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The 3-Legged Stool Approach to Retirement Confidence

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As a NYSLRS member, your defined benefit pension plan is a good reason to be optimistic about your finances in retirement. Once you retire, your pension will provide monthly payments for the rest of your life. But there is more to a financially secure retirement than having a pension. Understanding all your potential sources of income will help you plan for your future and boost your retirement confidence.

Think of retirement security as a three-legged stool. Each leg is a source of income to help support you when your working days are done.

3-Legged Stool Approach to Retirement Confidence

Leg 1: Your NYSLRS Pension

At retirement, vested NYSLRS members are eligible for a pension based on their final average earnings and the number of years they’ve worked in public service. Your NYSLRS pension payments will continue for the rest of your life, no matter how long you live. Unlike workers who rely on 401(k)-style retirement plans, you won’t have to worry about this income running out.

Most members can estimate their pension in Retirement Online. But, if you’re a long way from retirement, it may be better to think in terms of earnings replacement. Financial advisers estimate you’ll need to replace 70 to 80 percent of your income to retire with confidence. Your pension can help get you there. For example, if you retire with 30 years of service, your NYSLRS pension could replace more than half of your earnings. (Pension benefits depend on your tier and retirement plan. Find your retirement plan publication to learn how your retirement benefit will be calculated.)

Leg 2: Social Security

Your Social Security benefit is another source of income to help support you in retirement. At Social Security’s full retirement age, your benefit can replace from about 75 percent for lower income earners to about 27 percent for higher income earners. Learn more about Social Security benefits  and visit the Social Security’s Plan for Retirement page to estimate your income.

Leg 3: Retirement Savings Can Boost Your Confidence

A lifetime pension and Social Security income will be substantial financial assets, but it’s still important to save for retirement. Healthy retirement savings will give you more flexibility to do the things you want to do in retirement. It can also help in case of an emergency and act as a hedge against inflation.

Your savings is the retirement factor you have the most control over. You decide when to start, how much to save and how to invest your money. The key is to start saving early so your money has time to grow, even if you can only afford to save a small amount in the beginning.

Eligible employees might consider saving with the New York State Deferred Compensation Plan (NYSDCP). Money gets deducted from your paycheck, so you won’t even have to think about it. NYSDCP is not affiliated with NYSLRS, but New York State employees and some municipal employees can participate. If you’re a municipal employee, ask your employer whether you’re eligible for NYSDCP or another retirement savings plan.

National Retirement Security Month

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October is National Retirement Security Month. It’s a time to consider the importance of saving and to think about potential sources of income in retirement. Even if retirement seems far off, it’s never too early to start planning.

Retirement Security

NYSLRS and Retirement Security

Check out these blog posts to learn more about how your NYSLRS pension and other sources of retirement income can provide retirement security.

  • What is a Defined Benefit Plan?
    Your NYSLRS pension is a defined benefit retirement plan. When you retire, you’ll receive a guaranteed, lifetime benefit based on your earnings and years of service. A preset formula determines your benefit; it’s not limited to your accumulated contributions and investment returns, like with a 401(k)-style plan.  
  • The 3-Legged Stool Approach to Retirement Confidence
    Think of your retirement security as a three-legged stool. Each leg represents a different income source that supports you in retirement. The first leg of the stool is your NYSLRS pension, and the second is your Social Security benefit. The third leg is your own personal savings, which can help provide security in retirement and give you more freedom to do the things you want to do.
  • Compounding: A Great Way for Your Money to Grow
    The sooner you start saving, the better—especially if you invest in a retirement savings plan that reinvests the returns you earn. Such compounded savings increase in value by earning interest on both the principal and accumulated returns. But for your money to make more money in this way, it needs time to grow.
  • Deferred Compensation: Another Source of Retirement Income
    Deferred compensation plans are voluntary retirement savings plans like 401(k) or 403(b) plans designed and managed with public employees in mind. You can contribute as little as 1 percent of your earnings—automatically deducted from your paycheck. Deferring income from your take-home pay may mean less money to spend in the short-term, but it’s an easy way to start saving extra for retirement.
  • Give Your Retirement Savings a Boost
    Once you’ve started saving for retirement, you may want to look for ways to increase how much you save. Even small increases can make a big difference over time—and may have a minimal impact on your take-home pay.

Remember, retirement security doesn’t just happen—it takes planning.

Visit our Retirement Planning page for more information about your NYSLRS pension, including a calculator to estimate your monthly payments and a tool to help you find your retirement plan publication for a complete description of your benefits.

The 3-Legged Stool: An Approach to Retirement Confidence

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As a NYSLRS member, your defined benefit pension plan is a good reason to be optimistic about your finances when you retire. Your pension will provide you with monthly payments for the rest of your life. But there is more to a financially secure retirement than having a pension. Understanding your potential sources of income will help you plan for your future and boost your retirement confidence.

Think of retirement security as a three-legged stool. Each leg is a source of income to help support you when your working days are done.

retirement confidence

Leg 1: Your NYSLRS Pension

At retirement, vested NYSLRS members are eligible for a pension based on their final average earnings and the number of years they’ve worked in public service. Your NYSLRS pension provides you with a monthly payment for the rest of your life, no matter how long you live. Unlike workers who rely on a 401(k)-style retirement plan, you won’t have to worry about this income running out.

Most members can use Retirement Online to estimate how much their pension will be. But, if you’re a long way from retirement, it may be better to think in terms of earnings replacement. Financial advisers estimate you’ll need to replace 70 to 80 percent of your income to retire with confidence. Your pension can help get you there. For example, if you retire with 30 years of service, your NYSLRS pension could replace more than half of your earnings. (Pension benefits depend on your tier and retirement plan. Look up your retirement plan publication to find out how your retirement benefit will be calculated.)

Leg 2: Social Security

Your Social Security benefit is another source of income to help support you in retirement. It replaces a percentage of your pre-retirement income. At full retirement age, your social security benefit can replace from about 75 percent for lower income earners to about 27 percent for higher income earners. Visit Social Security’s Plan for Retirement page to estimate your income and learn more about your benefit.

Leg 3: Retirement Savings Can Boost Your Confidence

A lifetime pension and Social Security income will be substantial financial assets, but it’s still important to save for retirement. A healthy retirement savings will give you more flexibility during retirement, helping to ensure that you’ll be able to do the things you want to do. It can also help in case of an emergency and act as a hedge against inflation.

Saving is the retirement factor you have the most control over. You decide when to start, how much to save and how to invest your money. The key is to start saving early so your money has time to grow, even if you can only afford to save a small amount in the beginning.

Eligible employees might consider saving with the New York State Deferred Compensation Plan (NYSDCP). Money gets deducted from your paycheck so you won’t even have to think about it. NYSDCP is not affiliated with NYSLRS, but New York State employees and some municipal employees can participate. If you’re a municipal employee, ask your employer whether you’re eligible for NYSDCP or another retirement savings plan.