Tag Archives: retirement

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.

Cost-of-Living Adjustment Coming in September

Eligible NYSLRS retirees will see a cost-of-living adjustment (COLA) increase in their monthly pension payments beginning in late September 2021. For payment dates, check our pension payment calendar.

This COLA is a permanent annual increase to your retirement benefit. It is based on the cost-of-living index and is designed to address inflation.

cost-of-living adjustment (COLA) coming soon

How Cost-of-Living Adjustment is Determined

COLA payments are based on the rate of inflation, as reflected in the consumer price index published by the U.S. Bureau of Labor Statistics. The law requires that COLA payments be calculated based on 50 percent of the annual rate of inflation, measured at the end of the fiscal year (on March 31st). In addition, the COLA cannot be less than 1 percent or greater than 3 percent of your benefit.

The COLA adjustment is applied to the first $18,000 of your benefit calculated as a Single Life Allowance, even if you selected a different pension payment option. Once your COLA payments begin, you will automatically receive an increase to your monthly benefit each September.

The September 2021 COLA equals 1.4 percent, for a maximum annual increase of $252.00, or $21.00 per month before taxes.

eligibility for cost-of-living adjustment (COLA)

When Will You See the Increase?

Eligible retirees will see the first 2021 COLA payment in their September pension payment. It will be available to those with direct deposit on September 30, 2021. If you receive a paper check, the COLA will be included in the check mailed on September 29, 2021.

You can sign in to your Retirement Online account to view a current breakdown of your pension payment. If you have direct deposit and are eligible for a COLA increase, you will receive notification of the net change in your monthly payment amount in September.

If you are not eligible for a COLA yet, you will receive your first increase in the month after you become eligible. This payment will include a prorated amount to cover the month you became eligible. After that, you will receive a COLA increase each September.

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.

Retroactive payments

Retroactive Payments and Your NYSLRS Pension

Retroactive Payments

Retroactive payments are lump sum payments you receive from your employer. These payments can be from new union contracts, arbitration awards or legal settlements that took place while you were on your employer’s payroll.

If you receive a retroactive payment from your employer, it could affect your pension benefit calculation.

How Retroactive Payments Can Affect Your Benefit

Your final average earnings (FAE) are a major factor in your pension benefit calculation. It’s the average of your three (five for Tier 6 members) highest consecutive years of earnings. For most people, their highest years of earnings come at the end of their careers.

Retroactive payments are applied to the pay periods when they were earned, not when they were paid. So, retroactive payments can increase your FAE, and therefore your pension benefit, as long as the time period in which you earned that money is part of the time period your FAE is based on.

Your employer should let us know if you receive a retroactive payment before or after you retire. If you are a State employee who receives a retroactive payment after you retire, we will recalculate your pension automatically; you do not need to notify us. You will receive correspondence from us explaining any change in your pension benefit.

If you receive a retroactive payment from a non-State employer after your pension calculation is finalized, send a letter to our Recalculation Unit in the Benefit Calculations & Disbursement Services Bureau. Please include a copy of your check stub and any correspondence you received from your employer related to the payment. Mail it to:

NYSLRS
Attn: BCDS – Recalculation Unit
110 State Street
Albany, NY 12244-0001.

You can also email and upload this information to the Retirement System through our secure contact form.

For more information about FAE, read our Final Average Earnings blog post. You can also find out specific information about your FAE by reading your retirement plan booklet, available on our Publications page.

Tier 3 & 4 Members: When Is The Right Time To Retire?

Tier 3 and 4 members in the Article 15 retirement plan qualify for retirement benefits after they’ve earned five years of credited service. Once you’re vested, you have a right to a NYSLRS retirement benefit — even if you leave public employment. Though your pension is guaranteed, the amount of your pension depends on several factors, including when you retire. Here is some information that can help you determine the right time to retire.

Three Reasons to Keep Working

  1. Tier 3 and 4 members can claim their benefits as early as age 55, but they’ll face a significant penalty for early retirement – up to a 27 percent reduction in their pension. Early retirement reductions are prorated by month, so the penalty is reduced as you get closer to full retirement age. At 62, you can retire with full benefits. (Tier 3 and 4 Employees’ Retirement System (ERS) members who are in the Article 15 retirement plan and can retire between the ages of 55 and 62 without penalty once they have 30 years of service credit.)
  2. Your final average earnings (FAE) are a significant factor in the calculation of your pension benefit. Since working longer usually means a higher FAE, continued public employment can increase your pension.
  3. The other part of your retirement calculation is your service credit. More service credit can earn you a larger pension benefit, and, after 20 years, it also gets you a better pension formula. For Tier 3 and 4 members, if you retire with less than 20 years of service, the formula is FAE × 1.66% × years of service. Between 20 and 30 years, the formula becomes FAE × 2.00% × years of service. After 30 years of service, your pension benefit continues to increase at a rate of 1.5 percent of FAE for each year of service.

When is the Right Time to Retire infographic

 

If You’re Not Working, Here’s Something to Consider

Everyone’s situation is unique. For example, if you’re vested and no longer work for a public employer, and you don’t think you will again, taking your pension at 55 might make sense. When you do the math, full benefits at age 62 will take 19 years to match the money you’d have received retiring at age 55 — even with the reduction.

An Online Tool to Help You Make Your Decision

Most members can use Retirement Online to estimate their pensions.

A Retirement Online estimate is based on the most up-to-date information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit, which could help you determine the right time to retire. When you’re done, you can print your pension estimate or save it for future reference.

If you are unable to use our online pension calculator, please contact us to request a pension estimate.

This post has focused on Tier 3 and 4 members. To see how retirement age affects members in other tiers, visit our About Benefit Reductions page.

Financial Literacy and Retirement

April is Financial Literacy Month. But what is financial literacy? Basically, it’s the ability to understand and use financial skills to make wise decisions about your finances.

Financial literacy encompasses a variety of skills, but we’d like to focus on some basic skills that are relevant to planning for a successful retirement. Whether you’re just starting your career, planning on retiring soon or already retired, mastering these skills will help you and your future financial security.

financial literacy

Taking Stock of Your Finances

A good place to start building your financial literacy is by getting a handle on your current financial situation. Ask yourself some basic questions:

  • How much do you earn and spend each month?  
  • How much debt do you have?
  • Do you have any major expenses on the horizon?

If you know where you stand, you’ll be in a better position to plan for the future.

If you’re planning for retirement, you can estimate your pension by using the benefit calculator in Retirement Online. (You can also check your future Social Security benefit online.)

Creating a Budget

This financial planning tool helps you track your income and expenses. Having a budget can help you make better financial decisions, avoid debt, prepare for emergencies and save money.

If you don’t know how to get started, here are some tips on creating a budget. If you plan to retire soon, you can use our worksheet to create a post-retirement budget.  

Understanding Interest Rates

Interest is great if you’re on the receiving end, but not so great if you are paying it. Unfortunately, consumers can pay very high interest rates on credit. The average interest rate on a new credit card account is nearly 18 percent, and many consumers pay 20 percent or more on their credit cards.

If you have credit card debt, and only pay the minimum each month, you’ll make little progress on reducing the balance while the interest you pay every month adds up. For example, if you owed $1,000 on a credit card with an 18 percent interest rate, and made payments of $40 a month, it would take you 71 months to pay off and your total interest cost would be nearly $500. On the other hand, if you paid $100 a month, it would be paid off in half the time and your total interest would be about $160.

Managing Debt

Debt is not necessarily bad, but it can easily derail your financial plans if you’re not careful. Credit cards pose a particular risk because they are so easy to use, but you can learn strategies to avoid credit card debt.

Saving

As a NYSLRS member, you’ll receive a lifetime pension that will be based on your years of service and earnings. But your personal retirement savings can be an important supplement to your pension and Social Security. It’s never too early or too late to start saving for retirement. To learn more building your savings, read our recent blog post Saving for Retirement. Is Now the Right Time?

Follow our blog for future posts on retirement savings and related topics.