Tag Archives: retirement

Debt and Retirement

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If you’re planning to retire soon, it’s a good idea to take inventory of any debt you owe. Paying down your debt can give you flexibility to enjoy the type of retirement you want.

NYSLRS Loan Debt

If you have an outstanding NYSLRS loan balance when you retire, it will reduce your pension. The amount of your reduction is based on:

  • Your retirement system — Employees’ Retirement System (ERS) or Police and Fire Retirement System (PFRS);
  • Your tier;
  • Your age at retirement; and
  • Whether you retire with a service retirement benefit or a disability retirement benefit.
Debt and Retirement - How a NYLSRS Loan Balance Could Affect Your Pension

The pension reduction does not go toward repaying the outstanding loan balance — it’s a permanent reduction. And, at least part of the loan balance at retirement will be subject to federal income taxes.

When you apply to retire using Retirement Online and have an outstanding NYSLRS loan balance, the pension reduction amounts are provided to you. They are also listed on the loan applications on our Forms page. If you are nearing retirement, be sure to check your loan balance. If you are not on track to repay your loan before you retire, you can increase your loan payments, make additional lump sum payments or both (see the Change Your Payroll Deductions or Make Lump Sum Payments section of our Loans page.)

Although ERS members may repay their loan after retiring, they would have to pay the full balance that was due at retirement in a single lump sum payment. Then, going forward, the pension would be increased to the amount it would have been without the loan reduction. However, it would not be increased retroactively back to the date of retirement.

Other Debt to Check

Credit Cards

Another priority is paying off credit cards. The average American household with credit card debt carries a month-to-month balance of $7,876 and pays $1,380 a year in interest, according to a recent analysis of federal data.

Credit card statements carry a minimum payment warning that tells you how long it will take, and how much it will cost, to pay off your balance making only minimum payments.

If you have more than one credit card balance, many financial advisors recommend you pay as much as you can on the card with the highest interest, while making at least the minimum payments on lower-interest cards. Once you’ve paid off the high-interest card, focus on the one with the next-highest rate, and so on. Other advisors say it might be better to pay off the card with the smallest balance first. The idea is to gain a sense of accomplishment, and make the process seem less daunting.

Mortgages

Mortgage balances make up 70 percent of the $17.06 trillion in U.S. household debt. Should you try to pay off your mortgage before you retire? Advice varies on that question. It would eliminate a major expenditure and let you spend your retirement income on other things. On the other hand, if your mortgage interest rate is relatively low, you may want to focus on paying off other high-interest debt or boosting your retirement savings. What works best for you will depend on your situation.

NYSLRS – One Tier at a Time: PFRS Tier 2

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When you join the New York State and Local Retirement System (NYSLRS), you’re assigned a tier based on the date of your membership. This post looks at Tier 2 members of the Police and Fire Retirement System (PFRS).

Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

PFRS has five tiers. Almost half of PFRS members are in Tier 2, which began on July 31, 1973, and ended on June 30, 2009. Most are in special retirement plans that allow for retirement after 20 or 25 years, regardless of age, without penalty.

The special plans that cover most police officers and firefighters fall under Sections 384, 384(f), 384-d, and 384-e of Retirement and Social Security Law. You can sign in to Retirement Online to find your benefit plan, which is listed under ‘My Account Summary.’

PFRS Tier 2

Where to Find PFRS Tier 2 Information

Whether you’re in one of the retirement plans described in this post or another retirement plan, we encourage you to visit our website to find your NYSLRS retirement plan publication. It’s a comprehensive description of the benefits you’re entitled to receive as a PFRS member.

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.

Members may not be able to use the Retirement Online calculator in certain circumstances, for example, if they have recently transferred a membership to NYSLRS, if they are a Tier 6 member with between five and ten years of service, or if they have worked for multiple employers and were covered by different retirement plans. These members can contact us to request an estimate or use the “Quick Calculator” on our website. The Quick Calculator generates estimates based on information you provide.  

COLA Coming in September

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Eligible NYSLRS retirees will see a cost-of-living adjustment (COLA) in their monthly pension payments at the end of September 2023. This is a permanent annual increase to your retirement benefit that is based on the cost-of-living index and a formula set by State law. For upcoming pension payment dates, check our pension payment calendar.

COLA Coming Soon

How the COLA is Determined

The COLA is 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, as measured at the end of the State fiscal year (March 31). Once you are eligible, your annual increase will be at least 1 percent, but no more than 3 percent.

The percentage is applied to the first $18,000 of your benefit as if you had chosen the Single Life Allowance pension payment option, even if you selected a different option at retirement. Using the Single Life Allowance gives you the highest COLA amount possible, since this option pays the highest benefit. Once your COLA payments begin, you will automatically receive an increase to your monthly benefit each September.

The September 2023 COLA is 2.5 percent, for a maximum annual increase of $450.00, or $37.50 per month before taxes.

COLA Eligibility

When Will You See the Increase?

Eligible retirees will see the annual 2023 COLA in their end-of-September pension payment, which will be available to those with direct deposit on September 29, 2023. If you receive a paper check, your COLA will be included in the check mailed on September 28, 2023.

Viewing Your Benefit Payment

You can view your benefit payment pay stubs, including your current COLA amount, in Retirement Online. At the end of September, if you are eligible for the increase, you’ll be able to view a breakdown of your September payment with your new COLA amount.

To view your pension payments, sign in to Retirement Online. From the top of your Account Homepage, in the ‘I want to’ section, click the “View Pension Check” link. Then select the date of the pension payment that you want to view. You’ll see a list of payments you received beginning with your January 2023 payment and going forward. If you have direct deposit, you will also receive a notification of the net change in your monthly payment amount at the end of September.

Federal Tax Withholding and Your Pension

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If your last federal tax bill was larger than you expected, or if you received a hefty refund, it might be time to review how much federal tax withholding comes out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you may want to check with a tax preparer.

Remember, NYSLRS only withholds federal income tax. New York State doesn’t tax your NYSLRS pension, and we can’t withhold for income tax for other states.

federal tax withholding and your pension

New W-4P Federal Tax Withholding Form

The IRS released a new version of their W-4P federal income tax withholding form. For 2023, NYSLRS was required to update our tax withholding form as well.

The new form no longer allows tax filers to adjust their withholding by electing a specific number of withholding allowances. Instead, the W-4P form has fields for increasing or decreasing the amount of withholding, including fields for tax credits and deductions. 

You do not need to submit the new W-4P unless you want to change the amount of your tax withholding.

To Change Your Withholding

Retirement Online makes it fast and convenient to view your current federal withholding information and make changes using our online form that collects the same information as the paper form. You can check your current withholding by signing in to Retirement Online and viewing your most recent pension pay stub. To change your federal tax withholding, click the green “Update My W-4P Tax Information” button on your Account Homepage.

If you update your withholding online by the middle of the month, your changes will generally be applied that month. We’ll notify you by mail or email (depending on your contact preference) when the update has been completed.

Completing the Form

Basic Withholding

Step 1. Select your filing status. If you want your federal withholding to be based only on the benefit amount you receive from NYSLRS, with no adjustments, you can skip steps 2 – 4.

Adjustments to Withholding (Dependents, Tax Credits)

Complete Steps 2 – 4 ONLY if they apply to you.

Step 2. If you have income from a job or more than one pension/annuity, in addition to your NYSLRS pension, or if you’re married filing jointly and your spouse receives income from a job or pension/annuity, you can enter that in Step 2.

Click “View Instructions” or see page 2 of the paper W-4P form for examples that may help you with this step.

Step 3. If you need to claim dependents, you can enter that information in Step 3.

Step 4. If you have other adjustments to make — other income, deductions or extra withholding — you can complete Step 4.

Click “View Instructions” or see page 3 of the paper W-4P form for instructions and a worksheet that may help you with this step.

If you prefer to send in a paper form, you can print, complete and submit our W-4P Withholding Certificate for Pension or Annuity Payments form to update your withholding information, however paper forms take longer to process. Please be sure you are using the new form (revised 12/22), because NYSLRS will no longer accept previous versions of the W‑4P form.

If You Receive More Than One Benefit Payment from NYSLRS

NYSLRS administers two retirement systems — the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). It is possible to receive more than one benefit from one or both systems — as a retiree, a beneficiary or an ex-spouse who is receiving a benefit under a domestic relations order.

Generally, your withholding is tied to the retirement system. So, if your benefits are from the same system, you only need to submit your withholding information once and your preferences will be applied to all benefit payments you receive from that system. However, if you receive a benefit from both ERS and PFRS, you’ll need to submit a W-4P form for each system.

Your benefit payment pay stub will list whether the payment is from ERS or PFRS.

For More Information

Our Taxes and Your Pension page has additional information about withholding, including 1099-R tax form information, how to submit a paper W-4P form, what to do if you receive more than one benefit payment from NYSLRS and more.

If you need help completing the W-4P form, you can find phone numbers and online resources on the IRS Let Us Help You page.

Please note: Effective January 1, 2023, NYSLRS does not withhold federal income tax from benefits that are not subject to tax reporting.

Working After Retirement: Retiree Earnings

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working after retirement

As a NYSLRS retiree, you can work and still receive your pension, but if you are working after retirement, there may be a limit on how much you can earn each year without affecting your NYSLRS pension.

The rules and restrictions differ depending on:

  • The type of retirement benefit you are receiving (service or disability);
  • The employer you will be working for (New York State public employer, private employer, yourself, etc.);
  • Your date of membership and tier; and
  • Your age.

New York public employers include the State, its political subdivisions (cities, counties, etc.), school districts, Boards of Cooperative Educational Services (BOCES), public authorities, public benefit corporations and entities that participate in any of the State’s public retirement systems.

Temporary Suspensions of the Earnings Limit

Under a series of executive orders, the Governor had suspended the earnings limit. The last executive order expired on June 22, 2023. Pay from a public employer earned from June 23, 2023 through December 31, 2023 will count toward a retiree’s annual earnings limit.

Also, the Legislature has suspended the earnings limit for retirees employed by school districts and BOCES through June 30, 2024. You can find more information, as well as updates about any future developments, in our Update Regarding Retiree Earnings Limit blog post.

Working While Receiving a Service Retirement Benefit

As a service retiree (retired under a regular service retirement, not a disability retirement), your earnings are unlimited if you work for a private employer, a state other than New York State or the federal government.

If you return to work in the public sector, two sections of New York State Retirement and Social Security Law (RSSL) regulate post-retirement employment.

Section 212: Earnings Limited to $35,000 per Calendar Year

Section 212 of the RSSL allows retirees to earn up to $35,000 from public employment in a calendar year. There is generally no earnings restriction beginning in the calendar year you turn 65. (Special rules apply to elected officials.) If you’re under 65 and earn more than the Section 212 limit, you must:

  • Pay back NYSLRS for the pension payments you received after the date you reached the limit. If you continue to work, your pension will be suspended for the remainder of the calendar year and resume the following January.

    OR
  • Rejoin NYSLRS, in which case your pension will be suspended until you retire again at some future date (you’d need to reapply).

Section 211: Your Employer Can Seek a Waiver of the Earnings Limit

Under Section 211, the earnings limit can be waived if your prospective employer gets prior approval. In most cases, the New York State Department of Civil Service would be the approving agency.

Section 211 approvals cover a fixed period, normally up to two years. Approval is not automatic; it is based on the employer’s needs and your qualifications.

Working While Receiving a Disability Retirement Benefit

Earnings for retirees who are working while receiving a disability retirement benefit are limited whether they work for a public or private employer. The limit is specific to each retiree. To find out your earnings limit, please contact us.

Reporting Your Earnings

It is your responsibility to notify NYSLRS if you earn more than the limit. If you know you are going to exceed the limit, contact us at least a month before you go over the limit.

You can message us using the secure contact form or you can fax a letter to 518-402-2498. Be sure to include the name of your employer, the approximate date that you expect to exceed the limit and a daytime phone number in case we have questions.

For More Information

Before you decide to return to work, please read our publication, What If I Work After Retirement? It includes information such as how earnings limits are calculated for retirees receiving a disability retirement benefit, consequences to consider before returning to NYSLRS membership and more. If you have questions or concerns, please contact us.

Add a NYSLRS Publication to Your Summer Reading List

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Looking for some summer reading to add to your e-reader? Check out these publications from NYSLRS for important retirement information.

Add a NYSLRS Publication to Your Summer Reading List

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

Are you one of more than 350,000 Tier 6 Employees’ Retirement System (ERS) members covered by Article 15? Your retirement plan publication explains some of the benefits and the services available to you, including service retirement, disability retirement, death benefits and more. Read it now.

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

If you’re not in Tier 6, you’re likely among more than 260,000 Tier 3 and 4 ERS members covered by Article 14 and 15. Check out your publication to find out about the benefits and the services available to you. Read it now.

3. Service Credit for Tiers 2 Through 6

The service credit you earn as a NYSLRS member is an important factor in the calculation of your pension. This publication explains the service you can earn credit for and how you can request to purchase credit for additional public employment or military service. Read it now.

4. What If I Leave Public Employment?

While we hope you stay a NYSLRS member throughout your working career, we understand that circumstances can change. If you leave public employment, this publication explains what you’ll need to do and what happens to your NYSLRS membership. Spoiler: It depends on how much service you have. Read it now.

5. What If I Work After Retirement?

Generally, NYSLRS retirees under age 65 can earn up to $35,000 per calendar year from public employers in New York State without affecting their NYSLRS pension. However, you should be aware of the laws governing post-retirement employment and how working after retirement may impact your retirement benefits. If you are considering working while collecting your pension, you should read this publication. If you already work in public employment as a NYSLRS retiree, read our Update Regarding Retiree Earnings Limit blog post for information about recent legislation and Governor’s executive orders that affect the limit.

Other Publications

Looking for other retirement plans? Maybe you’re a police officer, a firefighter, a sheriff or a correctional officer. You can find your retirement plan publication on our website. Visit our Publications page for more general information topics such as Life Changes: Why Should I Designate a Beneficiary?

Are You Prepared for a Long Retirement?

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As you plan for retirement, you need to think about your sources of income in retirement. However, you should also consider how long your retirement income will need to last.

Longer Life Span, Longer Retirement

These days, a 55-year-old man can expect to live for another 27.4 years, to about 82. A 55-year-old woman can expect to live for more than 30 years. These figures, derived from the Social Security life expectancy calculator, are only averages. They don’t account for factors such as health, lifestyle or family medical history.

life expectancy statistics to help plan for a long retirement

Here are some other statistics worth considering as you plan for retirement (as of the State fiscal year that ended March 31, 2022):

  • More than 37,000 NYSLRS retirees were over 85 years old;
  • More than 3,500 had passed the 95-year mark; and
  • 401 NYSLRS’ retirees were 101 or older.

Considering that many public employees can retire as early as 55, it’s possible that a fair number of them could have retirements that last 45 years or more.

Saving for a Long Retirement

Your NYSLRS pension is one source of income that you can depend on however long your retirement lasts. Employees’ Retirement System (ERS) members who retired in fiscal year 2022 are receiving an average monthly pension of $2,748. Social Security is another long-term source. The average Social Security benefit for a retired worker was $1,837 a month, as of June 2023.

Your retirement savings is a crucial asset that can supplement your pension and Social Security. In a long retirement, savings can help with rising costs and provide a source of cash in an emergency.

It is never too late to start saving for retirement. The New York State Deferred Compensation Plan is one easy way to get started. It’s a 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.)

You should also visit our Start Saving for Retirement page. You’ll find an example of how much you can save over a 30-year period, and a sample withdrawal strategy designed to provide retirement income for 20 years.

Your NYSLRS Pension Benefit

Your NYSLRS pension is a lifetime benefit that will provide monthly payments throughout your retirement. Get a head start on your retirement planning and estimate your pension in Retirement Online.

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). You can start by saving as little as $10 per pay period. That 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.

Popular Blog Posts You May Have Missed

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New York Retirement News is dedicated to keeping NYSLRS members and retirees informed about developments that may affect their benefits. In case you missed them, or just want to take another look, here are some of our most popular blog posts from the past year.

popular blog posts
 
  1. Becoming Vested
    Becoming vested is a crucial milestone in your NYSLRS membership. Under legislation enacted in April 2022, Tier 5 and 6 members are now vested after five years of service. Previously, these members needed ten years of service credit to be eligible for a service retirement benefit.

  2. Update Regarding Retiree Earnings Limit
    Normally, most NYSLRS retirees who return to work for a public employer are limited in how much they can earn before their pension would be suspended. The limit is $35,000 per calendar year, however, executive orders from the Governor and legislation temporarily suspended this limit. Read the blog post for current information.

  3. Enhanced Death Benefit for Survivors of COVID-19 Victims
    Survivors of NYSLRS members who contract COVID-19 on the job may be entitled to an enhanced death benefit if the member dies as a result of the disease. This accidental death benefit covers eligible deaths through December 31, 2024.

  4. Find Your Retirement Plan Publication
    Your retirement plan publication is an essential resource that provides comprehensive information about your NYSLRS benefits. It explains how long you’ll need to work to receive a pension, how your benefit is determined, what death and disability benefits may be available and more. Our new tool can help you find your plan publication.

  5. What is a Defined Benefit Plan?
    As a NYSLRS member, you are part of a defined benefit plan, also known as a traditional pension plan. Defined benefit plans are often confused with defined contribution plans, but there are major differences between the two types of plans.

Other Popular Blog Posts

Our blog covers a variety of topics, including supplementing your NYSLRS pension with retirement savings, new retirement online features for retirees and age milestones for retirement planning. We also busted some common retirement myths. Keep reading for more posts on NYSLRS benefits, legislation updates and other retirement information. If you haven’t already subscribed to New York Retirement News, fill out our Subscribe form now to receive an email when we publish new posts.

Thank you for reading New York Retirement News!

Requesting Additional Service Credit

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Service credit is one of the major factors in calculating your NYSLRS pension. You earn a year of service credit for each year of full-time employment with a participating employer. In some cases, you may also be able to request additional credit for past service, which could increase your pension amount.

You can request credit for past service if you:

  • Worked for a participating employer before joining NYSLRS;
  • Worked for a public employer that later participated in NYSLRS; or
  • Received an honorable discharge from active military duty.

In most cases, you have to pay to receive additional service credit. The sooner you purchase your credit, the less it will generally cost. You must apply for any additional service credit that you wish to receive before you retire. After you apply, we’ll determine whether you’re eligible for the credit and how much it would be.

Credit for Previous Public Employment

Additional service credit includes work for an employer who later joined NYSLRS, or for public employment before you became a NYSLRS member.

Example:
You worked at the town library while going to school and, as a part-time employee, you chose not to join NYSLRS. When you graduated and took a full-time job at the Town Supervisor’s office, you were required to join. You can request credit for the part-time service at the library.

When you apply, you’ll be asked for the name of the employer and the approximate dates you worked there. We encourage you to submit any proof you may have of your previous service. We will also reach out to your former employer, but you may be able to expedite the process by providing payroll records such as W-2 forms or pay stubs to NYSLRS when you apply.

You must earn two years of service credit as a member before additional service can be credited to you.

Military Service Credit

If you served in the U.S. armed forces, you may be eligible to purchase credit toward your retirement for your military service, regardless of whether your military service was before or after you joined NYSLRS.

There are different sections of the law that allow credit for military service. The amount of military service credit you can receive, and the cost (if any), will vary depending on which section of the law allows the credit. Reserve and National Guard service may qualify if it’s considered active duty.

For requests for military service credit, you will need to include a copy of your Certificate of Release or Discharge from Active Duty (DD-214).

For certain military service, you must have five years of member service credit before you can apply. 

How to Request Additional Service Credit

You can apply for additional service credit and military service credit in Retirement Online. Sign in to your account, scroll down to the ‘My Account Summary’ section of your Account Homepage and click the “Manage My Service Purchases” button, then click “Request Additional Service Credit.” If you are applying for military service credit, select “Article 20 Military” when asked for your employer.

You can also complete and submit a Request to Purchase Service Credit form (RS5042). You can attach your form (and any supporting documents) to our secure contact form or mail it to NYSLRS, 110 State Street, Albany, NY 12244-0001.

More Information

There may be other ways to increase your retirement service credit. If you had a previous membership in a New York State public retirement system and it was terminated, you may be able to reinstate your membership. If you still have an active membership in another public retirement system, but you are no longer working for the employer that participates in that retirement system, you may be able to transfer that membership to NYSLRS.

A word of caution — there are certain situations where purchasing additional service credit will not increase your pension. For example, special retirement plans for police officers and firefighters allow retirement after 20 or 25 years of service regardless of age, but not all types of public employment count toward the 20 or 25 years in these plans. Contact us if you have questions.

For more information about purchasing additional credit: