Tag Archives: retirement

Financial Literacy and Retirement

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April is National Financial Literacy Month, a time dedicated to helping people make informed financial decisions and manage money effectively. Financial literacy means understanding and using skills such as budgeting, investing and managing your personal finances.  

Greater financial literacy generally translates into greater financial well-being, according to a recent report from the TIAA Institute-GFLEC Personal Finance Index. TIAA’s research also finds a connection between financial literacy and saving for retirement.

Financial Literacy and Retirement

Financial Literacy and Planning for Retirement

Increase your financial literacy and make a good plan for retirement by understanding your NYSLRS benefits, your other sources of retirement income and your current financial situation. Once you know where you stand, you’ll be in a better position to plan.

Understand Your NYSLRS Benefits

As a NYSLRS member, you are enrolled in a defined benefit plan, also known as a traditional pension plan. If you are vested and retire from NYSLRS, you will receive a monthly pension payment for the rest of your life. Your pension will be calculated using a formula based on your earnings and years of service, your retirement plan, and your tier. 

Find your retirement plan publication for comprehensive information about the benefits you are entitled to receive as a member of the Employees’ Retirement System (ERS) or the Police and Fire Retirement System (PFRS).

Depending on your tier and retirement plan, certain membership milestones will affect how your pension is calculated and how much you’ll receive at retirement. Read our milestones blog posts for general information about the retirement plans that cover most NYSLRS members:

Consider Other Sources of Retirement Income

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.

The formula for a financially secure retirement

Retirement savings can be an important financial asset when you retire. Savings can provide money for you to travel, continue your education, pursue a hobby or start a business. The money you set aside can also be a resource in case of an emergency, act as a hedge against inflation and boost your retirement confidence.

Evaluate Your Current Financial Situation

Estimate Your Retirement Income

An estimate of your NYSLRS pension benefit is essential for effective retirement planning. Most members can create their own estimate in minutes using Retirement Online. Your estimate will be based on the most up-to-date account information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit.

There are also a variety of online calculators that can help you estimate the retirement income you might expect from Social Security or personal retirement savings.

Create a Budget

Use our Monthly Income & Expenses Worksheets to help you track your current spending habits and project your future needs. Remember to account for non-monthly expenses, such as car insurance, property taxes and school taxes.

Pay Down Your Debt

If you’re planning to retire soon, it’s a good idea to take inventory of any debt you owe. Debt is not necessarily bad but paying it down can give you more flexibility to enjoy the type of retirement you want.

Overtime Limits for Tier 5 and 6 Members

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Tier 5 and 6 members are subject to limits on the amount of overtime that can be included in their pension. You can earn overtime pay beyond the overtime limit, but it won’t be factored into your pension calculation. And you don’t pay member contributions on overtime pay that is above the limit.

Overtime Limits for Tier 5 and 6 Members

Tier 5 Overtime Limits

The overtime limit for Tier 5 Employees’ Retirement System (ERS) members increases each calendar year by 3 percent. In 2024, the limit for Tier 5 ERS members is $22,688.85.

For Tier 5 Police and Fire Retirement System (PFRS) members, the overtime limit is 15 percent of your regular earnings each calendar year.

For more information, visit our Overtime Limits for Tier 5 page.

Tier 6 Overtime Limits

The overtime limit for Tier 6 ERS members increases each calendar year based on the annual increase of the Consumer Price Index (CPI). In 2024, the limit for Tier 6 ERS members is $20,459.

For Tier 6 PFRS members, the overtime limit is 15 percent of your regular earnings each calendar year.

For more information, visit our Overtime and Earnings Limits for Tier 6 page.

Your Pension Benefit Calculation

Your NYSLRS pension will be based on your service credit and final average earnings (FAE). Your FAE is the average annual earnings you receive during the period when your earnings are highest (36 consecutive months for Tier 5 and 60 consecutive months for Tier 6). Your FAE will include overtime pay you earned up to each annual limit.

Your FAE may be limited in other ways. For example, for most members, if your earnings increase significantly in the years used for your FAE, some of those earnings might not count toward your pension. The specific limits depend on your tier. Visit our Final Average Earnings page for more information about this limit.

For Tier 6 members, the earnings that can be used toward your pension are also limited to the Governor’s salary.

Read Your Plan Publication

Your retirement plan publication provides specific information about the earnings that will be used to calculate your pension. Visit our website to Find Your NYSLRS Retirement Plan Publication.

Estimate Your Pension in Retirement Online

Most members can create their own pension estimate in minutes using Retirement Online. You can enter different retirement dates to see how those choices would affect your benefit. Sign in to Retirement Online and click the “Estimate my Pension Benefit” button to try it.

Your Death Benefit Beneficiaries

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NYSLRS retirement plans provide death benefits for beneficiaries of eligible members who die before retiring. If you are retired, your beneficiaries may be entitled to a post-retirement death benefit.

It’s important to name beneficiaries and review them periodically. Life circumstances sometimes change, and the beneficiary you named before might not be the one you would choose today. For example, if you just married, you may want to update your NYSLRS account information to name your new spouse as your beneficiary.

2 Types of Beneficiaries

  • Your primary beneficiary will receive your death benefit. You can list more than one primary beneficiary. If you do, they will share the benefit equally. Or you can choose different percentages for each beneficiary to total 100 percent. (Example: John Doe, 50 percent; Jane Doe, 25 percent; and Mary Doe, 25 percent.)
  • A contingent beneficiary will only receive a benefit if all your primary beneficiaries die before you do. If you list multiple contingent beneficiaries, they will share the benefit equally unless you choose different percentages.

Special Beneficiary Designations

Your beneficiary doesn’t have to be a person. You can name a charity, a trust or your estate as your beneficiary.

Special Beneficiary Designations for Your NYSLRS Death Benefit
  • Estate. When you die, your estate is the money and property you owned. Your death benefit will be given to the executor of your estate to be distributed according to the terms of your will. You can name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as the primary beneficiary, do not name a contingent beneficiary.
  • Trust. You can name a trust as a primary or contingent beneficiary if you have a trust agreement or provided for a trust in your will. The trust itself would be your beneficiary, not the individuals for whom you established the trust. (Speak with your attorney if you’re thinking about making your trust a beneficiary.)
  • Entity. You can also name any charitable, civic, religious, educational or health-related organization as a beneficiary.
  • Minor children. If your beneficiary is under the age of 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may instead choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Custodians can be designated in Retirement Online or you can contact us for more information and the appropriate form before making this type of designation.

Keep Your Beneficiaries Up to Date

You can change your beneficiaries at any time. In addition to adding or removing them to reflect your current wishes, you should review the contact information for your named beneficiaries so we can find them when needed.

The fastest way to view or update your beneficiaries is in Retirement Online.

Find More Information

If you are not yet retired, you can read more about beneficiary designations in Life Changes: Why Should I Designate a Beneficiary?

If you are retired, you may wish to read our Can You Change Your Beneficiary After You Retire? blog post.

How Your Tier 6 Contribution Rate Can Change

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Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members (those who joined NYSLRS on or after April 1, 2012), that percentage, or contribution rate, can change from year to year based on your earnings. The minimum rate is 3 percent of your earnings, and the maximum is 6 percent.

Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates

The 2024–25 State budget included a new law which temporarily excludes overtime pay from the calculation of Tier 6 contribution rates. This may lower contribution rates for some Tier 6 members from April 1, 2024 through March 31, 2026.

For more information, read our blog post, Overtime Pay Temporarily Excluded from Tier 6 Contribution Rates.

Tier 6 contribution rates

When Tier 6 Contribution Rates are Determined

A Tier 6 member’s contribution rate is calculated annually. New rates become effective on April 1, the beginning of the state’s fiscal year. Once your rate is determined for a given fiscal year, it doesn’t change for the rest of that fiscal year. We provide rates to your employer in March, a few weeks before they need to apply any rate changes.

How Your Tier 6 Contribution Rate is Calculated

If you are a new NYSLRS member, during your first three years of membership your contribution rate is based on an estimated annual wage that your employer provided when you were enrolled as a new member.

If you have been a member for three or more years, NYSLRS calculates your rate using the earnings reported to us by your employer from the last completed fiscal year, April 1, 2022 through March 31, 2023.

Rates are calculated using your base pay, which includes:

This video will help explain how your contribution rate is determined:

How Your NYSLRS Pension Works

The amount you contribute to the Retirement System does not affect the amount of your pension. A NYSLRS pension is a defined-benefit plan. Under this type of plan, once you are eligible for a pension and apply for retirement, you will receive a monthly payment for the rest of your life. The amount of your pension will be calculated using a formula based on your retirement plan, years of service and final average earnings.

You can learn more about how your pension will be calculated by reading your retirement plan publication. Use our Find Your NYSLRS Retirement Plan Publication tool to find yours.

Your Retiree Annual Statement: Now Available Online

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Your Retiree Annual Statement is now available in Retirement Online! Retirees who opted to go paperless already received an email notifying them that their Statement is available in their Retirement Online account.

If you did not change your delivery preference to email, your Statement will be mailed by the end of February.

Get Your Statement Online Now

Whether you chose email delivery or not, you can access your Statement in your Retirement Online account now. To view, save or print your Statement:

If you don’t have an account, you can find step-by-step instructions for registering in the Tools & Tips section of the Retirement Online page.

Your Retiree Annual Statement is now available in Retirement Online

Inside Your Retiree Annual Statement

Your Statement has a new look this year, but it still contains the same information you receive every year about your benefit amount, deductions and tax withholding. Your Retiree Annual Statement includes:

  • Your NYSLRS ID. To protect your privacy, use this number instead of your Social Security number when conducting business with NYSLRS.
  • The total amount of your annual benefit. (This is your base benefit, before taxes, deductions and credits.)
  • Your total net benefit for the year. (This is your benefit after taxes, deductions and credits.)
  • The total amount of any cost-of-living adjustment (COLA), if you are eligible.
  • Your total Medicare credits (if eligible).
  • Federal tax withholding (if applicable).
  • Other deductions taken from your pension, such as payments to an alternate payee or union dues.
  • Health insurance premiums. (NYSLRS doesn’t administer health insurance benefits, but we deduct retiree premiums at the request of your former employer.)

Next Year Don’t Wait for the Mail

Going forward, your Statement will be available online in early February each year.

Update your delivery preference now to receive an email as soon as next year’s Retiree Annual Statement is available online:

  • Sign in to Retirement Online.
  • From your Account Homepage, click the “update” link next to ‘Retiree Annual Statement by.’
  • Choose “Email” from the dropdown.

If you choose to receive your Statement by email, you will not receive a printed copy in the mail.

Use Retirement Online to Stay Informed

Your Statement is a snapshot of your NYSLRS account as of December 31, 2023. For the most up-to-date information year-round, sign in to Retirement Online. If you don’t already have an account, you can learn more or register today.

In Retirement Online, you can view pay stubs for your benefit payments. Check them if you have a question or to track year-to-date totals of your pension benefit as well as any deductions for health insurance, union dues, tax withholding or disbursements under a domestic relations order.

Your Statement is Not a Tax Document

While your Retiree Annual Statement does include information about your benefit payments and tax withholding, it is not a tax document. If your pension is taxable, you should have received a 1099-R tax form (either through your Retirement Online account or by mail, depending on your delivery preference) for filing your taxes.

Retirees: Your 1099-R is Available Online

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Retirees: Your 1099-R is Available OnlineTax season is approaching, and with 1099-Rs available online, getting this key NYSLRS tax form is now faster and more convenient than ever.

Most NYSLRS pensions are subject to federal income tax (some disability benefits are not taxable). If you receive taxable income from NYSLRS, we provide a 1099-R tax form for filing your taxes. New this year, retirees who opted to go paperless received an email notifying them their 1099-R is available in their Retirement Online account. If you did not change your delivery preference to email, your 1099-R tax form will be mailed to you by January 31.

Understanding Your 1099-R

A 1099-R tax form is used to report the distribution of taxable retirement benefits. It shows:

  • The total benefit paid to you in a calendar year.
  • The taxable amount of your benefit.
  • The amount of taxes withheld from your benefit.

If you have questions about the information on the form, check our interactive 1099-R tutorial. It walks you through a sample 1099-R and offers a short explanation of each box on the form.

Get Your 1099-R Online Now

Whether you chose email delivery or not, you can access your 1099-R in your Retirement Online account now. To view, save or print your 1099-R:

  • Sign in to Retirement Online.
  • From your Account Homepage, click the “Manage My 1099-R Tax Forms” button.
  • Select “2023” from the dropdown.

If you don’t have an account, you can find step-by-step instructions for registering in the Tools & Tips section of the Retirement Online page.

Changing Your Federal Withholding

After you file your taxes, you may find that you need to adjust the federal taxes that are being withheld from your pension.

Retirement Online is the fast and convenient way to change your withholding information. You can also check your current withholding by signing in to Retirement Online and viewing your most recent pension pay stub. Visit our Taxes and Your Pension page for more information.

Note: New York State doesn’t tax your NYSLRS pension, and we can’t withhold income tax for other states.

Supplement Your NYSLRS Pension with Retirement Savings

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Your NYSLRS pension can provide a significant portion of your retirement income, but it’s also a good idea to supplement your pension and Social Security with a retirement savings account.

Retirement savings can be an important financial asset when you retire. Savings can enhance your retirement lifestyle and give you the flexibility to do the things you want. Your savings can provide money for you to travel, continue your education, pursue a hobby or start a business. The money you set aside can also be a resource in case of an emergency, act as a hedge against inflation and boost your retirement confidence.

Set a Retirement Savings Goal

How much to save is a personal decision, but here are some things to consider.

Financial advisers often recommend saving 10 to 15 percent of your gross earnings throughout your career to retire comfortably. However, that advice is aimed at people with 401(k)-style defined contribution retirement plans as their main source of retirement income.

As a NYSLRS member, you’re part of a defined benefit plan, also known as a traditional pension plan. Your pension, based on your years of service and earnings, will provide a lifetime benefit. You can estimate your pension in Retirement Online to get an idea of the income it will provide in retirement.

Having a pension means you may not need to save as much as someone with only a 401(k). Use a retirement savings calculator to see how much a retirement savings plan could yield over time, or test the results of different savings amounts.

Below you can see potential savings results of someone who invests 50 dollars every two weeks over 30 years. While the stock market can be turbulent over the long term, stock market returns average about 10 percent a year.

Saving for Retirement

As you get closer to retirement, you should develop a plan to withdraw money from your retirement savings. A withdrawal plan will give you a better idea of the income you might expect from your nest egg.

Here is one possible withdrawal strategy, which was designed to provide retirement income for 20 years. Please note, if your retirement is far in the future, the money you withdraw may not have the same value that it has today. However, while inflation has been high recently, it does cycle and has been lower in the past.

Withdrawing from Retirement Savings

If you find you’ll need to save more to meet your goal, you can make adjustments to help ensure you’ll have enough savings in retirement.

Deferred Compensation – A Way to Save

State employees and many municipal employees are eligible to save for retirement through the New York State Deferred Compensation Plan. Once you’ve signed up, your retirement savings, which may be tax-deferred, depending on your plan, will be automatically deducted from your paycheck. (The Deferred Compensation Plan is not affiliated with NYSLRS.)

Check with your employer’s human resources or personnel office to see if they participate in the Deferred Compensation Plan or if they offer other savings options.

Read More About Retirement Savings

You can find more information about saving for retirement in these posts:

10 Things All NYSLRS Retirees Should Know

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Retirees, brush up on your Retirement System knowledge!

10 Things All NYSLRS Retirees Should Know
  1. Get Your 1099-R Tax Form in Retirement Online
    Starting in 2024, your 1099-R tax form will be available in Retirement Online! Get yours faster and help us ‘go green’ — update your delivery preference now to receive an email when it’s ready, instead of waiting for it in the mail. (If you choose to receive your 1099-R by email, you will not receive a printed copy in the mail. Regardless of your delivery preference, you will be able to view and print your 1099-R by signing in to Retirement Online at the end of January.)
  2. Change Your Federal Tax Withholding in Retirement Online
    Retirement Online is the fastest way to update your withholding. Changes submitted by the middle of the month will generally appear in that month’s payment. Most NYSLRS pensions are subject to federal income tax (some disability benefits are not taxable).
  3. Not Taxed by New York State
    Your NYSLRS pension is not subject to New York State or local income taxes. Visit our Taxes and Your Pension page for more information. If you move to another state, your pension may be subject to that state’s income tax. If you’re thinking of moving to another state, check with that state’s tax department.
  4. Get Your Retiree Annual Statement in Retirement Online
    Starting in 2024, you can use Retirement Online to view and print your annual statement. Help us go green and update your delivery preference to receive an email when it’s available, instead of waiting to receive it in the mail.
  5. Manage Your Direct Deposit in Retirement Online
    Use Retirement Online to securely update your direct deposit bank account information. Whether you’ve switched banks or need to move your deposits to a different account, you can make those changes quickly with Retirement Online. Changes are generally applied within one to two payments. You can find out when your next pension payment is coming by checking our online pension payment calendar.
  6. Prove Your Pension Income Using Retirement Online
    You may need proof of your retirement income for housing or as part of an application for the Home Energy Assistance Program (HEAP). With Retirement Online, you can print or save an income verification letter any time you need one.
  7. Receiving Your Annual Cost of Living Increases
    Once you become eligible for a cost-of-living adjustment (COLA), you will receive a permanent increase to your pension amount every September. When your net benefit amount changes, NYSLRS will inform you.
  8. View Your Pension Payment “Pay Stub” in Retirement Online
    Sign in to Retirement Online to access full pay stubs for your pension payments. Select the date of the payment you want to review to see a breakdown of your pension payment, including your most recent COLA amount as well as any deductions made for health insurance, union dues, tax withholding or disbursements under a domestic relations order.
  9. You May Leave a Death Benefit
    Your survivors may be entitled to a death benefit after you die. Retirement Online makes it easy for eligible retirees to view their beneficiary selections, choose different beneficiaries or change contact information for an existing beneficiary. Anyone can report the death of a retiree by using our online death report form.
  10. Best-Funded, Best-Managed
    The New York State Common Retirement Fund holds and invests the assets of NYSLRS on behalf of members, retirees and their beneficiaries and continues to be one of the best-funded and best-managed public pension funds in the nation. Comptroller Thomas P. DiNapoli is the administrative head of NYSLRS and trustee of the Common Retirement Fund.

Not retired yet? Read our blog post 10 Things All NYSLRS Members Should Know.

Apply for Retirement in Retirement Online

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Ready to retire? Retirement Online makes it fast and convenient to apply for retirement. There are no forms to mail in and nothing to have notarized. If you don’t already have an account, sign up today.

As a reminder, you must submit your application 15 – 90 days before your retirement date. Before you apply for retirement, make sure you have proof of your date of birth on hand. If you choose a pension payment option that leaves a lifetime benefit to a beneficiary when you die, we will need proof of their birth date too.

Retirement Online Makes It Fast and Convenient to Apply for Retirement

From there, you’ll go through a series of screens where you’ll be able to:

  • Choose a retirement date;
  • Get an estimate of your pension and the payment options available to you;
  • Select a payment option;
  • Enter federal tax withholding information;
  • Sign up for direct deposit (have your bank account information ready);
  • Upload required documents, such as proof of date of birth;
  • Pay off your NYSLRS loan or service credit purchase; and
  • Review your employment history.

After you click the “Submit” button, make sure you receive a confirmation message that your retirement application has been successfully submitted before closing your browser.

One Exception — Disability Retirement

NYSLRS provides disability benefits for members who are permanently disabled and cannot perform their duties because of a physical or mental condition. Applications for disability retirement can’t be submitted in Retirement Online. Members who wish to apply for a disability retirement need to submit a paper application. Visit our Disability Benefits page for more information.

For Benefit Information, Read Your Retirement Plan Publication

Your service and disability retirement benefits and death benefits are based on your tier, plan, service credit, and other factors. For comprehensive information about your available benefits, find your NYSLRS retirement plan publication.

10 Things All NYSLRS Members Should Know

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Brush up on your Retirement System knowledge! Here are 10 things all NYSLRS members should know.

10 Things All NYSLRS Members Should Know
  1. Lifetime Retirement Benefit
    You are part of a defined benefit pension plan, which provides a lifetime benefit at retirement based on your earnings and years of service.
  2. Qualify for a Retirement Benefit by Becoming Vested
    Becoming vested is a key milestone in every NYSLRS member’s career. Once you’re vested, you have earned enough service to qualify for a retirement benefit, once you meet the minimum age requirements established by your retirement plan.
  3. Tier Determines Benefits
    Your tier determines your eligibility for benefits under your plan and how those benefits are calculated.
  4. Conduct NYSLRS Business Using Retirement Online
    Retirement Online is the fastest and most convenient way to do business with NYSLRS. It only takes a few minutes to open your account. Use Retirement Online instead of calling or mailing for instant access to benefit information and convenient tools to make account changes.
  5. Estimate Pension Using Retirement Online Calculator
    Most members can use Retirement Online to create benefit estimates based on the most up-to-date information we have on file. You can enter different retirement dates and payment options to see how those choices would affect your benefit.
  6. Use Plan Publication to Learn about Benefits
    Your retirement plan publication is a comprehensive source for information about your benefits.
  7. Pension Calculated Using Highest Earnings
    Your final average earnings (FAE) is another major factor in calculating your NYSLRS pension. When we calculate your pension, we find the set of consecutive years (one, three or five, depending on your tier and retirement plan) when your earnings were highest. 
  8. Request Past Service Credit Before Retirement
    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.
  9. NYSLRS Membership Includes Death and Disability Benefits
    NYSLRS membership provides more than just retirement benefits. If you become seriously ill or injured, you may be eligible for a disability benefit. And, you may also be eligible to leave a beneficiary a death benefit if you die while working for a public employer.
  10. Best-Funded, Best-Managed
    The New York State Common Retirement Fund holds and invests the assets of NYSLRS on behalf of members, retirees and their beneficiaries and continues to be one of the best-funded and best-managed public pension funds in the nation. Comptroller Thomas P. DiNapoli is the administrative head of NYSLRS and trustee of the Common Retirement Fund.

NYSLRS is one of the largest public retirement systems in America, serving more than 1.2 million members, retirees and beneficiaries. Read A Look Inside NYSLRS to learn more about your retirement system.