Planning For a VRS Retirement
Agenda At the end of this presentation, you will be able to: Determine if you are eligible for retirement Select the best payout option for you Understand your additional benefits Navigate the application process
Determining retirement eligibility
Retirement Requirements VRS Members Reduced Benefit Age Years of Service + + 50 10 55 5 Unreduced Benefit Age + + Years of Service 50 30 65 5
Benefit Calculation Age Service Average Final Compensation An additional factor is used to calculate your reduced retirement benefit
Choosing a payout option
Payout Options Basic Benefit Survivor Option Advance Pension Option Partial Lump-sum Option Payment
Basic Benefit Maximum monthly benefit Lifetime benefit Paid to VRS member only Cannot be changed after retirement
Survivor Option Benefit paid to your survivor Benefit reduction is based on: Percent you choose Age difference between you and your survivor
Advance Pension Option A higher benefit during the early years of retirement Reduces at the age you select between 62 and your normal Social Security retirement age
Advance Pension Option Based on your estimated Social Security benefit Stand-alone option Not available under 50/10 Reduced benefit cannot fall below one-half the basic benefit you would have received
Example #1 Basic Benefit vs Advance Pension Option Average Final Compensation: $56,000 Years of service: 24 years 0 months Age at retirement: 57 years 0 months
Example #1 Basic Benefit Monthly benefit: $ 1,241.41 Advance Pension Option Benefit before age 62: $ 1,788.97 Benefit after age 62: $ 888.97 Social Security at age 62: $ 900.00
Partial Lump-Sum Option Payment Available when you choose the Basic or Survivor Option Lump-sum distribution of up to three times your annual benefit Requires you to work past full retirement age for one, two or three years
Example #2 50% Survivor Option vs PLOP with a Survivor Average Final Compensation: $56,000 Years of service: 33 years 2 months Age at retirement: 57 years 0 months
Example #2 50% Survivor Option: Monthly benefit: $ 2,351.79 Survivor s monthly benefit: $ 1,175.90 PLOP with 50% Survivor Option: 3 year PLOP: $ 94,724.28 Reduced monthly benefit: $ 1,859.28 Survivor s monthly benefit: $ 929.64
Things to Consider Basic Benefit Survivor Option Advance Pension Option PLOP paid only to you benefit is reduced VRS benefit reduces at selected age possible tax penalty paid from member contribution account first paid from member contribution account first
VRS Web Site www.varetire.org
Understanding your additional benefits
Basic Group Life Insurance At retirement: Coverage continues at no cost to you Natural death benefit and accelerated death benefit continue Your life insurance begins to reduce after retirement
Optional Life Insurance Continue a portion of Optional Life Insurance into retirement At retirement: You must elect the coverage within 31 days of retirement Coverage begins to reduce when you reach age 65 and ends at age 80
Life Insurance Benefits Minnesota Life (800) 441-2258 (toll free) Joe Member 123 Main St Anytown, VA 22222 Minnesota Life P.O. Box 1193 Richmond, VA 23218-1193
Death-In-Service Benefits If you die while in a VRS-covered position: A benefit is paid to your beneficiary Paid in lump-sum or as a monthly benefit
Order of Precedence Spouse Child(ren) Parent(s) Executor or Administrator of the Estate Next of kin under laws of state where member resided at time of death
Updating Beneficiary Information Complete a Designation of Beneficiary (VRS-2)
Health Insurance Credit Eligibility 15 years of service Pay a monthly premium for individual health insurance coverage
Cost-of-Living Adjustments Annual adjustment made on July 1 First COLA effective July 1 following the first full calendar year of retirement
Applying for retirement
Applying for Retirement Benefits Apply 2 to 3 months before the date you want to retire Obtain the retirement application booklet from HR or www.varetire.org
Required Forms
Other Forms
Other Documents Legible copy of your birth certificate For the survivor option, a legible copy of your survivor s birth certificate
Retirement Certificate Your date of retirement Type of retirement Total credited service Payout option Monthly benefit Average Final Compensation Tax information Life insurance
Monthly Benefit Payment Your retirement application must be received at least 60 days prior to your retirement date Your first monthly benefit payment should be deposited on the 1st of the month following the month of your retirement
Monthly Benefit Payment An earnings statement will be mailed for your 1st check After that, you will only get one when there is a change to your deposit amount or change in bank account
Retirement Strategies Increase Service Credit: Purchase Prior Service Credit Convert Service Credit From Sick Leave payout Investigate other agency benefits
Retirement Strategies Maximize contributions to your employer s deferred compensation plan Utilize the catch-up provisions: Age 50+ Standard Roll over payments at termination: Partial Lump-sum Option Payment
Pieces of Your Financial Future
Communicating with VRS E-mail: vrs@varetire.org Mailing address: Joe Member 123 Main St Anytown, VA 22222 VRS P.O. Box 2500 Richmond, VA 23218-2500 Toll Free: (888) VARETIR (827-3847) Fax: (804) 786-1541
Questions? Thank You