, you’re making critical decisions about your financial future. And once you’ve retired, some of those decisions will be irrevocable. Whether your planned retirement date is just around the corner or a few years off, asking these questions now could help you avoid costly mistakes.

Do I have all the service credit I think I have?

Under some retirement plans, service milestones (20 years, 30 years, reaching full retirement age) can have a big impact on the amount of your benefit. If you’re aiming for one of these milestones, but retire just short of reaching it, your pension will be less than you might be expecting. To make sure you have enough service credit on your planned retirement date, sign in to Retirement Online to check the most up-to-date estimate of your total service credit.

Do I have previous service credit I want to purchase?

You may be able to buy credit for previous public employment or military service, which in most cases would increase your pension.  

If you are planning to purchase service credit, including military service, you should do that as soon as possible, especially since you can’t purchase service credit after you retire. You can apply for additional credit in Retirement Online or by submitting a Request to Purchase Service Credit form (RS5042). You may also wish to read our publication Service Credit for Tier 2 Through 6.

Do I have a balance on a NYSLRS loan?

If you have an outstanding balance on a NYSLRS loan, you should pay it off before you retire. If you retire with an outstanding loan, your pension will be permanently reduced.

While Employees’ Retirement System members may repay their loan after retiring, they must pay back the full amount of the outstanding balance that was due at retirement in one lump-sum payment. Once the loan has been repaid, their pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to their date of retirement.

You can use your Retirement Online account to check your loan balance, make a lump-sum payment or increase your payment amount. For more information, visit our Loans page.

Retirement Planning Resources

The more you know about retirement and the retirement process, the better off you’ll be. Here are some resources that can help with your retirement planning:

Taxes After Retirement

Estimating your post-retirement expenses is crucial to effective retirement planning, and it’s important to remember that taxes are also part of that equation. Most retirees pay less in taxes than when they were working, partly because their incomes are lower. But there are other reasons why your tax burden may be lighter after you stop working.

taxes after retirement

New York State Taxes

As a NYSLRS retiree, your pension will not be subject to New York State or local income tax. New York doesn’t tax Social Security benefits, either.

You may also get a tax break on any distributions from retirement savings, such as deferred compensation, and benefits from a private-sector pension. Find out more on the Department of Taxation and Finance website.

Be aware that you could lose these tax breaks if you move out of New York. Many states tax pensions, and some tax Social Security. For information on tax laws in other states, visit the website of the Retired Public Employees Association.

Federal Taxes

Unfortunately, most of your retirement income will be subject to federal taxes, but there are some bright spots here.

Your Social Security benefits are likely to be taxed, but at most, you’ll only pay taxes on a portion of your benefits. You can find information about it on the Social Security Administration website. (If you’re already retired, use the Social Security Benefits Worksheet in the Form 1040 instructions to see if any of your benefits are taxable.)

Throughout your working years, you’ve paid payroll taxes for Social Security and Medicare. For most workers, that’s 6.2 percent (Social Security) and 1.45 percent (Medicare) of your gross earnings out of every paycheck. But Social Security and Medicare taxes are only withheld from earned income, such as wages. Pensions, Social Security benefits and retirement savings distributions are exempt from Social Security taxes. Of course, if you get a paying job after retirement, Social Security and Medicare taxes will be deducted from your paycheck.

Once you turn 65, you may be able to claim a larger standard deduction on your federal tax return.

To better understand how your retirement income will be taxed, it may be helpful to speak with a tax adviser.

Give Your Retirement Savings a Boost

If you’re already building your retirement savings, you already understand how those savings, along with Social Security, work together with your pension to help provide financial stability in retirement. Financial advisors call this the “three-legged stool.”

But why not take it a step further and give your retirement savings a boost? Even a small increase could make a big difference over time, while having minimal impact on your take-home pay.

How much of a difference would it make? You can check it out yourself using this online calculator and your own salary and savings information. Calculate the impact of your current savings, then try the same calculation with an additional 1 percent of your earnings. For example, if you’re saving 5 percent of your pay, see what saving 6 percent would do by the time you expect to retire.

retirement savings

Impact on Your Paycheck

Fortunately, adding a small amount to your retirement savings won’t have a substantial impact on your paycheck. For example, if you’re making $60,000 a year, 1 percent is only $600. That’s just $50 a month or, if you are paid every other week, about $23 per payday.

The impact on your take-home pay would be even less if you save in a tax-deferred plan because you won’t have to pay income tax on those earnings until after you retire. The New York State Deferred Compensation Plan’s paycheck impact calculator can help you estimate how increased savings would affect your paycheck. (You don’t have to have a Deferred Compensation account to use their calculator. The New York State Deferred Compensation Plan is not affiliated with NYSLRS.)

When to Increase Retirement Savings?

The sooner you boost your savings, the better off you’ll be. But if you’re not ready to increase your savings right now, then try this: Schedule your increase to coincide with your next raise. That way, you may not even miss the money.

Countdown to Retirement – 1-3 Months to Go

Congratulations! After years of hard work and planning, the big day is almost here. It’s time to file for retirement.

You must submit your service retirement application 15 to 90 days before your retirement date.

Countdown to Retirement – 1-3 Months to Go

Filing Online

Online filing offers a secure and convenient way to apply for a service retirement benefit. You can upload needed documents instead of having applications notarized and taking them to the post office. You can also check on the status of your application once you submit it through Retirement Online. To get started, sign in to your Retirement Online account, scroll to the ‘My Account Summary’ section and click the “Apply for Retirement” button.

From there, you’ll go through a series of screens where you’ll be able to:

  • Choose your retirement date;
  • Get an estimate of the pension payment options available to you;
  • Select a pension payment option and beneficiary;
  • Have federal taxes withheld;
  • Sign up for direct deposit; and
  • Upload required documents, such as proof of date of birth.

After you click the “Submit” button, do not close your browser until you receive a confirmation message saying your application has been successfully submitted.

Once you submit your application, you will see a summary page that will include all the information that you have submitted through Retirement Online. Review this information to be sure that your online application is complete and your chosen option benefit and beneficiary information are accurate. This is very important since there are specific deadlines for selecting or changing a pension option and beneficiary.

If you don’t have a Retirement Online account, you can sign up today.

Filing by Mail

If you prefer, you can submit a paper retirement application. Complete an Application for Service Retirement (RS6037) and mail it to NYSLRS. (Do not give your retirement application to your employer.) Your application must be signed, notarized, and received by NYSLRS. We recommend that you mail your application “certified mail, return receipt requested.”

If you have received a recent pension estimate and you know which pension payment option you want, you should include your pension payment option form when you mail your retirement application. If you have not received an estimate, we will send you one, along with an option form, after we receive your application, but you must select an option within the deadlines required by law.

If you file by mail, you must also send us the following documents:

 We cannot start paying benefits until we receive proof of your date of birth.

If you have questions about filing for your retirement benefits, you can schedule a pre-retirement telephone consultation. To make an appointment, call 1-866-805-0990 (or 518-474-7736 in the Albany, NY area), press 2, then follow the prompts.

Read the Rest of Our Countdown to Retirement Series

This is the final installment of our Countdown to Retirement series. Missed our earlier posts? Catch up with them here:

Crunching the Numbers: A Short Guide to Retirement Calculators

A good estimate of your post-retirement income is essential to retirement planning. But estimating your income becomes a little tricky when you need to calculate income from several sources. Fortunately, there are retirement calculators available to help you.

online calculators

NYSLRS Benefit Calculator

A good place to start is with the NYSLRS online benefit calculator. Most members can create a pension estimate in minutes using Retirement Online. A Retirement Online estimate is based on the most up-to-date account information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit.

Social Security Calculators

The Social Security Administration (SSA) hosts a variety of calculators that you may find helpful. The SSA’s Quick Calculator, which uses information you enter, provides a rough estimate of your Social Security benefit. The Retirement Estimator, which estimates your benefit based on your actual Social Security earnings record, is more refined, but you’ll need to enter your Social Security number and other personal information.  

You can also calculate when you will be eligible for full Social Security benefits and estimate your life expectancy.

Savings Calculators

If you are saving for retirement, a simple savings calculator can show you how your money can grow over the years. But simple calculators assume a fixed amount of savings each month. In reality, most people increase their retirement savings as their income grows. With more sophisticated calculators, like this 401k Retirement Calculator, you can account for salary increases over time. (Note: The 401k Retirement Calculator works with other types of retirement savings plans, including 457(b) plans like the ones offered by the New York State Deferred Compensation Plan.)

Savings Withdrawal Calculators

Savings withdrawal calculators like this one are designed to help determine how much savings remains after a series of withdrawals. These are especially helpful tools to use when trying to determine how long your retirement savings will last. Enter the starting amount, how much to withdraw and how often, and an expected final balance will be calculated.

While the calculators mentioned above are great planning tools for before and after retirement, remember that their results are only estimates.

Countdown to Retirement – 4-6 Months to Go

The countdown to retirement continues. Here are a couple of things you should do four-to-six months before your retirement date to make sure you stay on track.

Countdown to Retirement - 4-6 months to go

Locate Proof of Your Birth Date

Before NYSLRS can pay out any retirement benefits, we will need proof of your date of birth.

For most people, locating that proof is no big deal — a photocopy of your driver’s license will do. But if you don’t have proof of your birth date readily available, this is a good time to look for it or arrange to get a replacement. This is especially important if you need to write to an out-of-state registry or a foreign country for the necessary document.

If you intend to leave a lifetime pension benefit to a beneficiary after your death, we will need proof of their birth date as well.

In most cases, we will accept a photocopy of your proof of date of birth, and you can submit it when you apply for retirement online or by mail. If you mail us the original, we will return it to you.

Acceptable documents for proving your date of birth include your:

The National Center for Health Statistics’ website contains information for each state on where to write for your vital records.

Review Your Retirement Budget

In our Countdown to Retirement – 12 Months to Go blog post, we recommended that you calculate your retirement income and expenses. But circumstances can change in six months, so now is a good time to review your post-retirement budget and make any necessary adjustments. At this point, you may have a clearer picture of your retirement income or you may be aware of expenses that you didn’t consider earlier. A budget review will help ensure that you are still on track to retire on your terms.

If you missed it, be sure to read the first post in our series, Countdown to Retirement –  18 Months to Go. You’ll also want to keep an eye out for the final installment of this series.

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 pension payment options to choose from. All of them will provide you with a monthly benefit for life. Some 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.

That’s a lot to think about, so let’s make this clearer with an example.

Pension Payment Option 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, depending which option she chooses, her grandkids would split her reduced benefit amount for the rest of that period.

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

There are several options that leave a lifetime benefit. Under these options, you can only name one beneficiary. Benefit amounts are determined based on the birth dates (life expectancy) of both the retiree and their beneficiary, so Jane will receive less of a pension reduction leaving a benefit to her husband than she would if she were to consider leaving a lifetime benefit to a grandchild.

Under the Joint Allowance — Full or Joint Allowance — Half option, if a retiree dies, depending which option they choose, their beneficiary would receive half or all of their reduced benefit for life.

Under the Pop-Up/Joint Allowance — Full or Pop-Up/Joint Allowance — Half option, if a retiree dies, depending which option they choose, their beneficiary would also receive half or all of their reduced benefit. These options reduce the pension a little more, but they have an advantage: If the 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 and whether you’ll leave a pension benefit to a beneficiary or beneficiaries, you may also want to consider questions such as:

  • Do you qualify for a death benefit?
  • Do you have life insurance?
  • Do you have a mortgage, unpaid loans or other monthly payments that will have to continue 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. Most NYSLRS members can also create their own pension estimate in minutes using Retirement Online. You can enter different retirement dates to see how those choices would affect your benefit. When you’re done, you can print your pension estimate or save it for future reference.

Countdown to Retirement – 12 Months to Go

The final months leading up to your retirement date go by quickly. When you are 12 months from your planned retirement date, you should consider your post-retirement finances. Putting together a good picture of your expected income and expenses should be a big part of your countdown to retirement.

Countdown to Retirement - 12 months To Go

Estimate Your Pension

Your NYSLRS pension is likely to be a major source of retirement income, but how much will you get? Most members can estimate their pension in Retirement Online.

A Retirement Online estimate is based on the account information we have on file for you. You can enter different retirement dates to see how an earlier or later date would affect your benefit. You need a Retirement Online account to use the online benefit calculator.

If you are unable to use the online calculator, you can request a benefit projection by calling our toll-free number at 866-805-0990 or by submitting a Request for Estimate form. Also, most Tiers 1 through 4 members can still use the Quick Calculator on the NYSLRS website. 

Review Other Retirement Income

One year out is a good time to take a closer look at other sources of retirement income. If you have an account with the New York Deferred Compensation Plan, review your latest statement. If you have an old 401(k) or IRA from another job, you should review those plans as well.

Social Security is a major source of income for most retirees. Although most NYSLRS members can retire as early as age 55, you cannot start collecting Social Security retirement benefits until age 62. Your Social Security benefits will be reduced permanently, however, if you retire before your full Social Security retirement age. You should still familiarize yourself with the program and estimate how much you’ll get. The Social Security Administration has several benefit calculators on its website to help you do that.

Review Your Health Insurance Coverage

NYSLRS doesn’t administer health insurance benefits, but health care can be a significant retirement expense you’ll need to plan for. Check with your employer’s health benefits administrator to determine what coverage you’re eligible for once you retire. Now is the time to research private health insurance plans if you’re not eligible for post-retirement coverage or if you need to supplement it.

If you are a New York State employee, you may want to review the Planning for Retirement guide from the Department of Civil Service.

If you’re close to age 65, learn more about Medicare benefits.

Make a Retirement Budget

How much will you spend each month after you retire? By preparing a post-retirement budget before you retire, you can set goals and establish guidelines that can help you stay on track throughout your retirement.

One of the best ways to plan for the future is to track what you spend now. For a more realistic budget, keep a record of your current spending for a month or two to get an idea of your expenses. Be sure to factor in periodic expenses, such as car insurance or property and school taxes.

To help you with your retirement budget, we’ve created monthly income and expense worksheets. These forms can help reveal your current spending habits and assist you in projecting your future needs.

Counting Down

Your planned retirement date will be here before you know it. If you missed it, you may wish to read our earlier Countdown to Retirement post. You’ll also want to keep an eye out for rest of this series for steps to take at four-to-six months and one-to-three months before your retirement date.

Countdown to Retirement — 18 Months to Go

Thinking about retiring soon? Our Countdown to Retirement series will help you get started and stay on track to hit your retirement date.

Countdown to Retirement 18 months

Review Your Account Information in Retirement Online

As your first step on the road to retirement, you should sign in to your Retirement Online account and review the information we have on file for you. If you don’t have an account, consider signing up for one. It’s an essential retirement tool that will make the retirement process easier.

Make sure your mailing address and email address are current and check other information in your account. In your Retirement Online account, you’ll find:

  • The date you joined NYSLRS;
  • Your tier and membership plan;
  • Your estimated service credit;
  • Your annual earnings for the past five years; and
  • Loan balances and payoff dates.

If you believe information is missing or incorrect in your Retirement Online account, please contact us.

Read Your Retirement Plan Booklet

Your retirement plan booklet provides essential information about your NYSLRS benefits. It shows the formula that NYSLRS will use to calculate your pension and discusses other factors that may affect your pension.

You can find your plan booklet on our Publications page. Read our blog post about retirement plans to figure out which plan is yours. If you’re still not sure, check your Retirement Online account or ask your employer.

Learn How Divorce Can Affect Your Pension

If you’ve been through a divorce since you joined NYSLRS, that may affect your pension.

Retirement benefits are considered marital property and can be divided between you and your ex-spouse. Any division of your benefits must be stated in a domestic relations order (DRO), a legal document that gives us specific instructions on how your benefits should be divided.

Read our Divorce and Your Benefits page to learn more.

Other Things to Consider

If you have a NYSLRS loan, you should plan to pay it off before retirement. Your pension will be reduced if you retire with an outstanding loan. You can use Retirement Online to check your balance, make a lump-sum payment or increase your payment amount. For more information, visit our Loans page.

If you are planning to purchase service credit, including military service, you should do that as soon as possible. You can apply for additional credit in Retirement Online or submit a Request to Purchase Service Credit form (RS5042). Our publication Service Credit for Tier 2 Through 6 has more information.

Your Countdown to Retirement

Your planned retirement date will be here before you know it. Watch for future posts in the Countdown to Retirement series for steps to take at 12 months, four-to-six months and one-to-three months before your retirement date.

Are You Prepared for a Long Retirement?

We all look forward to a long, happy and financially secure retirement. But as you plan ahead for retirement, “how long?” is an important question to ask.

Longer Life Span, Longer Retirement

People are living longer. A 55-year-old man can expect to live for another 27 years, to about 82. A 55-year-old woman can expect to live for another 30 ½ years. These figures, derived from the Social Security life expectancy calculator, are only averages. They don’t take into account such factors as your health, lifestyle or family medical history.

Here are some other statistics that are worth pondering as you plan for retirement: more than 37,000 current NYSLRS retirees are over 85, and more than 3,400 have passed the 95 mark. In fact, in the State fiscal year that ended in March 2020, 375 NYSLRS’ retirees were 101 or older. Considering that many public employees retire at 55, it’s possible that a fair percentage of them could have retirements that last 45 years or more.

preparing for a long retirement - how long can we expect to live

Making Your Savings Last

As you plan for a long retirement, you need to ask yourself, will I have enough money to maintain a comfortable lifestyle for decades to come?

Employees’ Retirement System (ERS) members who retired in fiscal year 2020 are receiving an average monthly pension of $2,656. The average Social Security benefit for a retired worker was $1,544, as of December 2020.

Your retirement savings are also crucial assets that can supplement your pension and Social Security. Savings are a hedge against inflation, can help in an emergency and provide flexibility over a long retirement.

If you have no retirement savings, it is never too late to start. An easy way to get started is through the New York State Deferred Compensation Plan, a retirement savings program created for New York State employees and employees of participating public agencies. If you’re a municipal employee, ask your employer if you’re eligible for the Deferred Compensation Plan or another retirement savings plan. (The New York State Deferred Compensation Plan is not affiliated with NYSLRS.)

After you retire, you’ll need to manage your retirement savings wisely to ensure your money lasts. You may find this savings withdrawal calculator helpful.

NYSLRS is Here for You

Your NYSLRS pension is a lifetime benefit that will provide monthly payments throughout your retirement. Get a head start on your retirement planning by getting a pension estimate. Most members can get an estimate by using our online benefit calculator.