Friday Top Five: Retirement Related News for 5/30/14

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MO LAGERS: Retirement Security Series - Episode 1

(VIDEO) LAGERS Assistant Executive Secretary, Bob Wilson, discusses the importance of retirement security for our communities.

From Truth-Out Op-Ed The Wall Street Pension Scam

In recent years there has been a regular drum beat of news stories warning us about the enormous unfunded liabilities of state and local pension funds. Much of this has come from reports issued from well-endowed foundations, most notably the Pew and Arnold foundations who have a joint project on public pensions.

From Pensions & Investments Aegon: Fewer people expect to stop working at retirement age

A phased, flexible retirement is now the reality for the majority of employees, with 32% of respondents to a survey by Aegon expecting to stop work completely at retirement age.

From Pensions & Investments Appeals court rules S&P, Moody's must face CalPERS subprime lawsuit

A California Court of Appeals panel allowed a lawsuit by the California Public Employees' Retirement System to proceed against two firms' ratings on subprime mortgages that led to $800 million in losses for the $293 billion pension fund

From the Huffington Post  We Can Do Better for Mothers: 3 Ways to Shore Up Financial Security

Mom found herself in a situation where she had to live on half of my father's Social Security benefit and funds she set aside after the sale of the family home I grew up in. Her situation isn't unique. Women are almost twice as likely as men to live below the poverty line during retirement, and single and minority women struggle the most according to U.S. Government Accountability Office analysis of 2012 Census Bureau data.

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Long-Term Investment Returns

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Please comment on the article by Lenny Grover "Looming Public Pension Crisis is Bigger than it Appears" dated May 2014 in Seeking Alpha newsletter, in which he states that not a single public pension plan, including Missouri, has met its own benchmark rate of return for long term pension outlay sustainability. This was a very well done analysis. Does trouble loom ahead? We are watching you.
We are not certain what the writer considers to be “long-term.” However, for the past 20, 25, and 30 years our annualized returns as of the quarter ended March 31, 2014, were 9.0%, 9.3% and 10.2% respectively. The respective policy returns for those same periods were 7.9%, 8.3% and 9.8%, meaning that for those lengthy periods MOSERS’ actual returns exceeded the policy returns. Beyond that, for the bulk of those periods our assumed rate of return for funding purposes was 8.5% and it is currently 8.0%. Our actual long-term returns have exceeded those assumed rates.

The internet is a wonderful tool for the exchange of information.Unfortunately, it is also a vehicle that can be recklessly used to spew volumes of misinformation. That has certainly been the case regarding public employee retirement of late.  As Mark Twain said, “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”Correcting what writers maintain they know for sure that is simply incorrect would be a full time job for several people.

We are proud of our track record and are glad that you are watching. We hope you will continue to do so.
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Tough choices: College vs. Retirement

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If you are concerned about financing your children’s college education, you aren’t alone.  Parents everywhere are faced with the tough choice: should you pay for your children’s college or your own retirement? With rising tuition costs and an uncertain economic future, it’s hard to shrug off the feeling of responsibility towards your children. Providing for your own retirement can be crucial since no one offers grants, scholarships, or federally-guaranteed loans to support your retirement.

Think of it this way: flight attendants advise that in cases where an oxygen mask is needed, parents should secure their own before helping children. Yes, it goes against the “children first” mentality, but sometimes, in order to help others in the long-run, you have to safeguard yourself first.

The Cost of Retirement

When assessing the cost of retirement, it’s important to consider all the changing variables in your life. Shortchanging your retirement to help pay for college can backfire. While you’re avoiding your family being saddled with debt, you may increase the likelihood that your children will have to support you later in life.

In a recent Met Life survey, researchers found that the proportion of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years. The cost of leaving the work force to care for an elderly parent can top $300,000. In comparison, the average in-state tuition costs for a Missouri public four-year college run slightly lower than $10,000 – or an average of $40,000 to complete a Bachelor’s degree.

In 2011, the first of the baby boom generation reached what used to be known as retirement age. For the next 18 years, boomers will be turning 65 at a rate of about 8,000 a day. This massive phase-out, coupled with discouraging statistics on current retirement savings, will shape aspects of your family’s life.

The State of Missouri Deferred Compensation Plan is a convenient and affordable way to get your own mask secure by saving extra money for retirement. Online enrollment takes minutes to complete and the Plan’s custom investment lineup, highlighted by 13 Missouri Target Date Funds and a brokerage window, offers various levels of investment control. You can make both before- and after-tax (Roth) contributions to the Plan. With before-tax contributions, you won’t pay federal or state income taxes on your contributions or associated earnings until you withdraw money in retirement. With after-tax, or Roth, contributions, you pay taxes now in return for tax-free distributions in retirement, provided you meet certain eligibility requirements.   

Offsetting the cost of college

Now that your own mask is secured, it’s time to look at options for your child’s college savings. Like retirement, starting your child’s college fund earlier will create the biggest impact.

In an earlier post, we covered where to find scholarships [link]. Today, we’ll cover Missouri’s 529 College Savings Plan (MOST), a type of investment account you can use for higher-education savings.  Opening an account is easy and comes with federal and state tax savings. Similar to the State of Missouri’s Deferred Compensation Plan, you may select your level of investment control. MOST is available to all U.S. citizens or resident aliens with a verified permanent U.S. address and valid social security number or other taxpayer identification number.

You may set up accounts for any future student with a valid SSN or other taxpayer identification number, and they can use the savings for qualified higher-education expenses at eligible education institutions, including post-secondary trade and vocational schools; 2- and 4-year colleges; and post-graduate programs. A student can attend any eligible institution in the U.S. or abroad.

To get started, find out how much you’ll need to save.  Then, you’ll want to collect some basic information and open up an account. The MOST Quick guide to opening an account will help you navigate the system.

Alternatively, you could opt to save funds in a taxable account for maximum flexibility. You will lose some tax breaks and you should understand that cost. But if you’re truly on the fence about how to earmark your savings, you’ll be able to put off the decision of how to spend your money to a later date.

Ultimately, you’ll have to make the best choice for you and your family. Every situation is different, but know that you have resources to navigate these tricky decisions.

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Friday Top Five: Retirement Related News for 5/23/14

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From PlanSponsor: Keep It Current

As smartphones and tablets expand their role in the work/life balance of most Americans, the retirement plan industry has begun to capitalize on these new capabilities, and plan sponsors may increasingly see social media and other technology as a way to connect with plan participants.
For instance, last spring, Mercer launched “Uncover the Numbers,” an educational website to get participants to engage more with their 401(k). The site has been very popular, says Bruce Lee, principal of public relations in New York, because it is grounded in research—the annual Mercer Workplace Survey.
In an era of stagnant wages and rising prices, Americans are expected not only to pay the daily bills and save millions for retirement, but also put away enough for college for their kids.

The only problem is that most people can't afford to save simultaneously on so many fronts.

So who is coming to the rescue? Grandparents such as Maureen Reiter.

For the first time since 2007, half of Americans expect they will have enough money for retirement, according to a Gallup survey.

The percentage of Americans who were confident about having enough money for retirement fell to 46 percent during the recession in 2008 and remained below 50 percent until this latest survey. Still, that’s a lot lower than the 77 percent of current retirees who say they have enough to live comfortably.

Back in January, Sylvester Schieber and Andrew Biggs made the case that retirement incomes are in much better shape than is commonly understood. Because the Current Population Survey (CPS) fails to count the bulk of the income older Americans derive from 401(k) and IRA plans, observers relying on CPS data have concluded that the shift from defined-benefit pensions to defined-contribution savings plans has greatly reduced retirement incomes. And some of these observers have thus concluded that we ought to increase Social Security benefits to mitigate the effects of this decline. Schieber and Biggs use the incomes retirees report to the IRS to get a clearer picture of what’s happening on the ground. They find that while the CPS reported $5.6 billion in individual IRA income in 2008, retirees reported $111 billion in IRA income to the IRS. Similarly, the CPS reports that Social Security beneficiaries collected $222 billion in pensions or annuity income while federal tax filings show that these households collected $457 billion. IRS data offers a much rosier picture of retirement incomes than CPS data, and Schieber and Biggs note that it doesn’t factor in distributions from Roth plans or pension and IRA distributions to low-income retirees who do not file annual tax forms. Moreover, they maintain that CPS understates participation in retirement plans, as the CPS relies on individual responses that are not always reliable. For example, CPS finds that only half of American workers are offered retirement plans while a 2011 analysis by the Social Security Administration’s Office of Retirement and Disability Policy finds that 72 percent of all private workers were offered retirement plans, including 84 percent at large firms with 100 employees or more.

More U.S. employees are satisfied with their company-sponsored retirement benefits now compared with five years ago, but satisfaction with health care benefits, especially the cost of medical benefits, has declined, according to a survey by global professional services company Towers Watson. 

The Towers Watson Global Benefits Attitudes Survey also found that a growing number of employees are willing to sacrifice pay for more secure and generous retirement benefits, while fewer would give up pay for better health benefits.

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How Does BackDROP Work?

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Exactly how does a five year backdrop work, payout, one a year or exactly?
The BackDROP distribution is payable in either:
  • One lump sum payment at retirement (choosing either the cash option, rollover option, or combination cash and rollover option)
  • Three annual installments (one with your first monthly benefit payment and one each of the following two years thereafter).*
Please note that MOSERS is required to withhold 20% of the taxable portion of the BackDROP for federal income tax. Your BackDROP payment is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan. Depending upon your age, there could also be an additional 10% tax if you choose the cash payment.

For more information, see the BackDROP Brochure on MOSERS’ website, other questions about BackDROP on Rumor Central, or contact a MOSERS benefit counselor to learn more about how BackDROP applies in your individual situation. The BackDROP provision is not available to members of the MSEP 2011.

*Three annual installments are only available to members electing the cash option payment method. Delaying receipt through the three installment option does not increase the amount – that is, you will not receive interest on the second or third payments.

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Scholarship Resources

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Whether your kids are starting college in the fall or getting ready for their first year of high school, it’s never too early or too late to start looking into college grants and scholarships. There are a number of ways to supplement payment of those college tuition bills.

Start With Free & Look Everywhere

Invest your time instead of your money when you’re looking at scholarships. You may also check with your spouse’s employer to see if they offer scholarships to employee children or your child’s school counselor to learn about local scholarships.

While you’ll likely apply for large scholarships and grants, don’t discount smaller ones! Many universities offer their own scholarships, but you’ll have to check and find out if a separate application is required. Organizations, such as Girl Scouts and Boy Scouts of America, offer their own scholarships.

Here are some places to start:
  1. Missouri Department of Higher Education
  3. The Sallie Mae Fund
  4. Scholarship Hunter
  5. FinAid

What Makes Your Child Unique?

What makes your child unique can also earn him or her money. There are the obvious differences – academic merit, athletics, etc. But there are also scholarships for left-handed people, holography enthusiasts, and people interested in studying vacuum coating technology.

Consider Alternatives

There are a few Missouri-specific scholarships, such as the A+ Scholarship Program, that provide opportunities to students who may not be able to afford all four years away at college. The A+ Scholarship program provides funds to eligible graduates of A+ designated high schools who attend a participating public community college or vocational school.

If your child has scored high enough on the ACT or SAT and will be enrolled in a participating Missouri School, he or she may be eligible for the Missouri Bright Flight program or the Advanced Placement Incentive Grant. If your child didn’t, it may be worth retaking the test.

Beware of scams

There are many scams charging for scholarship information that is available for free on the Internet. Avoid companies that will claim that they’ll do all the work for you or guarantee scholarship money. Be suspicious of any scholarship offers that ask you to pay a fee to apply for the scholarship, to provide financial account information, or if the offer is filled with typos and spelling errors. For example, “scholarship” is spelled “scholorship.”

If you’ve received fraudulent calls promoting “scholarship opportunities,” please read the U.S. Department of Education’s instructions on what to do. If you or your child have been the victim of identity theft regarding federal educational funds or your student information, contact the U.S. Department of Education and follow these instructions.

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Friday Top Five: Retirement Related News for 5/16/14

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From St. Louis Post-Dispatch: Early 401(k) withdrawals replace homes as America's piggy bank

Premature withdrawals from retirement accounts have become America’s new piggy bank, cracked open in record amounts during lean times by people such as Cindy Cromie, who needed the money to rent a U-Haul and start a new life.

Her employer, the University of Pittsburgh Medical Center, had outsourced Cromie’s medical transcription work. Cromie said the move cut her income by as much as 60 percent, at times leaving her with minimum-wage pay.

From Government Executive: Rubio Pitches Giving All Americans Access to the TSP

All Americans should have access to the same retirement savings plan as federal employees, according to a Republican lawmaker. But a spokeswoman for the plan said opening it to the general public might not be in the best interest of current participants.

Sen. Marco Rubio, R-Fla., on Tuesday unveiled a proposal to overhaul the nation’s retirement system, including a provision to give any American without employer-sponsored defined contribution retirement benefits access to the Thrift Savings Plan. The plan is similar to one proposed by President Obama in his most recent State of the Union address, which would give all Americans access to the TSP’s government securities (G) fund.

From Mail Online: Heading for the exit? Two-thirds of savers could want out of their gold-plated pensions to make use of Budget freedoms

Many savers want a way OUT of their gold-plated final salary pensions to take advantage of new rules giving them full access to their retirement pots, a survey has found.

Some 68 per cent of pension scheme trustees and employers said they think their final salary members will be tempted to transfer their pots over to a defined contribution pension to take advantage of the major changes announced in the Budget.

That comes despite the fact that income from the rest of your life from a good-sized final salary scheme is considered to be the finest of pensions possible to have - and many could be making a serious blunder by taking their pot as a cash lump sum instead.

From BenefitsPro: Myth understandings

A frequent criticism of the 401(k) design is that it was “never designed” to provide a full retirement benefit, unlike, as it’s often stated or implied, the defined benefit plan.

Moreover, while there is a very real tendency to focus on the CURRENT balance in a defined contribution/401(k) plan and treat that as the ultimate outcome, for reasons I’ve never really been able to understand, people tend to think and talk about defined benefit (DB) plans in terms of the benefit they are capable of providing, rather than the actual benefits paid.

From Montreal Gazette: Brenda Shanahan: Employee benefits should be explored, not ignored

Remember that first day at your new job? Most of us vaguely recall being shown a number of documents, checking off boxes and signing forms as directed by our employer’s human resources person. We know we have employee benefits, and the lucky among us have company pensions, but how many of us know exactly what we have in the way of health, dental, insurance or retirement entitlements, thanks to our employment?
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BackDROP and Taxes

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I don't understand the twenty percent tax off the top of backdrop. That is way above normal income tax rates. Why is it so extremely high? Will they pay interest on the over the to prepayment?
If any portion of your BackDROP payment can be rolled over and you do not elect to make a direct rollover, MOSERS is required by law to withhold 20% of the taxable amount. This amount is sent to the IRS as federal income tax withholding.  The lump sum income must be reported as a taxable payment, and the amount that was withheld will be credited against any income tax you owe for the year. See page 27 of IRS Publication 575 for specific information on taxable distributions.

To defer taxation, you do have the option to roll your BackDROP over to a traditional IRA or qualified employer plan such as the State of Missouri Deferred Compensation Plan. See their Thinking About the BackDROP? publication for the advantages of this distribution method.  If the payment is rolled over, it won’t be taxed until you withdraw the money. 

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Finding Other Retirees

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MOSERS does not publish contact information on our website for retirees out of respect for the privacy of our members. We have a board rule that stipulates that member records shall be kept confidential (with the limited exception of releases of information as provided in law). If you need to reach a current state employee, the Missouri state government website has an Employee Phone Directory.

You may be interested to know that MOSERS conducts Coffee Break seminars around the state to educate our retirees on MOSERS benefits and other retirement-related issues. Many of our retirees enjoy attending these each year since the topics change and they are a good opportunity to network with other retirees in the area. They are free to attend, but do require a reservation since they fill up quickly.  You can check the Coffee Break seminar page or call MOSERS at:  (800) 827-1063, extension 6194, to check the current schedule.

In addition, our Retiree Connection group is a small group of retirees who represent areas all across the state who have quarterly meetings at MOSERS. They serve as the voice of the retirees in their region in identifying relevant member issues, facilitating two-way communications, and proposing customer-friendly improvements. If you are interested in joining this group, complete the application brochure and you may be contacted when there is an opening in your area.

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Friday Top Five: Retiree Related news for 5/9/14

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From AARP: The New Older Workers: Women

The U.S. workforce has been turned on its (graying) head. New research finds that workers at or near retirement age are taking up a bigger share of the labor pool — a trend that’s driven mainly by women. And in this ever-evolving jobs landscape, older men and women are projected to be working more in the next decade.

Using the latest Census Bureau data, the Washington-based Employee Benefit Research Institute looked at workers’ labor force participation rates over the last four decades. The rate for workers 55 and older was 34.7 percent in 1975, then declined to 29.4 percent in 1993.  Fast forward to 2013, and it was 40.3 percent.

From Yahoo! News: The biggest threat to seniors’ retirement might be the roof over their heads

For many older Americans, the biggest threat to their retirement security might just be the roof over their heads.

More seniors today are carrying mortgage debt in retirement than ever before, rising from 22% to 30% from 2001-2011, according to a new report by the Consumer Financial Protection Bureau. Over the same period, the median mortgage balance for older Americans has nearly doubled from $43,400 to $79,000.

From Reuters: The vanishing defined-benefit pension and its discontents

If only we could revive the good old pension. You retire after 30 or 40 years at a company, get the gold watch, and the monthly checks start flowing.

Many Americans still get those checks, but Corporate America has been running away from defined-benefit (DB) pensions for decades, and many experts see that as a key cause of our retirement security crisis. Pensions provide a guaranteed lifetime income stream, while owners of 401(k)s and individual retirement accounts take on two impossible-to-control risks: stock market volatility and uncertainty about their own longevity.

From Forbs: The 5 Biggest Retirement Planning Mistakes You Can Avoid

One of the primary reasons that people engage a financial planner is to know if, and when, they can retire.  Just the thought of retirement can cause anxiety and many feel overwhelmed and unprepared.
In fact, one of the biggest dilemmas for those approaching retirement is balancing the life they want to live today with the life they want to live in retirement.

From Employee Benefit News: Small employers riding the rising wave of retirement improvements

Small businesses may be much closer to preparing their employees for retirement than initially expected, as contribution and savings rates top previous expectations.

The use of retirement plans has been a boon for many smaller employers, not just for the financial and tax advantages, but also for its ability to increase employee morale and retention.

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Percentage of BackDROP Lost

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Approximately what percentage of your backdrop is lost if you take it in a lump sum upon retirement?
If you are referring to taxes and penalties, the implications of the lump-sum payment depend on your age and which payment option you elect.
  • Cash Option - If you elect the cash option, the distribution will be paid directly to you. MOSERS is required to withhold 20% of the payment and send it to the IRS as income tax withholding. The BackDROP distribution is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan. You may be able to use special tax rules that could reduce the tax you owe. NOTE: If you receive a cash payment before you reach age 59 1/2 and you do not roll it over, you may have to pay a penalty equal to 10% of the taxable portion of the payment in addition to the regular income tax. Consult our Special Tax Notice brochure for a list of exceptions.
  • Rollover Option - If you elect the rollover option, your payment will be made directly to a traditional individual retirement arrangement (traditional IRA), or if you choose, to another eligible employer plan that will accept your rollover. Your payment will not be taxed in the year of the rollover and no income tax will be withheld. The payment will be taxed when you take it out of the traditional IRA or the new eligible employer plan.
  • Combination Cash and Rollover Option - If you elect this option, you may specify the amount of the distribution to be paid directly to a traditional IRA or another eligible employer plan. The remaining balance will be paid to you (less the required 20% income tax withholding).
If you elect the BackDROP, the lump-sum payment will equal to 90% of the Life Income Annuity amount you would have received between the BackDROP date and your actual retirement date. This includes any temporary benefits, cost-of-living allowances (COLAs), and other benefit increases. 
For a detailed explanation of the payment methods and tax consequences, please review our Special Tax Notice, which is available on our website (  More information on the BackDROP is also available in the BackDROP for General State Employees Brochure on MOSERS’ website. We recommend you contact a tax consultant or financial advisor before electing a payment method.
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BackDROP and Taxes

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Can you have your backdrop dollars added to your monthly benefit at retirement? Also what is the amount we will be taxed on the monthly benefit?
No, because BackDROP is a payment option, not additional money. You may decline to take BackDROP if you prefer those dollars to be included in your monthly benefit. Without BackDROP, your monthly benefit is typically higher because it will be calculated using your full years of creditable service, final average pay as of your retirement date, and the multiplier.

If you take BackDROP, you will get a lump-sum in addition to your monthly retirement benefit, which can be taken as a one-time payment or in three annual installments. Your monthly benefit will be calculated using your final average pay and creditable service as of the BackDROP date instead of your actual retirement date which typically results in a lower monthly payment than what it would have been had you not taken the BackDROP.

You may see how BackDROP will affect your monthly benefits by logging into the MOSERS Secure Member Homepage and selecting Estimate My Retirement under the Estimate menu. BackDROP is available to members of the MSEP and the MSEP 2000.

The only taxes MOSERS will withhold from your monthly pension benefit are federal and Missouri state taxes. You will elect how you would like us to withhold these taxes by completing our Substitute W-4P form (available online) when you apply for retirement. You may change your withholding amount at any time.

When determining how much to withhold for federal taxes, you should review the Federal Tax Calculator available on our website. This calculator is based on the federal tax tables and can give you an idea of what your federal withholding will be based on your marital status and number of allowances. There is a helpful video in MOSERS’ online Video Library that explains federal tax deductions and your MOSERS benefit.

For your state tax withholding, you may qualify for the Public Pension Exemption. In order to be eligible for the full pension exemption, your Missouri gross adjusted income must fall within certain income limitations. For further details regarding the Public Pension Exemption, please review the Department of Revenue’s website or contact a qualified tax advisor. Also remember that if you become a resident of another state after you retire, you will not need to have Missouri state taxes withheld from your benefit.

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Friday Top Five: Retirement Related News for 5/2/14

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From The Globe and Mail: Living in Retirement: Without my defined benefit pension plan, I’d be working

I worry about the youth of today. Instead of facing my generation’s concerns of whether we'll outlive our money, I wonder if young people will be able to save enough money to even have a retirement.

From Market Watch: The retirement-income crisis, in one chart

Call me paranoid, but it seems like the financial-services industry has undertaken a concerted effort to show that the U.S. does not have a retirement-income problem – that most people will have all the money they need in retirement. Indeed, some sophisticated economic modelling does suggest that people may be saving optimally. But the basic data say otherwise.

From Huffington Post: The Real Retirement Crisis

America has a retirement crisis, but it's not what some people want you to believe it is. It's not the defined benefit pension plans that public employees pay into over a lifetime of work, which provide retirees an average of $23,400 annually (although some public officials fail to make their required contributions to these and then claim they are unaffordable). It's not the cost of such plans, which may ultimately cost taxpayers far less than risky, inadequate and increasingly prevalent 401(k) plans. It's not Social Security, which is the healthiest part of our retirement system, keeps tens of millions of seniors out of poverty and could help even more if it were expanded. The crisis is that most Americans lack the essential elements of a secure retirement -- pensions and adequate savings. They'll depend on Social Security to stave off poverty once they stop working, and it will not be enough.

The crisis is that the economic collapse that started in 2007, triggered by fraudulent and risky financial schemes, wiped out many Americans' personal savings and decimated many state and city pension investments. And while the stock market and many pension investments have rebounded, for numerous Americans the lingering economic downturn, soaring student debt, diminished home values, the responsibility of caring for aging parents and other financial demands have made it hard, if not impossible, to save for retirement.

From NASRA: Summary of Observations Regarding “Friends Without Benefits,” by Bellwether Education

Bellwether Education, The Joyce Foundation, and recently published a paper, “Friends without Benefits,” which claims that “poorly structured“ policies governing retirement benefits for public school teachers create an inequitable distribution of retirement security outcomes: career teachers are heavily rewarded, and short-term teachers leave the profession with retirement savings that are disproportionately small relative to those with longer tenures. This memo summarizes the feedback we received from members, staff and public pension actuaries; this feedback is reflected in the following narrative and is presented verbatim in the appendices, including a helpful Myth vs. Fact analysis of the report.

A NASRA issue brief is in progress to provide a more comprehensive review of the various benefits provided in public retirement systems, benefits that are overlooked or omitted in this and other like papers issued recently. Also, NASRA is reaching out to the authors of the Bellwether report to share our concerns about their methodology and conclusions.

From PlanSponsor: States’ Pension Reform Reduced Potential Retirement Income

Public employees hired under new pension rules in many states can expect a lower retirement income compared with that of existing employees, an analysis finds.

According to a report from the Center for State and Local Government Excellence and the National Association of State Retirement Administrators, calculations of the projected initial retirement benefit of state and local employees, before and after recent modifications were made to pension design and financing, shows reductions ranging from less than 1% (for new state employees in Colorado) to 20% (Alabama). The average benefit for the 24 states that changed variables in their benefit calculation equaled approximately 92.5% of the benefit produced under the prior conditions. In other words, the average benefit change in this analysis was a decrease of 7.5%.

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Keeping Your Health Insurance After Retirement

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The Missouri State Employees’ Retirement System (MOSERS) administers retirement, long-term disability and life insurance benefits for our members. Health care for most state employees is managed by the Missouri Consolidated Health Care Plan (MCHCP). You can contact them at or (800) 487-0771.

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Division of Benefits Orders

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As the member, you may request a Division of Benefits (DBO) estimate through MOSERS via phone or by filling out a Division of Benefits Order – Request Estimate form. This estimate will give permission to MOSERS to release your benefit information to another party. Generally, the DBO estimate will show the amount of creditable service, the benefit formula, and the accrued monthly retirement benefit attributable to the period of the marriage. You must be vested at the date of your divorce.  The parties may divide up to 50% of the value of the annuity accrued during the marriage.

MOSERS cannot pay out any benefits to an ex-spouse without a DBO with a judge’s signature. While most members and their former spouses use attorneys to get a DBO, you are not required to use an attorney if you and your former spouse agree to the terms of the DBO and are willing to go to court and represent yourselves in the matter.  MOSERS cannot advise you on the details of how to do this but you may wish to contact the circuit clerk’s office for possible assistance on how to get the matter before a judge where you were divorced. 

In any event, you must submit a draft DBO that is filled in so that MOSERS can review it for accuracy.  Once MOSERS advises you that the draft DBO is approved, you can then make arrangements to go to court to obtain the judge’s signature on the DBO.

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