Life Changes: How Do I Prepare to Retire?
A Message from Comptroller Thomas P. DiNapoli
We are living longer and, as a result, many people will find themselves spending up to a third of their lives in retirement. That is why you should consider what you need to do to ensure a financially secure retirement.
The first step is becoming well-informed. This booklet provides you with information you need as you plan for retirement. It describes some of the resources available to you, presents factors to consider as you plan, takes you step by step through the retirement process, and even addresses many post-retirement concerns.
While this booklet is useful, it may not address all of your unique circumstances. Please remember that our staff is available to answer any questions you may have about your benefits.
Sincerely, Thomas P. DiNapoli State Comptroller
Learn About Your Benefits
Understanding the benefits you currently have and those you are eligible to receive in the future is essential when preparing for retirement. There are several major sources for this information.
When you joined the Retirement System, you were assigned to a tier and retirement plan. You can find specific information about your plan, the benefits you are entitled to receive and when you can receive them on our website. Since our website is revised periodically to reflect changes in the law, visit often to ensure you have the most up-to-date information on your plan.
Your Member Annual Statement
Each summer, you will receive your Member Annual Statement (MAS). It shows the latest information we have for you, including your beneficiary designations, service credit, salary and outstanding loan balances. For most members of the Employees’ Retirement System, it also includes “Projected Benefits and Retirement Options” — a “ballpark” estimate of your pension that details each payment option available to you when you retire.
If there are any errors in your account information, such as your date of birth, address, or beneficiaries, please contact us to have them corrected. The earnings and service information on this statement are reported by your employer. If you believe your reported earnings are not accurate, please contact your employer. Your employer will complete an adjustment report, if corrections are needed, and submit it to us so we can change your records.
If you have questions about your statement, our online MAS Tutorial can help. This interactive tutorial includes a page-by-page explanation of your statement, instructions on how to correct or update your information, and answers to Frequently Asked Questions.
Laws affecting the Retirement System, and possibly your benefits, can change. We are always offering new pre-retirement planning information to our members. In addition to checking our website, you can get information by reading The Update for Employees’ Retirement System (ERS) members and The Sentinel for Police and Fire Retirement System (PFRS) members. These newsletters are sent to your employer for distribution twice a year and are also available on our website.
E-News, our monthly email newsletter, lets you know about the latest retirement news and includes a special section dedicated to pre-retirement planning. To start receiving E-News, visit our website and click on “Email Sign Up.”
At your employer’s request, we offer pre-retirement presentations for members within five years of retirement eligibility. These presentations guide you through the retirement process, explain the benefits you can expect and discuss post-retirement issues. Try to attend one at least 18 months before you plan to retire to get more detailed information on the retirement process.
Our Information Representatives are available to meet with you at locations throughout New York State. While all of our sites have access to your Retirement System records, we encourage you to bring your retirement estimate or your most recent MAS. For consultation site hours and locations, check our consultation site page. To schedule an appointment, contact our Call Center at 1-866-805-0990 or 518-474-7736 in the Albany, New York area.
Your Public Employment History
Make Sure Your Credit is Complete
The amount of your retirement benefit is directly related to your years of public service, unless you are in a special plan allowing you to retire after 20 or 25 years of specific service. When you work for a participating public employer in New York State, you receive service credit. One year of full-time employment is the same as one year of service credit.
While we keep records for all of our members from the date they join the Retirement System, we have no way of knowing if and when our members previously worked for a public employer. If you worked for a public employer before you joined the Retirement System, you may be able to receive service credit for that time.
Please note that you must request credit for any previous service prior to your retirement.
Purchasing Previous or Military Service Credit
If you apply for previous or military service credit, we will notify you of your eligibility. Most of the time there is a cost associated with receiving this credit. We will calculate the cost and give you several options for making your payment, such as through payroll deductions, a rollover from a deferred compensation or tax-sheltered annuity, or in a lump sum. In most cases, you are buying back the years of credit with interest, so it is to your advantage to purchase your credit as early in your career as possible in order to pay less interest.
To request previous service credit, complete and send us a Request for Previous Service form (RS5042) , available on our website or from our Call Center. To request credit for your military service, please write to us, or email our Military Service Unit. Include your name, retirement registration number, and a copy of your Certificate of Release or Discharge from Active Duty (DD-214).
Purchasing this credit is optional. However, in most cases, the credit will increase the amount of your benefit. For more information, read Service Credit for Tiers 2 through 6 on our website.
And How to Avoid a Problem
If you have taken a loan from the Retirement System, it’s important to remember that you cannot pay off your loan after you retire. If you have an outstanding balance when you retire, it will permanently reduce your retirement benefit, and at least some portion of the loan balance will almost always be reportable as ordinary income (subject to federal income tax). If you don’t want a permanent reduction, you can increase the amount of your loan repayments and/or make additional lump sum payments so your loans are fully paid before retirement.
Your Final Average Salary
Be Aware of the Limits
In addition to service credit, your retirement benefit is also directly related to your final average salary (FAS).
For members in Tiers 1 through 5, your FAS is the average of your highest three consecutive years of earnings in public employment. For Tier 6 members, your FAS is the average of your highest five consecutive years of earnings. For most, this is the last years of employment immediately before retirement (but it can be anytime in your career).
Your FAS includes your regular salary and can also include the following payments:
- Overtime and noncompensatory overtime* earned in the FAS period;
- Holiday pay;
- Longevity payment (maximum of one per FAS year) if earned in the FAS period; and
- For Tier 1 members who joined before April 1, 1972, and for ERS Tier 3, 4 and 5 members, up to 30 days vacation, if your FAS is based on the last three years of earnings prior to your retirement.
*For Tier 5 and 6 members, the total amount of overtime and noncompensatory overtime that can be used in the FAS calculation is limited.
Limitations to Your FAS
The earnings used in your FAS calculation may be subject to limitations based on your tier and retirement system (ERS or PFRS). Any amount in excess of the limitation would be excluded from the FAS calculation.
Tier 1 (ERS & PFRS)
If your date of membership is June 17, 1971 or later, the earnings in any one year used in the FAS calculation cannot exceed the earnings in the previous 12-month period by more than 20 percent.
Tier 2 (ERS & PFRS), Tier 3 PFRS Members Covered by Article 11 and Tier 5 PFRS
The earnings in any one year used in the FAS calculation cannot exceed the average of the previous two years by more than 20 percent.
Tiers 3, 4, and 5 (ERS) and Tier 3 PFRS Members Covered by Article 14
The earnings in any one year used in the FAS calculation cannot exceed the average of the previous two years by more than 10 percent.
Tier 6 (ERS & PFRS)
The earnings in any one year used in the FAS calculation cannot exceed the average of the previous four years by more than 10 percent.
For more detailed information about your FAS limitations, please refer to your retirement plan booklet on our publications page.
PFRS Members Only
Some employers provide a one-year FAS for their PFRS members. (Note: The one-year FAS is generally not available to Tier 6 members.) The one-year FAS is the regular compensation you earned during the 12 months of actual service immediately preceding your retirement date. (Check with your employer to see if a one-year FAS is available to you.)
Salary, overtime, holiday pay and longevity pay are among the payments that are considered regular compensation. For more information on what can and cannot be included, consult your retirement plan information on our website. If your three-year FAS is greater than your one-year FAS, we will use the three-year FAS to calculate your retirement benefit.
Full or Reduced Retirement Benefits
If you are a Tier 2, 3, 4 or 5 ERS member who is covered by a regular plan, and you work until age 62, you will retire with a full benefit. Tier 6 ERS members covered by a regular plan who work until 63 will retire with their full retirement benefit. Tier 2, 3 and 4 ERS members who are age 55 or older and have 30 or more years of service credit can also retire with a full benefit. However, if you retire before meeting these requirements, your retirement benefit is permanently reduced. Since the full amount of your benefit is tied to your age and service credit, the closer you are to age 62 (age 63 for Tier 6 members) when you retire, the smaller the reduction in your benefit will be.
ERS members in Tiers 2 through 6 who are covered by a special plan and PFRS members should consult our website to review the specific details of their plan concerning benefit reductions.
If You’re Not Working for a Public Employer — Filing at Age 55 vs. 62 (63 for Tier 6 Members)
If you are vested,* no longer work for a public employer, and do not anticipate returning to public employment, should you take early retirement with a benefit reduction or wait until you can receive your full retirement benefit? (Benefit reductions do not apply to Tier 1 members.)
If you are a Tier 2, 3 or 4 member, you can retire at age 55 with a 27 percent reduction for early retirement. If you wait until you are 62 to retire with full benefits, it will take you 19 years to recover the benefits you would have received if you had retired with the reduction at age 55.
If you are a Tier 5 member, you can retire at age 55 with a 38.33 percent reduction for early retirement. If you wait until you are 62 to retire with full benefits, it will take you 11 years to recover the benefits you would have received if you had retired with the reduction at age 55.
If you are a Tier 6 ERS member, you can retire at age 55 with a 52 percent reduction for early retirement. (Tier 6 PFRS members who are off public payroll may not retire until age 63.) If you wait until you are 63 to retire with full benefits, it will take you seven years to recover the benefits you would have received if you had retired with the reduction at age 55.
If you anticipate returning to public employment, you should evaluate the potential impact of additional service credit and salary on your retirement benefit before choosing early retirement.
*Tier 1, 2, 3 and 4 members are vested when they have at least five years of credited service. Tier 5 and 6 members must have ten years of credited service to be vested.
The Sick Leave Benefit
Sections 41(j) and 341(j)
Sections 41(j) and 341(j) of the Retirement and Social Security Law (RSSL) provide an optional sick leave benefit for ERS and PFRS members, respectively. If your employer offers this benefit, you may receive additional service credit for your unused, unpaid sick leave at retirement. To be eligible, you must retire directly from public service or within a year of separating from service.
The additional credit is determined by dividing your total unused, unpaid sick leave days, which cannot exceed 165 days for most members, 100 days for most Tier 6 members or 200 days for some members in certain plans, by 260. If your employer offers this benefit, it will be listed in your MAS.
Credit for your unused sick leave at retirement cannot be used to increase your retirement benefit beyond the maximum amount payable under your retirement plan. It also will not qualify you for vesting, a special retirement plan or a better retirement benefit calculation.
Accumulated sick leave may reduce or eliminate post-retirement health insurance costs. We do not administer health insurance programs for retirees, but your employer’s health benefits administrator can tell you if you and your family are eligible for post-retirement coverage. For more information, New York State employees and others covered by the New York State Health Insurance Program should visit the Department of Civil Service’s website.
The Retirement Benefit Calculator
A Useful Website Tool to Estimate Your Retirement Benefit
The Retirement Benefit Calculator is available on our website and allows most members to enter different retirement dates, final average salaries and service credit totals to estimate what their benefit could be when they retire. By entering different possibilities for each variable, you can see the impact additional service credit and/or delaying retirement may have on your benefit. Visit our website and click on the “Benefit Calculator” link under “Planning for Retirement.”
Request a Benefit Projection from Our Call Center
Most Tier 2, 3 and 4 members with five or more years of service credit are eligible to request a benefit projection by calling the Retirement System’s Call Center. Members of any age can request a benefit projection based on their salary and service reported to that date. Actively employed members age 50 or older can also request a benefit calculation that projects additional service credit based on a date of retirement up to five years into the future. In most cases, these projections will be mailed on the next business day to your home address. A benefit projection is a great tool for vested members who are considering leaving the payroll before they are old enough to collect their pension benefits, and for those members who will be eligible to retire within five years. To request a benefit projection, contact our Call Center toll-free at 1-866-805-0990, or 518-474-7736 in the Albany, New York area.
Once you begin seriously considering retirement, there are important things you need to know and do in the months leading up to the big day. Here are just a few steps you can take to make your path to retirement as smooth as possible.
Requesting an Estimate
An Essential Step for Success
If you are eligible to retire within 18 months, one of the most important things you can do is request an estimate. With your estimate, you can confirm that the information we have for you is accurate. For example, if you requested credit for previous public employment, you can make sure it’s included in your estimate.
The estimate will show:
- Your approximate FAS (not including vacation pay, future increases in salary, etc.);
- Your total years of credited service;
- Your total member contributions (if applicable);
- Your outstanding loan balances and how much your pension will increase if you pay off the loans before retiring (if applicable);
- The retirement date used to determine your pension;
- The names and birth dates of your current beneficiaries;
- How much your pension will be under each of the retirement payment options; and
- The increase in your pension if you purchase optional service credit (if applicable).
To get an estimate, send us a completed Request for Estimate form (RS6030) , available on our website and from our Call Center. You can also write to us. In your letter, include your estimated retirement date, the name and birth date of your intended beneficiary, your public employment history, any military service you may have and your retirement registration number.
The information we have in our records is used to provide you with an estimate of what your pension will be on your estimated date of retirement. Therefore, when you receive your estimate, report any inconsistencies to us as soon as possible. Remember, the figures in the estimate are not final and should be used only as a guide. If you decide not to retire after getting your estimate, you may request a new estimate whenever your circumstances change.
Proof of Your Birth Date
A Must-Have Document
Before you can receive any pension benefits, we must have proof of your birth date on file. In most cases, a photocopy is acceptable. If we need to see the original document, we will contact you.
You can submit a copy of one of the following anytime before you retire:
- Birth certificate;
- New York State driver license issued on or after January 1, 2005;
- Enhanced driver license;
- Certificate of Release or Discharge From Active Duty (DD-214);
- Baptismal certificate; or
- Naturalization papers.
If you are unable to provide one of the above, please contact us for information about other acceptable documents.
Your Domestic Relations Order
Send Us a Copy
If you divorce, your retirement benefits could be affected. Retirement benefits are considered marital property and can be divided between you and your ex-spouse when the marriage ends.
- Your ex-spouse may be entitled to a portion of your pension.
- You may be required to name your ex-spouse as beneficiary of any pre-retirement death benefit payable.
- You may be required to elect a retirement option that provides a continuing benefit to your ex-spouse in the event of your death.
- Your ex-spouse may be entitled to a portion of your cost-of-living adjustment.
Any division of your benefits must be stated in the form of a Domestic Relations Order (DRO) — a legal document that gives us specific instructions on how your benefits should be divided.
We offer an easy to complete online DRO template. The template is not required, but all submissions using the template will be given priority review. We will also honor a properly drawn DRO issued by a New York State Court.
Once the court has approved a DRO or an amendment to a DRO, please send us a certified copy promptly.
For more detailed information, please read our Guide to Domestic Relations Orders available on our website and review our DRO Frequently Asked Questions before you finalize your divorce.
Review Your Health Insurance Coverage
Before you retire, check with your employer’s health benefits administrator to determine your eligibility for post-retirement coverage for yourself and your family. (We do not administer health insurance benefits.) The administrator will be able to provide you with information concerning the type of coverage available, the cost, and how much you must pay. If you are not eligible for coverage after retirement or you need supplemental coverage, you should investigate private health insurance well in advance of retiring.
For New York State employees and retirees, the New York State Department of Civil Service administers the New York State Health Insurance Program (NYSHIP). Your health benefits administrator should be able to answer your questions about your coverage as a retiree, or you can visit the Department of Civil Service’s website to learn more.
If your records are in order and you meet the eligibility requirements, the retirement process can be very simple. The following section presents general information regarding the steps to take once you are ready to retire.
Filing Your Retirement Application
The Form That Makes It Official
You cannot receive your retirement benefit unless you file an Application for Service Retirement (RS6037) , available on our website. The form is also available from your employer, our consultation sites and our Call Center. Staff members at our consultation sites are notary publics and can help you with your application, if needed.
Your Application for Service Retirement must be on file with the Office of the State Comptroller at least 15 days but not more than 90 days before the date on which your retirement will occur. The 15-day filing requirement is waived if you are over age 70 at retirement. Vested members no longer on a public employer’s payroll can file between 90 days and one day before their retirement date.
Do not give your retirement application to your employer. Please send it to us directly.
The Confirmation Letter
You’re on Your Way
Once we receive your application, we will send you a confirmation letter. We will also notify your employer that you filed for retirement. If you received a formal estimate from us within the past 18 months, we will include three forms with the letter:
- Your W-4P form (Withholding Certificate for Pension or Annuity Payments), so you can choose the amount you want withheld from your benefit each month for federal taxes;
- A direct deposit enrollment form, so you can have your benefit payment automatically deposited into your checking or savings account as soon as we finalize your retirement calculations; and
- An Option Election form, so you can choose how you want your pension paid based on the information supplied in that estimate.
If you have not previously received an estimate, we will send you the W-4P form and direct deposit enrollment form and begin to process your estimate. Once your estimate is completed, we will send it to you along with the Option Election form.
The W-4P Form
If you do not submit a completed W-4P form to us, we will still process your retirement application, but the amount of federal tax withheld will be based on the status, “married with three dependents.” You can change your federal withholding tax status at anytime. W-4P forms are available from our Call Center, consultation sites or website.
Your retirement benefit is not subject to the income tax of New York State or its municipalities. However, if you move to another state, it could be taxable in that state. Check with the state where you will be living to see if your retirement benefit will be taxable. You can also visit the Retired Public Employees Association’s website for a complete list of states that do and do not tax New York State pensions.
The Option Election
The Option Election form tells us how you want your retirement benefit paid to you. It must be filed by the last day of the month in which you retire (unless you are otherwise notified, as in the case of disability retirement).
All of the options provide you with a monthly benefit for life. The Single Life Allowance option provides you with the highest retirement benefit. However, under this option, no monthly payments are made to your beneficiaries after you die. All of the other options reduce your benefit in order to possibly provide for your beneficiary (or beneficiaries) upon your death. Your accountant, financial advisor or estate planner can help you determine the tax implications of the various options.
You have up to 30 days after your retirement benefit is payable to change your Option Election (your benefit is payable on the first of the month following your date of retirement). After the 30 days, your decision is irrevocable.
If you have not yet received an estimate of the amounts payable under each option available to you, we will notify you of your Option Election deadline in the letter that accompanies your estimate.
Receiving Your Retirement Benefit
What to Expect
Since most employers are on a lag payroll, we cannot get certain information (such as your employer’s certification of your unused vacation and sick leave credits) until after you retire. During this time, you may be eligible to receive advance checks (partial payments based on your estimated benefit) until we are able to determine exactly what your actual benefit will be. These checks will be mailed to your home each month, beginning approximately 30-60 days after your date of retirement.
NOTE: Your date of birth must be verified before any payment can be made.
Your Retroactive Check
As soon as we determine exactly what your monthly retirement benefit will be, you will receive a retroactive payment to make up the difference between the advance payments and the amount actually due (minus federal withholding).
Once you receive your retroactive payment, you are automatically included in the regular pension payroll disbursement schedule. With our Direct Deposit Program, your monthly pension payments are deposited directly into your checking or savings account on the last business day of the month for that month. If you decline enrollment in direct deposit, you will receive pension checks, which are mailed the second to the last business day of each month for that month.
The Direct Deposit Program
The Fastest Way to Get Your Money
Enrolling in our Direct Deposit Program may be done at the same time you file for retirement. Just fill out a Direct Deposit Enrollment Application and return it to us. As soon as your retirement benefit is finalized, your payments will be directly deposited into the account you specified on your enrollment application. (If you are eligible for advance payments, these will still be made by paper check.)
Direct deposit is quick, easy and safe. In most instances, your money is immediately available and you will not have to rely on the Postal Service to deliver your check or wait in long lines at the bank to cash it. Direct Deposit Enrollment Applications are available from our Call Center and our website.
Planning Your Post-Retirement Budget
Having a post-retirement budget enables you to decide how you want to spend your money once you retire. One of the best ways to plan for the future is to keep track of what you spend now. To help you plan your post-retirement budget, we have included our Monthly Expenses Worksheet and Monthly Income Worksheet below. These forms can help you determine how you spend your money over the course of one or two months. Remember to include expenses that occur periodically, such as car insurance, property taxes and school taxes.
Worksheets to Help You Plan — Monthly Expenses
|Real Estate Taxes|
|Repairs, House & Grounds|
|Water, Electricity, etc.|
|Furniture & Fixtures|
|Equipment, House & Yard|
|Automobile & Transportation|
|Monthly Car Payment|
|Gas & Oil|
|License & Registration|
|Medical & Health|
|Medicines & Drugs|
|Doctor, Dentist, etc.|
|Dry Cleaning, Laundering|
|Food at Home|
|Food Away from Home|
|Taxes & Insurance|
|State & Local|
|Life Insurance Premiums|
Worksheets to Help You Plan — Monthly Income
|New York State Retirement Income||$||$|
|Social Security Income|
|Yield from Savings|
|Dividends from Stocks, Mutual Funds|
|Life Insurance Income|
Worksheets to Help You Plan — Where My Assets Are
One problem survivors often have is finding documents and valuable papers. You can do them a favor by filling out this form. Give copies to your loved ones, executor, lawyer and anyone else who will need this information. Make sure copies are kept in a secure place. You should review and update this information periodically.
|Retirement System Registration No.|
|Social Security Number|
My valuable papers and assets are stored in these locations (address plus where to look)
|B. Safe-Deposit Box|
|My will (original)|
|Power of attorney|
|Spouse’s will (original)|
|Life insurance policy|
|Health insurance policy|
|Car insurance policy|
|List of checking/savings accounts|
|List of credit cards|
|Brokerage account records|
|Titles and deeds|
|List of stored & loaned items|
|Auto ownership records|
|Military discharge papers|
|Children’s birth certificates|
|Health care proxy|
Important Names, Addresses and Phone Numbers
New York State and Local Retirement System 110 State Street, Albany, NY 12244-0001.
1-866-805-0990 or 518-474-7736
|Copies Given to|
NOTE: Beneficiaries should contact the Retirement System to determine what benefits may be due.
If you have questions, do not hesitate to contact us. There are several ways to do this:
- Email us;
- Phone our Call Center at 1-866-805-0990 or 518-474-7736 in the Albany, New York area;
- Make an appointment to meet with an Information Representative at any of our consultation sites throughout the State;
- Fax us at 518-402-4433; or
- Write to us at:
New York State and Local Retirement System
110 State Street
Albany, New York 12244-0001.
VO1709 (Rev. 7/14) © 2014, New York State and Local Retirement System
This publication provides a general summary of membership benefits, rights and responsibilities, and is not a substitute for any New York State or federal law. For specific information about your benefits, please contact us.