Friday Top Five May 31 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From US News and World Report's Money Blog: 5 Reasons Your Credit Score Matters During Retirement

  • Refinancing your mortgage

  • Getting the best rewards credit card

  • keeping great insurance rates

  • Helping you spot identity theft

  • Second acts

From the Las Vegas Sun: Ask the Right Questions on Social Security, Health Care

In this opinion piece, AARP President Rob Romasco focuses his efforts on conveying "AARP's most important mission: making sure that more than 100 million Americans age 50 and older are able to live a vibrant life, with dignity and purpose."

From Pension Dialog: Are Pensions Relevant?

According to a benefit "specialist" at the law firm McDermott Will & Emory, the answer to that question is no. We beg to differ, as do our friends at Pension Dialog!

From the Center for Retirement Research at Boston College: How Important Is Medicare Eligibility in the Timing of Retirement?

The brief’s key findings are:

  • Although Social Security’s “Full Retirement Age” has moved to 66, 65 remains a popular age to withdraw from the labor force.

  • One reason might be the availability of Medicare at 65, particularly for workers who have employer coverage while working but not after they retire.

  • The analysis, which relates retirement patterns to health coverage, suggests that Medicare explains about 30 percent of the continued spike in age-65 retirements.

  • And, as anticipated, those who would lose employer coverage if they retired before 65 appear to be the most affected by Medicare eligibility.

From aiCIO: DB Plans Outperform DC by Widest Margin Since 1995

From the article: "Since the beginning of our study, DB plans have consistently achieved better investment returns than DC plans, except during boom stock market years," said Towers Watson's Chris DeMeo, head of investment for the Americas. "However, the spread between the two has been narrowing, and with many sponsors adjusting the asset allocation strategy of their DB plans to better match assets to liabilities, the disparity may diminish further in the future."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

The Longevity Revolution

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"For over 35 years, Dr. Ken Dychtwald has been recognized as the foremost visionary and original thinker regarding the lifestyle, financial, healthcare, and marketing implications of the longevity revolution." Dychtwald says "the longevity revolution is non-trivial. It changes everything." Published on 4.8.13, this 43 minute video features Dychtwald's 2013 American Society on Aging (ASA) presentation "Transforming Retirement."

In it, Dychtwald covers five themes, or converging forces, that stitch together:

1) The Longevity Revolution: The arrival of the 20th century and the growth of public health departments changed the future of retirement. In addition to the emergence of antibiotics, extraordinary breakthroughs of food distribution and refrigeration, pharmacological advances, there has also come an alteration in our life expectancies. Notions of retirement didn't matter before because you wouldn't live to see it. "Two-thirds of all the people who have ever lived past 65, in the entire history of the world, are alive today."

2) A Longevity Bonus: Think about the difference between a linear lifespan vs. cyclic lifespan. "Informed by longevity, rather than having more old people being old the same way longer, the whole life course is redistributing, rethinking itself."

3) Financial Wake-Up Call: (financial mind shift) There have been shifts in pension plans from Defined Benefit plans to Defined Contribution plans and [many] have no discipline in terms of saving. Dychtwald says [many in] the United States are terrible at managing money and health.

4) New Retirement Lifescape: Webster's definition of retirement is to disappear, go away, withdraw. Dychtwald sees a new definition of retirement emerging, illustrated by these five stages of retirement:
  • Imagination
  • Anticipation
  • Liberation
  • Reorientation
  • Reconciliation
5) Retirement Finds a New Purpose: What is the purpose of longevity? Is retirement the beginning of the end? Is it a time for rest and relaxation? Or is it an opportunity for a new chapter in life?

Be sure and check out the Sony commercial that begins at the 12:07 mark of the video. And here's a summary of the original presentation that Dychtwald wrote for the HuffPost50 blog. Print Friendly and PDF

Friday Top Five May 24 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the blog at Today: Great Recession Will Haunt Millions Into Their Retirement Years, Study Finds

A new study by Pew Charitable Trusts, Retirement Security Across Generations: Are Americans Prepared for Their Golden Years? shows that "Gen-X is the first generation that’s unlikely to exceed the wealth of the group that came before it and face downward mobility in retirement...and they have lower financial net worth than previous groups had at this same age and they lost nearly half of their wealth in the recession.” Key findings include:

  • Early boomers are financially prepared for retirement

  • Wealth accumulation and savings for Americans born after 1955 is mixed

  • Baby boomers and Gen-Xers have significantly lower asset-to-debt ratios than do older Americans

From The Detroit News Politics Blog: Clean up Detroit's Pension Mess

In this opinion piece, author Jeff Hadden suggests that once Detroit's emergency manager reports on the city's pension funds, officials might want to again try to figure out a way to keep Detroit's pension funds from being exploited, as they have been in the past. "Perhaps the logistics of transferring the Detroit systems to [the Municipal Employee Retirement System] MERS are too complex or expensive. But after (Emergency Manager) Orr’s task force completes its examination of the systems, some other structure– one that wouldn’t make it so tempting for city employees, trustees and would-be investors to misuse their positions or the pension assets – is in order. The sorry record of bribery deals doesn’t inspire confidence in the current pension set-up."

From Bloomberg: Illinois Pension Fix Seen in Best Rally Since 2011: Muni Credit

From the article: "Illinois debt is rallying the most since 2011 as investors bet lawmakers will end two decades of inaction and pass a measure to fix the worst-funded U.S. state pension system.

With 11 days left in the budget session, each legislative chamber has approved a pension-overhaul bill. The house plan will save $150 billion over 30 years, while the senate version, endorsed by public-employee unions, would cut the shortfall by about $50 billion. Passing either may halt downgrades that have made Illinois the lowest-rated state."

From the University of Michigan News Service: The New Retirement: No Retirement?

According to the conclusion of a recent article in the current issue of the ISR Sampler, the annual magazine of the University of Michigan Institute for Social Research, "for growing numbers of Americans, the new retirement may really mean no retirement."

"The New Retirement: No Retirement? by Susan Rosegrant, appears in the Spring 2013 issue of the ISR Sampler. Read the full article, including stories of those who've chosen different retirement, or unretirement, paths, at"

From HuffPost POST50: When You Haven't Saved Enough for Retirement

Some great suggestions for what to do if you are over 50 and haven't saved enough for retirement, from an article that first appeared on the personal financial site

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

BackDROP Funds That are Rolled Over to Deferred Comp

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How are backdrop funds that are rolled over into deferred comp accessed? Do the proof of emergency forms still have to be completed
BackDROP funds that are rolled to the deferred compensation plan will be placed in the 401(a) source of your account. If you’re 55 or older the year you separate from service (terminate), then you can access 401(a) funds without paying a 10% penalty (the Plan is required to withhold 20% of each payment for federal income taxes). If you’re younger than 55 when you retire, you still have access to 401(a) assets, but you must pay the additional 10% penalty for any distribution that occurs before age 59 ½. As a reminder, you will have penalty-free access to the assets in your 457 source (these are monies you have contributed to the plan throughout your career), at any age once you separate from service.

To answer your second question, you do not need to complete an unforeseeable emergency form to gain access to your money after separation from service. You can withdraw funds online in Account Access at or by calling the Plan Information Line at 800-392-0925.

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HB 233: 2013 Legislative Session

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Does SCS HCS HB 233 -- State Employee Benefits affect BackDROP lump sum payments?
No, HB 233 does not affect BackDROP lump sum payments.

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When C+I ≠ B+E

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This is a good illustration of C+I=B+E, which MOSERS does not have a problem with. Also, the state of Missouri has always made the required contributions certified annually by the Board of Trustees.

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Medical Premium and BackDROP

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Does an employee continue to accrue the 2.5% per year medical premium incentive during BACKDROP years if the employee has not already reached the maximum allowable of 65% decrease for the medical premium effective with retirement? Thank you.
Yes. The contribution toward your health care premium is based on your years of service with the state at retirement. It is calculated by using the number of full years of service multiplied by 2.5 percent. The maximum contribution cannot exceed 65 percent. Electing BackDROP does not reduce the years of service used to calculate the retiree medical subsidy.  MOSERS reports the total creditable years of service to Missouri Consolidated Heath Care Plan, which may include service credit for unused sick leave.  For additional information about your health care, MCHCP can be reached at

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Friday Top Five May 17 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From The New York Times: How They Do It Elsewhere

From the article: "A new report ranking various countries’ retirement systems gives the United States a C, considerably worse than the A received by Denmark and the B-plus given to the Netherlands and Australia. The study, by the Mercer consulting firm and the Australian Center for Financial Services, weighs adequacy of benefits, breadth of coverage and other factors, and points to numerous weaknesses in the American system."

Also from the New York Times: Pension Predators

In this NYT editorial, NY Governor Andrew Cuomo is praised for his actions in "ordering New York’s top banking regulator to investigate 'pension advance' firms that persuade customers to sign over all or part of their monthly pensions in exchange for immediate cash payments."

From Forbes: Five Retirement Myths Worth Changing

The five myths, laid out by psychologist and the guru on the aging of America Ken Dychtwald, include:

  • People are saving enough for retirement

  • The linear life plan

  • The old retirement definition

  • The disengagement policy

  • The static financial state

From the Squared Away Blog: Our Mission at Year 2

We often highlight blog posts from the Squared Away blog, a favorite of ours from the Center for Retirement Research at Boston College. This post outlines their renewed mission on their second anniversary (a focus on financial behavior, the latest research, and providing helpful material for people of all ages) and includes links to readers' 10 favorite articles from 2013 so far.

From the Administration on Aging: May is Older Americans Month

Older Americans Month is a proud tradition that shows AOA's commitment to honoring the value that elders contribute to our communities. This year’s Older Americans Month theme—“Unleash the Power of Age!”— highlights the significant contributions made by thousands of older Americans across our nation. Check out their website, including activity ideas and a social media gallery

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Explanation of BackDROP and Payment Options

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I just spoke to a retiree. She told me that your backdrop actually comes off the end of your retirement payments. In other words do we get less number of monthly payments? Please explain how that works. Also,she stated we have to have taxes taken out if we get more than 2 years back drop. Is that true? I plan on retiring in less than 3 years so would like lots of time to decide how to handle that money. Thank you for your time and help.
Whether or not you choose to take the BackDROP does not impact the number of monthly benefit payments you receive. Once you retire as a vested member of MOSERS, you will receive a monthly retirement benefit for the rest of your life. If you elect the BackDROP, the monthly benefit payable on your actual retirement date is based on the benefit you would have been receiving had you left employment and retired on an earlier date, referred to as the BackDROP date. In addition, you will receive a lump sum payment equal to 90% of the Life Income Annuity amount you would have received during the BackDROP period.

If you elect the BackDROP, you may receive your BackDROP lump sum distribution in one of three ways, all of which have some tax implications. If you receive the payment before age 59 1/2, you may have to pay an additional 10% premature distribution tax (see Special Tax Notice for exceptions).

Cash option – If you elect the cash option, the distribution will be paid directly to you. MOSERS is required to withhold 20% in federal tax withholding. The BackDROP distribution is considered taxable income for the year in which you receive the payment if you choose the cash option.

Rollover Option – If you elect the rollover option, your payment will be made directly to an individual retirement account (IRA), or if you choose, to another eligible employer plan [i.e. State of Missouri Deferred Compensation Plan, 403(b), 401(k), 401(a), etc.] that will accept your rollover. Your payment will not be taxed in the year of the rollover and no income tax will be withheld, unless it is a rollover to a Roth IRA. Otherwise, the payment will be taxed when you take it out of the traditional IRA or the eligible employer plan.

Combination Cash and Rollover Option – If you elect this option, you may specify the amount of your distribution to be made directly to an IRA or another eligible retirement plan. The balance will be paid to you (less the required 20% federal income tax withholding).

You can read more about BackDROP on our website. As always, we encourage you to meet with a Benefit Counselor to discuss your individual circumstances as you get closer to retirement.

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Purchasing Service with BackDROP

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Why can't retirement, backdrop and service time credit purchase be calculated so that backdrop funds can be used to buy military time in order to reach the two year minimum requirement for backdrop?
Missouri law (Section 104.606 RSMo) specifies that purchases of service must be completed prior to applying for retirement. Since BackDROP payments aren't issued until the end of the month of your effective date of retirement, they cannot be used to purchase military service.

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Friday Top Five May 10 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From Pension Dialog: Public Sector Cash Balance Pension Plans

From the post: "Louisiana is one of the most recent states to adopt a cash balance plan for newly hired public employees; however, the implementation of their plan was deemed as unconstitutional on technical grounds, and that ruling is under appeal to the Louisiana Supreme Court.... At issue is 'the lack of retirement security offered by the cash balance plan for members who have no Social Security safety net.'” Also included is a report on cash balance plans written by Paul Zorn, director of governmental research at Gabriel, Roeder, Smith & Company.

From NPR: John Bogle's Latest Advice: A 'Gatekeeper' For Your Nest Egg

John Bogle, founder of The Vanguard Group, says in this 3 1/2 minute interview, "corporations have shifted risk from their own backs in the typical pension plan to the backs of the individual investors. We're basically moving risk from generally sophisticated institutions to gravely undereducated investors. So I think we need a regulation that limits access to the retirement plan system of this country to those that are doing their best to give shareholders a focus on long-term investment, on low-cost, on broad diversification." Bogle was a featured guest on PBS's recent Frontline documentary "The Retirement Gamble" that we featured in our April 26 2013 FTF.

From the Squared Away Blog: Health Reform May Impact Your Finances

This is a post about how the Affordable Care Act, when fully implemented in 2014, may impact a person's decision to retire.

From the Pittsburg (PA) Post-Gazette: Protect Pennsylvania Pensions

In this well written opinion piece, Diane Oakley, executive director of the National Institute on Retirement Security (NIRS), discusses the Pennsylvania legislature's recent effort to dismantle that state's defined benefit pension plan and replace it with a 401(k)-type plan. She argues that if this were to happen, it would be at the expense of state employees, would harm Pennsylvania's economy and make it more difficult for the state to recruit and retain qualified employees. It would also make retirement security less attainable for the state's retirees. NIRS puts great effort into the defense of defined benefit plans at the national level.

From PlanSponsor: Financial Resources for Retirement Changing

This article summarizes the responses from a January 2013 Merrill Lynch survey which was done in partnership with Age Wave. Among other things, the survey asked respondents' views on motivation for post-retirement careers, retirement worries, income sources in retirement, where they expect their money to be spent in retirement, and investing expectations. The survey included more than 6,000 respondents age 45 and older.

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Accessing Rumor Central From a State Computer

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Why can I no longer access rumor central on my state computer?
Rumor Central is linked from the MOSERS official website. It always has been housed on Google's Blogger software, so we don’t know why this would just now be prohibited. Check with your agency to see if this is a policy, or if it is unintentionally being blocked, perhaps because it is in a blog format. Let us know what you find out and, if possible, we can work with the department to help to make this important communication tool accessible, while adhering to any security concerns the agency may have.

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Friday Top Five May 3 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From Pension Dialog: Retirees and Volunteerism

A nod to the link between retirement security and retirees' ability to give back to their communities through volunteerism.

From Segal: Moody’s Revised New Approach to Adjusting Reported State and Local Government Pension Data

In this bulletin from Segal, a private employee-owned actuarial and consulting firm, they discuss the background, the adjustments that Moody's has made, as well as the implications of the changes to how total state pension liabilities are reported. From the bulletin: "Moody’s received many comments, including from The Segal Company, that these adjustments will further confuse investors, government officials and the public about the viability of an entity and how the pension fund fits into a government’s overall fiscal health profile. It remains to be seen if these adjustments are used only for rating purposes — as Moody’s intends — or if they add factors that provide little to increase the clarity with respect to the funded status of public employee retirement systems."

From The St. Louis Post-Dispatch: Are Retirees 'Mooching' Off Social Security?

This well written piece by SLPD columnist Jim Gallagher helps us understand how the Social Security trust fund is funded, and the various proposals that are circulating now in an effort to keep it solvent, including a proposal to "scrap the cap," as more and more boomers retire. Currently there is a cap on the amount of wages that are subject to Social Security payroll taxes. Eliminating that cap, some argue, would go a long way toward eliminating any Social Security funding shortfalls. Also, here's a bonus video from, a project of the Economic Opportunity Institute.

From InvestmentNews: Advisers Stung by 'Frontline' Attack

In last week's FTF, we linked to the PBS Frontline documentary called The Retirement Gamble. According to this article, "the...documentary that highlighted American workers' biggest obstacles in saving for retirement left a bad taste in the mouths of advisers and industry representatives."

From the State of Missouri Deferred Compensation Plan: April 2013 DC Update

With the airing of the Frontline documentary and all the talk of fees, the State of Missouri Deferred Compensation Plan took the opportunity to discuss its low fees and how those low fees translate into more money for participants. This 5-minute video is well worth the watch.

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF