Tag Archives: retirement planning

Retirement Age and Your NYSLRS Pension

For some NYSLRS members, your retirement age matters when it comes to receiving your NYSLRS retirement benefits.

Your pension will be based largely on your years of service and final average earnings, but your age at retirement is also a factor. How age plays into the equation depends on your tier and retirement plan.

Members in regular retirement plans can retire as early as age 55, but they may face significant pension reductions if they retire before their full retirement age. The full retirement age for members in most tiers is 62, and it’s 63 for Employees’ Retirement System (ERS) Tier 6 members and for Police and Fire Retirement System (PFRS) Tier 6 members who leave public employment before retirement age, but have enough service to receive a pension. If you joined NYSLRS on or after April 1, 2012, you are in Tier 6.

pension reductions based on retirement age

Benefit reductions are prorated by month. The closer you are to your full retirement age when you retire, the less the reduction will be. Here are some examples of how that would work.

  • ERS Tiers 2, 3 and 4, PFRS Tiers 2, 3 (Article 11), 5 and 6: If you retire at age 58 1/2, your pension will be permanently reduced by 16.5 percent.
  • ERS Tier 5: If you retire at age 58 1/2, your pension will be permanently reduced by 20.83 percent.
  • ERS Tier 6: If you retire at age 58 1/2, your pension will be permanently reduced by 29.5 percent.

Once you retire with a reduced benefit, the reduction is permanent — it does not end when you reach retirement age.

Retirement Age Exceptions

Tier 1 members can retire at 55 without a benefit reduction. Benefit reductions don’t apply to ERS Tier 2, 3 or 4 members if they retire with 30 years of service. Tier 5 Uniformed Court Officers and Peace Officers employed by the Unified Court System can also retire between 55 and 62 without penalty if they have 30 years of service.

More Information

Understanding how age affects your NYSLRS benefits is crucial to retirement planning. To learn more, please review your retirement plan booklet on our Publications page.

You can check your service credit total and estimate your pension using Retirement Online. Most members can use our online pension calculator to create an estimate based on the salary and service information NYSLRS has on file for them. You can enter different retirement dates to see how your choices would affect your potential benefit.

Tier 6 Benefits – A Closer Look

Tier 6 members (those who joined NYSLRS since April 1, 2012) are eligible for a lifetime pension benefit once they’ve earned 10 years of credited service. And that pension can replace a portion of your salary throughout your retirement.

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. For most members, those higher-paid years come at the end of their careers. Since retirement is still some years in the future for most of you, we won’t focus on the dollar amount of your FAE today. But we can look at what percentage of that salary would be replaced by your pension if you continue in the system until retirement age.

For Tier 6 members of the Employees’ Retirement System (ERS), the benefit is 1.66 percent of your FAE for each year you work, up to 20 years. (Benefit calculations for members of the Police and Fire Retirement System vary based on plan.) 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.

Financial advisers say you will need to replace between 70 to 80 percent of your salary to maintain your lifestyle during retirement. Let’s see how we can get there.
Tier 6 Salary Replacement
NYSLRS Pension: Say you begin your career at age 30 and work until your full retirement age of 63. That’s 33 years of Service Credit. You’ll get 35 percent of your FAE for the first 20 years, plus 26 percent for the last 13 years, for a total benefit that would replace 61 percent of your salary. If you started at age 25, and continue till 63, you’d get 71 percent of your FAE. If you didn’t start till age 35, you’d still get 51 percent at 63.

Social Security: You also should factor in Social Security. According to the Social Security Administration, Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. In the future, it’s estimated that Social Security might still replace between 25 and 30 percent of a typical worker’s pay.

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.

Saving for Retirement. Is Now the Right Time?

If COVID-19 has taught us anything, it’s that dramatic change can happen quickly.

It’s clear that just about everyone’s life has been turned upside down during this pandemic. Many have been forced to rethink their plans, including plans for retirement.

In the midst of this upheaval, a clear trend has emerged: many people are spending less money, which may create an opportunity to start saving for retirement or increase your current savings.

Why Save for Retirement?

While retirees tend to spend less than they did while they were working, financial experts say you’ll still need 70 to 80 percent of your pre-retirement income to maintain your lifestyle during retirement.

NYSLRS members have the rare advantage of a well-funded, defined-benefit pension. As a NYSLRS member, once you’re vested, you’re entitled to a pension that, once you retire, will provide you with monthly payments for the rest of your life. Retirement savings can supplement your NYSLRS pension and Social Security, helping you reach that income-replacement goal.

Retirement savings can also be a hedge against inflation and a source of cash in an emergency. A healthy retirement account will give you more flexibility during retirement, helping ensure that you’ll be able to do the things you want to do. It can also provide peace of mind.

Saving for Retirement

Getting Started

For New York State employees and many other NYSLRS members, there’s an easy way to get started. If you work for a participating employer, you can join the New York State Deferred Compensation Plan. If you don’t work for New York State, check with your employer to see if you are eligible. If you are not eligible, your employer may be able to direct you to an alternative retirement savings program.

Once you sign up for Deferred Compensation, your contributions will automatically be deducted from your paycheck and deposited into your account. You can choose from a variety of investment packages or choose your own investment strategy. (The Deferred Compensation Plan is not affiliated with NYSLRS.)

Dig into the NYSLRS Summer Reading List

Looking for some summer reading? Why not check out these publications from NYSLRS? They’re light on colorful characters and exotic settings, but what they lack in plot intrigue, they make up for in important retirement information.

summer reading

1. Retirement Plan for ERS Tier 3 and 4 Members (Articles 14 and 15)

More than 250,000 Tier 3 and 4 members of the Employee’s Retirement System (ERS) are covered by this plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. Read it now.

2. Retirement Plan for ERS Tier 5 Members (Article 15)

If you joined ERS from January 1, 2010 through March 30, 2012, you are in Tier 5. This booklet describes benefits for Tier 5 members in regular retirement plans. Read it now.

3. Retirement Plan for ERS Tier 6 Members (Article 15)

More than 178,000 Tier 6 ERS members are covered by this Plan. The publication explains some of the benefits and the services available to you, including a service retirement, a vested retirement, a disability retirement, death benefits and more. Read it now.

4. Life Changes: A Guide for Retirees

Already retired? As a NYSLRS retiree, you know that you will receive a monthly retirement benefit for life. However there may be other benefits available to you, as well as services that we provide retirees. This guide will answer many of the questions you may have and explain your responsibilities as a retiree. Read it now.

5. What If I Work After Retirement?

In most cases, NYSLRS retirees under 65 can earn up to $35,000 per calendar year in a public-sector job, but there are no restrictions if you work for a private-sector employer. If you plan to work while collecting your pension, you should read this booklet. Read it now.

Other Plan Booklets

Not covered by the retirement plans above? Maybe you’re a police officer, a firefighter, a sheriff or a correctional officer. You can still find you plan booklet on our Publications page. They’re great reading any time of year. If you’re not sure which plan covers your benefits, you can ask your employer or Contact Us.

How Tier 6 Contribution Rates Can Change

Most members of the New York State and Local Retirement System (NYSLRS) contribute a percentage of their earnings toward their pensions. For Tier 6 members, that percentage, or contribution rate, can vary from year to year. If you joined NYSLRS on or after April 1, 2012, you are in Tier 6.

Tier 6 contribution rate

When Tier 6 Contribution Rates are Determined

Tier 6 contribution rates are calculated annually. New rates become effective each year on April 1, the beginning of the State’s fiscal year. Once your contribution rate is set for a fiscal year, it will not change for the rest of that fiscal year. However, depending on your earnings, it may change the following year.

How Your Tier 6 Contribution Rate is Calculated

As a Tier 6 member, your contribution rate is based on how much you earn. Changes in your earnings may result in changes to your contribution rate.

For the first three years as a NYSLRS member, your contribution rate is based on an estimated annual wage we receive from your employer. After three years, the rate is based on what you actually earned two years prior. The minimum contribution rate is 3 percent of your earnings, and the maximum is 6 percent.

See our Member Contributions page for additional information.

Learn More

The percentage you contribute toward your pension while you work does not affect the pension amount you may receive in retirement. Your NYSLRS pension is a lifetime benefit based on your retirement plan, years of service credit and final average salary. You can learn more about your pension by reading your plan booklet on our Publications page. For help finding the right plan book, read our blog post, Knowing Your Retirement Plan is the Key to Retirement Planning. For more information about ERS Tier 6 memberships, read our blog post, What to Know About ERS Tier 6.

Knowing Your Retirement Plan
is the Key to Retirement Planning

Information is the key to being fully prepared for your retirement years. The single most important thing you can do to achieve this goal is to know what NYSLRS retirement plan you’re in. Once you know that, the next thing you must do is understand the benefits your plan provides.

Your retirement plan booklet covers things like how long you’ll need to work in order to receive a pension, how your pension amount is determined, and what kind of death and disability benefits may be available to you. You can find a copy of your plan booklet on our Publications page.

But here’s the challenge: NYSLRS manages 335 retirement plan combinations, which are described in 51 plan booklets. How do you figure out which is yours?  The information below should help.

Retirement plan

Two Key Questions

To get started, you need to answer two questions.

Question One: Which retirement system are you in? NYSLRS is made up of two different systems:

  • The Employees’ Retirement System (ERS), which is for public employees in non-teaching positions. It also includes some law enforcement personnel, such as correction officers, sheriffs and sheriffs’ deputies.
  • The Police and Fire Retirement System (PFRS), which is for paid firefighters and police officers, including SUNY police, State Park police, Encon officers and State Forest Rangers.

Question Two: Which tier are you in? There are six tiers in ERS and five tiers in PFRS. Your tier, based on when you joined NYSLRS, determines such things as when you become eligible for benefits and how much you contribute. You can find your tier by checking your Account Information in Retirement Online or by checking the What Tier Are You In? page on the NYSLRS website.

Know Your Retirement Plan Number

For many members, knowing your retirement system and tier are enough. But for other members, especially those in law enforcement, it may help to have your retirement plan number as well. The plan number indicates the section of Retirement and Social Security Law the plan is based on. For example, Plan A15 indicates that you are covered by Article 15. You can find your plan number in the Account Information section of Retirement Online.

Roughly three-quarters of all ERS members are covered by Article 15; they just need to know their tier to find the correct booklet.

State policeSUNY policeState Encon OfficersState Park Police and Forest Rangers each have their own plan booklet, which can be found in the PFRS section of the Publications page. That’s also where you’ll find the Special 20- and 25-Year Plans, which cover officers in most municipal police departments. (Members in these special plans should see 384, 384-d or 384-e listed in Retirement Online.)

If you are still unsure which retirement plan booklet covers your benefits, you can send us an email using our secure contact form, or you can ask your employer.

Take the Time to Understand Your Retirement Plan

It cannot be stated enough how important it is to read your plan publication to learn all you can about your benefits. It is the key to solid retirement planning. Remember, no one has a more vested stake in your retirement than you do.

Too Much Free Time?

Could retirement bring you too much free time? When people think about retirement planning, they usually think about money. Will you have enough to maintain a comfortable lifestyle for a retirement that could last decades? But regardless of your finances, there is one thing you’re likely to have a lot more of after you retire: time. Figuring out how you’ll spend that time should also be part of your retirement planning process.

Free time after retirement

Counting the Hours

According to the U.S. Labor Department, the average American worker spends about nine hours a day at work. Add another hour a day commuting time, and that’s ten hours a day or 50 hours each week.

All those hours you spent working, and traveling to and from work, will instantly become free time. While that may sound great to many people, all that extra time can have downsides.

If not put to good use, that extra time can lead to boredom and even depression. What’s more, if you’re married and you and your spouse are both retired, you may find yourselves wondering how to spend that time together.

Make a Plan for Free Time

For many couples, having extra time together is a dream come true. However, some couples find themselves getting in each other’s way, and that can sometimes lead to problems.

But there are ways to cope. For example, finding activities outside the home, both together and separately, can help. As with most things, you’ll be better off if you recognize there may be a problem, discuss it with your spouse, and come up with a plan.

There are more thoughts on the subject, and some good advice, in this article: 10 Tips to Help Your Marriage Survive Retirement.

How Do I Prepare to Retire?

If you plan to retire in the near future, consider How Do I Prepare to Retire? a must-read.

This NYSLRS publication is a road map for the retirement process — a guide to the steps you’ll need to take before and after you file your retirement application. It highlights resources you can tap to get a better understanding of your benefits, including the NYSLRS website and Retirement Online.

prepare to retire

Retirement Planning Tips

Before you retire, you may need to tie up some loose ends regarding your membership. How Do I Prepare to Retire? discusses how to get credit for all of your service, paying off any outstanding NYSLRS loans, and other matters you should attend to before you file for retirement.

The biggest decision you’ll make as you plan your retirement is setting a date. This booklet includes a discussion about the impact early retirement may have on your pension amount. You’ll also find information about how your final average salary is calculated and how to get an estimate of your future benefits.

Retirement Countdown

Once you seriously begin to consider retirement, the booklet details a few steps you can take to make your path to the big day as smooth as possible.

  • File Proof of Your Date of Birth. Before we can pay any benefits, we must have proof of your date of birth.
  • File Your Domestic Relations Order. If you have a court order showing how your benefits are to be divided with an ex-spouse, we’ll need a certified copy.
  • Review Your Health Insurance. Check what coverage you’ll have or investigate health insurance options. (NYSLRS does not administer health insurance for our retirees, but you may be able to pay for yours through pension deductions.)

Filing for Retirement

Filing an Application for Service Retirement sets the ball in motion. In most cases, your application must be on file with the Office of the State Comptroller 15 to 90 days before you retire. You need to send it directly to NYSLRS; don’t give it to your employer. You can mail it, preferably by certified mail, or drop it off at one of our consultation sites.

This booklet tells you what to do and what to expect as we finalize your pension. There are important documents you’ll need to file, such as a W-4P form, so we know how much we should withhold from your pension. But don’t fret too much about these things: just keep How Do I Prepare to Retire? handy and consult it whenever you have a question.

Other Publications

Read our recent blog posts about other NYSLRS publications.

A Guide for Retirees

Our publication A Guide for Retirees is a valuable resource to read if you’re retired or planning to retire soon. This guide details the continuing benefits and services NYSLRS provides for its retirees.

What’s Inside A Guide for Retirees?

The first section of A Guide for Retirees outlines your benefits in clear, straightforward language. It provides an estimate of when to expect your first pension check, along with a couple reminders to help avert any delay in your payment. There’s also a brief description of how we calculate your benefit and information about what to do if you believe your benefit was calculated incorrectly.

Your NYSLRS retirement benefit will provide you with monthly payments for the rest of your life. But that doesn’t mean the amount of your pension won’t change. For example, your benefit will increase once you are eligible for a cost-of-living adjustment. Signing up for Medicare or getting a divorce can also change your benefit amount.

The booklet also describes benefits that your survivors may be eligible for, such as the post-retirement death benefit.

A Guide for Retirees

Services We Offer

A Guide for Retirees describes services NYSLRS provides for retirees, including:

  • Retirement Online. A fast and secure way to do business with NYSLRS.
  • Automated Information Line. You can call 24 hours a day, seven days a week to request a form, check your COLA eligibility, get general tax information and more.
  • Direct Deposit. Have your pension deposited directly into your bank account.
  • Pension Verification Letters. You can create your own in Retirement Online or we can send one at your request.
  • Individual Consultations. You can discuss your benefits with one of our information representatives in person or over the phone.

Your Obligations

Your benefits come with certain responsibilities. Most importantly, you need to let us know if your address changes. Even if you’re getting your pension through direct deposit, we need to have your correct address so we can send you tax documents and other important information.

This section also reminds you to keep your beneficiary information current, contact us if your check is lost or stolen, and review your withholding regularly.

Other Publications

Read our recent blog posts about other NYSLRS publications:

What Happens After You File
Your Retirement Application

The big day has finally come. You’ve submitted your retirement application, and you’re ready to start collecting your pension. Here’s what will happen next.

There are four documents we’ll need in addition to your retirement application. You can send them with your retirement application or after you apply:

retirement application

After we receive your application, we will send you a confirmation letter, which lists your retirement date and the forms we’ve received from you. If you don’t submit a W-4P, we’ll withhold federal taxes based on the status “married with three dependents.” (You can change your withholding at any time.)

If you haven’t received an estimate in the past 18 months, you don’t need to send an option election form with your retirement application. We’ll send you an estimate, along with an option election form, after we receive your retirement application.

Your First Payment

Your monthly payments will be based on the salary and service information we have on file.

We cannot send your first payment until we have proof of your date of birth. If you can, you should submit this document with your retirement application. (A copy of your New York driver’s license, birth certificate, passport or naturalization papers are acceptable proofs.) If you don’t have proof of date of birth available when you submit your retirement application, you can email us a photocopy by attaching it to our secure contact form.

We encourage you to sign up for direct deposit, so you’ll have safe and reliable access to your pension payments on the last business day of each month. Paper checks are mailed on the second to last business day of each month and may take longer to receive.

Possible Adjustments

If we receive additional payroll information from your employer, such as eligible lump sum payments, a retroactive pay increase or lagged regular earnings, we may need to adjust your pension payment. Because of the many variables that are often involved in verifying service and salary details with your former employer, finalizing your retirement benefit amount can take some time. The time this takes depends on the complexity of the circumstances. For example, if you worked for multiple public employers, it may take longer to pull together all your income information.

Once we have all the information we need, we’ll recalculate your pension amount. If your payment increases, you will receive a retroactive payment for the amount you are owed back to your date of retirement (the difference between your initial payments and your final retirement benefit amount).

For more information, please read our publication How Do I Prepare to Retire? and these recent blog posts: