Friday Top Five: Retirement Related News for 8/29/14

Posted on

From South County Mail: Missouri public employees now safe from pension advances

State Treasurer Clint Zweifel announced House Bill 1217 goes into effect today, meaning public retirees in Missouri are now protected from the predatory lending practice known as pension advances. Retired public employees who are drawn into these misleading agreements can now take legal action against the businesses offering them. This measure is just one step Treasurer Zweifel is taking to protect working Missourians’ retirement security.

From BenefitsPro: Near-retirement boomers far short of ready

Boomers could be in for a shock. Although they’re the age group closest to retirement, according to a study of 401(k) participants by by Natixis Global Asset Management, 33 percent of them have less than $50,000 put away for the big day, even though they say they’ll need a 401(k) balance of $805,000 to cover living expenses in retirement.

On average, boomers have put away $258,898, only about a third of what they’ll need, while millennials — who appear to be underestimating their retirement financial needs because of their age, believing the magic number to be $822,000 — have already done better than that. They’ve got an average of $91,215 in their retirement plans and years of saving ahead.

From USA Today: Wanted: A million bucks or more in retirement savings

The majority of Generation X workers believe they'll need to save a million bucks or more for retirement, and almost a third think they'll need more than $2 million.

But so far they only have about $70,000 in retirement savings for their household, according to a report out Thursday from the non-profit Transamerica Center for Retirement Studies.

From Washington Post: Retirement mistakes people make at every age

Retirement security didn’t always feel this out of reach.

People worked until their early 60s, earned pensions and collected Social Security. Today, most people expect that they will rely on their own savings, and some worry that Social Security is no longer a sure thing. Workers now need to view the income they earn throughout their careers, which can span 40 years, as money to last them into their 80s and beyond.

From Pacific Coast Business Times: After Ventura County court battle, pension tensions endure

For most of the summer, Ventura county was at the heart of a statewide debate over public-sector pensions.

Reformers spent tens of thousands of dollars on a proposed referendum to change Ventura County’s public employee retirement system from a defined-benefit system to a 401(k)-style system. On Aug. 4, the battle ended when a judge struck the measure from the November ballot.


But the war over public-sector pensions is far from over. Above the tangle of details hovers a fundamental debate about the fiscal stability of local governments, the vanishing middle class, inequality and the future of organized labor.

Print Friendly and PDF

Taxes & BackDROP

Posted on
Does the Backdrop payment show as income on your W-2?
Yes (except retirees get a 1099R form instead of a W-2). 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% IRS penalty if you choose the cash payment.

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.

For a detailed explanation of the payment methods and tax consequences, please review our Special Tax Notice, which is available on our website (www.mosers.org). 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.

The BackDROP provision is not available to members of the MSEP 2011.

Print Friendly and PDF

Insurance and BackDROP

Posted on
Word is going around that if you stay 5 years after your Backdrop all of your insurance would be paid for. Is this correct or just a rumor? Thanks in advance for your help.
That is incorrect. As we described in a previous RC post, the contribution toward your health care premium (medical subsidy) 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 years of service (1-5) during your BackDROP period would be included in your number of full years of service. However, the maximum contribution cannot exceed 65 percent of the cost of your premium. Since health care benefits are administered by MCHCP, we encourage you to contact them to discuss details of your situation.
Print Friendly and PDF

Unmmaried Members Dying Before Retirement

Posted on
If I pass away before my retirement date, am unmarried, and my child is over 21 where does my hard earned retirement benefits go?
Your retirement plan is designed to provide financial security to you in retirement or to those who are financially dependent upon you.  If a member dies without any eligible dependents, no retirement benefits are paid.  You do not have a separate account, rather the state’s annual contribution toward your benefit is pooled with investment returns and employee contributions (MSEP 2011 members) to fund the retirement plan.

Most* MOSERS members are also eligible for basic life insurance equal to one times their annual salary and any optional life insurance that they may have elected. Your life insurance coverage amounts are payable to your named beneficiary(ies) if you die while insured, whether those beneficiaries are financially dependent upon you or not.

We addressed the potential survivor benefits in the case of a member’s death before retirement in more detail in another recent Rumor Central question. As a reminder, you can click on Categories on our Rumor Central blog and see if we have answered your question or a similar one in the past.  

* MOSERS’ life insurance benefits are not available to employees of the Department of Conservation or state colleges and universities (except State Technical College of Missouri and Lincoln University).Those organizations administer their own life insurance benefits. 

Print Friendly and PDF

Death Before Retirement

Posted on
IS IT TRUE IF I AM 80 AND OUT AND READY TO RETIRE, BUT DIDN'T SIGN THE PAPERWORK I WAS GOING TO RETIRE, AND DIE IN MY SLEEP TONIGHT, NO FAMILY MEMBER WOULD GET MY RETIREMENT FUNDS, ONLY LIFE INSURANCE AND DEFERR COMP?
It depends on if you are vested or not. If you are a general state employee, employed before January 1, 2011, and die with at least five years of credited service  (at least ten years of credited service for members of the MSEP 2011), a survivor benefit will be paid to your eligible spouse or child(ren). Although survivor benefit payments begin the first of the month following your date of death, they are not automatic. Each eligible benefit recipient must submit an Application for Survivor Benefits with the required proof-of-age and lawful presence documentation.

To be eligible, your surviving spouse must be married to you on your date of death. The monthly benefit for your spouse will be based on the benefit you have accrued as of your date of death and calculated according to the Joint & 100% Survivor Option. The survivor benefit will be payable for the remainder of your spouse’s life.

If there is no eligible spouse, a survivor benefit may be paid to your natural or legally adopted child(ren) who are younger than age 21. This benefit is dependent on the law in effect at the time of your termination. If there is more than one eligible child, the benefit will be divided equally among them. The survivor benefit for each child will stop when the child becomes age 21 (unless a child is totally disabled and you terminated service with the state on or after 8/28/2001).

If there is no eligible spouse or dependent children, then there would be no pension benefit payable and only life insurance and deferred compensation funds would be payable.

We encourage you to apply online – it is fast, easy and efficient. The ideal time to apply for retirement is 45-120 days prior to your retirement date.

Your MOSERS life insurance benefits* will be paid to the designated beneficiary(ies) on file with MOSERS.

*Note: Life insurance programs mentioned here may not apply to universities/colleges and the Department of Conservation. Please contact your HR or personnel office for more information.

Print Friendly and PDF

Friday Top Five: Retirement Related News for 8/22/14

Posted on

From KSHB: 10 terms you need to know if you ever plan to retire

In the modern economy, the responsibility for retirement largely falls to the individual. Being educated about this process can mean the difference between spending your retirement in vacation mode and working an additional decade. To secure the future you want, it’s important to plan. The earlier you start figuring it out (and saving!), the better. Here is a glossary of essential terms to know.

From BenefitsPro: Participants pass on opportunities for retirement saving

Participants in 401(k) plans are a feisty lot. Not only do 90 percent of them say that they’ll be relying on themselves to provide the money they need in retirement, but 87 percent of them say that, after health insurance, having a 401(k) plan is the top make-or-break factor when deciding whether to accept a new job.

Yet once they get that coveted 401(k) plan, they aren’t at all confident about their abilities to make the right choices, according to a new survey from Schwab Retirement Plan Services. But that doesn’t mean they’ll ask for help. They’re more likely to get someone to change the oil in their cars (87 percent) than to ask for help in making investment choices (24 percent), and most spend more time researching new cars (55 percent) and vacations (39 percent) than the investment options available in their plans.

From Time: How to Claim Social Security Without Shortchanging Your Spouse

Deciding when to take Social Security can have a big impact on your family's income. Here's what you need to know.

When it comes to claiming Social Security, millions of people make this huge mistake: overlooking the impact on their family’s income.

From The Washington Post: Five ideas to better prepare Americans for retirement

Americans simply do not save enough for retirement, that’s the inescapable fact. The latest survey on retirement savings shows that more than one-third of working age Americans have not saved any money for retirement. Even worse, 14 percent of people age 65 or over have no retirement savings whatsoever. In the July-August issue of Harvard Business Review, Nobel Prize laureate Robert Merton analyzes the issue in-depth, calling it a “crisis in retirement planning.”

While the financial services industry continues to produce a number of incremental improvements to existing retirement options, has there really been a major, game-changing innovation since the first 401(k) plan was unveiled nearly 30 years ago?

From The Republic: State can repeal pension increases for public employees, Washington Supreme Court rules

The Legislature had the right to eliminate state employee pension increases that were approved during the stock market boom of the 1990s, the Washington Supreme Court said unanimously Thursday in two decisions that save the state billions of dollars but leave many public employees feeling cheated.


In twin rulings, the court found lawmakers were within their rights in 2007 when they repealed a "gain-sharing" benefit that paid employees more when investment returns on pension trust funds exceeded expectations, and in 2011 when they repealed automatic cost-of-living adjustments for certain retirees.

Print Friendly and PDF

Early Payouts

Posted on
I am a former state employee who is fully vested. I recently received an early "payout" from another former employer for retirement funds. My question is, does the state of Missouri ever offer such early "payouts"?
No. There are no lump sum payments available. If you are vested (after 5 years of benefit-eligible employment in MSEP or MSEP 2000 and after 10 years in MSEP 2011) and leave state employment (“terminated-vested”), you will receive a lifetime monthly benefit upon reaching retirement age and applying for retirement.

If you are a vested member of MSEP 2011, you can request a refund of contributions you paid to the system. By receiving a refund of contributions, you forfeit all your credited service and any future rights to receive benefits from the system. However, you may leave your contributions with MOSERS if you think you may return to state employment in the future. As a vested member, your contributions will continue to accrue interest until you are eligible for normal retirement. See the Member Contributions brochure on MOSERS’ website for more information.

Print Friendly and PDF

Different Benefit Amounts

Posted on
I am getting very close to submitting for my retirement. I have printed off a couple of benefit estimates. Each one is different. Even though I have submitted exact same information. MSEP base in July is $46.95 higher than one I printed today 8/18. Same with remaining estimates. MSEP 2000 $50 difference in base and temporary benefit with about $75 difference between total monthly benefit. So if I run another estimate before I actually start the process on line and it has even different balances, will I end up with lowest estimate benefit or is the estimator just that, a estimate?
When you generate a benefit estimate online or receive one from a benefit counselor, the system uses the previous month’s salary and projects it forward to your retirement date in order to estimate your benefit.  If your salary varies from month to month, this can cause your estimates to fluctuate each time your salary changes.  However your actual retirement benefit will be calculated on your actual reported salary, and not projections.

Please note that estimates provided to you through the MOSERS website or from staff must be verified, meet all legal requirements, and if necessary, be corrected before any payments can be made. Corrections could change the amount of the service and benefits you receive or even your eligibility to receive a benefit.

Print Friendly and PDF

When Retirees Can Expect the 2014 COLA

Posted on
Will we be receiving a cost of living raise this September?
Yes, a cost of living adjustment (0-5%) is applied each year for eligible retirees. As MOSERS announced in January, the COLA for retired general state employees or their surviving beneficiaries for 2014 is 1.172%. The month you receive your COLA depends on your individual circumstances. COLAs are payable on the anniversary of the member’s retirement date, except for:
  • Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July.
  • Retirees who elected a BackDROP will have COLAs payable on the anniversary of the BackDROP date.
More information is available on the MOSERS COLA page, including a short video. 

Print Friendly and PDF

Rolling funds to a deferred compensation plan

Posted on
As a public employee – both as a state of Missouri employee and as a public university employee – you are eligible to participate in the State of Missouri Deferred Compensation Plan. One lesser-known feature of this program is that you can roll your previous retirement savings balances into the 457(b) or 401(a) account sources that make up the Plan. Whether you’re an active employee or retired, this rollover benefit is available to all participants with a plan balance.

The difference between the 457(b) and 401(a)

Your 457 and 401(a) accounts are accessible through the deferred compensation plan website, but what do the two accounts mean for you? Here’s a breakdown:
457
401(a)
  • This account consists of your payroll contributions, other eligible 457 plan rollovers, and any investment earnings on those savings.
  • In most cases, you can withdraw 457 savings without paying a 10% penalty before age 59 ½, as long as you are retired or no longer working fort the state. Normal income taxes still apply.
  • Can be both pre- and post-tax (Roth) savings.
  • This account consists of employer matching funds, BackDROP rollovers, and rollover funds from other retirement savings accounts.
  • In most cases, you cannot withdraw funds before you reach age 59 ½ without paying a 10% early withdrawal penalty.

Why combining retirement savings makes sense

Both active employees and retirees choose to consolidate their retirement savings in one place for the sake of lowering costs and maintaining simplicity.

Currently, there is a flat fee of $34 per year to participate in the deferred compensation plan. In reality, the fee is only $1 a month ($12 annually) because of reimbursements from investments offered through the plan. This fee covers plan administration, communications, publications, and customer service. There are additional fees, depending on which investment options you pick inside the Plan. You may read about each fund’s fees on the State of Missouri Deferred Compensation website. There are no taxes or penalties to roll funds into the Plan.

An additional benefit of rollovers is simplicity. Many find it helpful to have all of their retirement savings in one location. When you access your account, you have the ability to:
  • View your total balance
  • Manage investment elections
  • Adjust contributions
  • Withdraw savings (if you are eligible)
  • Access a retirement toolbox that contains custom calculators and additional customer support

What you can consolidate

You may roll over savings from any qualified employer plan or individual retirement account, including:
  • IRA
  • 401(k)
  • 403(b)
  • 457
  • 401(a)
You cannot roll over Roth IRA assets because of IRS regulations. If you elect the BackDROP payment option, you may roll your BackDROP into your State of Missouri Deferred Compensation Plan account. The one form MOSERS provides is the only form needed. Contact a MOSERS benefit counselor for more information about this option.

How to roll over non-BackDROP funds

  1. Download and fill out the Incoming Direct Rollover form. If you are rolling over funds from multiple external sources, you will need to fill out one form for each source.
  2. Call the company or companies that you’re rolling the funds away from. Find out their process for transferring funds to another company, including forms and fees. If they require a signature from the deferred compensation plan, please contact a participant service representative at 800-392-0925.
  3. Fax the form to the State of Missouri Deferred Compensation Plan.

How long will it take

After faxing your Incoming Direct Rollover form, you will receive a letter of acceptance within seven days notifying you that the Plan has processed your request. Typically, the funds will be transferred in 30 to 45 days. A deferred compensation plan representative will keep in touch until they have received the funds. If you haven’t received confirmation of the transfer within 60 days, you may need to contact the company you’re transferring funds from.

If you already have funds in the 401(a) plan, your money will be allocated to the investment elections on record before the transfer. If you do not, your money will be invested in the Missouri Target Date Fund that corresponds with your date of birth. To make any changes, log on to your deferred compensation plan account and choose Manage Funds under the My Account tab.

For more information

If you have additional questions about transferring your retirement savings to the State of Missouri Deferred Compensation Plan, please contact the Plan at 800-392-0925.

Print Friendly and PDF

Disqualification for Benefits

Posted on
if an employee gets fired after they are vested do they still get to keep their retirement benefits when they reach the age of 80 and out in my case.
Yes. Once you reach the age and service combination that makes you eligible for retirement (such as “80 and Out” for members of the MSEP or MSEP 2000) and submit all  necessary forms, you will still get your pension benefit.  A termination cannot revoke your vested benefits. Bear in mind that your retirement eligibility date may change if you are no longer accruing service credit, retirement is a two-step process and there are deadlines concerning when forms need to be received by MOSERS and other benefit providers. See the MOSERS Retirement Guide for more information.

While termination does not mean you will lose your retirement benefits, there are other circumstances that could cause disqualification or forfeiture of benefits.

Disqualification

A person who knowingly makes a false statement, or falsifies or permits to be falsified a record of the system, in an attempt to defraud the system shall be subject to fine or imprisonment under the Revised Statutes of Missouri.

The board shall not pay an annuity to any survivor or beneficiary who is charged with the intentional killing of a member, retiree or survivor without legal excuse or justification. A survivor or beneficiary who is convicted of such charge shall no longer be entitled to receive an annuity. If the survivor or beneficiary is not convicted of such charge, the board shall resume annuity payments and shall pay the survivor or beneficiary any annuity payments that were suspended pending resolution of such charge.


Forfeiture of Benefits

(Based on HB1217 which was passed by the General Assembly and signed by the Governor in 2014)

If you are employed in a MOSERS benefit-eligible position and are convicted of certain felony offenses committed in connection with or related to your duties as an employee, on or after August 28, 2014, will not be eligible to receive any retirement benefits from MOSERS based on service rendered on or after August 28, 2014. However, if you are a member of the MSEP 2011, you may still request a refund of contributions from MOSERS, including interest credited to your account.
The finding of guilt for any of the following felony offenses or a substantially similar offense provided under federal law will result in your ineligibility for retirement benefits from MOSERS:
  • Stealing under section 570.030, when such offense involved money, property, or services valued at $5,000 or more as determined by a court;
  • Receiving stolen property under section 570.080 when such offense involved money, property, or services valued at $5,000 or more as determined by a court;
  • Forgery under section 570.090;
  • Counterfeiting under section 570.103;
  • Bribery of a public servant under section 576.010; or
  • Acceding to corruption under section 576.020.

Print Friendly and PDF

Reemployed Retirees and Sick Leave

Posted on
When I retired from DMH April 1 of this year, I had about 1,000 hours of sick leave which gave me additional time toward retirement. If I go back to work at DMH in a benefits eligible position, will I at some point get that sick leave back?
No – not as it relates to your a future retirement benefit. You can consider the approximately 1,000 hours that has been applied to your retirement benefit as already “spent”. You will not get credit for those hours again as it relates to your retirement benefit.

However, you may accrue additional sick leave going forward and any unused sick leave you accrue from the time you return to work until you retire again will be used in calculating your future retirement benefit.

You should also be aware that if you return to a MOSERS benefit-eligible position, your retirement benefit will stop. No benefits will be paid for any portion of the month in which you are reemployed in a benefit-eligible position.

Contact your human resources representative to discuss the details of your agency's sick leave policy.  

Print Friendly and PDF

Friday Top Five: Retirement Related News for 8/15/14

Posted on
John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went under cover.

The former U.S. Labor Department economist called representatives at companies such as Bank of America Corp., Charles Schwab Corp. and Wells Fargo & Co. He identified himself as a potential client grappling with what to do with his own nest egg.

Note: The article below discusses how federal employees are being convinced to roll their savings out of their very low-cost Federal Thrift Savings Plan into higher-cost IRAs. In a similar way, state employees may be told they will be better off to roll their savings out of the very low-cost State of Missouri Deferred Compensation Plan. When you retire, you may leave your savings in the Plan and take advantage of the very low fees throughout retirement.  See the Considering a Rollover? Questions You Should Ask flyer for more important information on rollovers.     

It sounds counterintuitive, but a Fidelity Investments survey indicates that 43 percent of workers weigh employer matching funds in their 401(k)s so heavily that they’d accept lower pay so long as it came with a higher match.

The survey highlighted the fact that employees feel employer contributions such as matching funds or profit-sharing are one of the most important parts of a benefits package. It also showed that only 13 percent of workers were willing to consider a job that came with no company match, even if the pay were higher.

Social Security has been around long enough to collect old age benefits.

It marked “79 years of public service” Thursday.

It’s good to celebrate a venerable program that reflects what government should do, making life better for the nation’s elderly, disabled and children since President Franklin D. Roosevelt signed the Social Security Act in 1935.

The Great Recession battered the 401k retirement accounts of millions of Americans – delaying or destroying the dreams of those on the verge of retirement and surprising many others who had assumed the value of their plans would keep rising – well, indefinitely.

As the stock market has recovered, average account balances have increased. With the improving economy, many employees feel they have more disposable income to invest in these accounts. But criticism of the 401k remains pervasive – and if the 401k is still the best retirement deal for many, it’s often by default.

There are, however, key takeaways to keep in mind about the 401k in 2014.

Two prominent reports claiming Gen Xers will be in worse shape for retirement than baby boomers are based on flawed assumptions or methodologies, according to a report from the Employment Benefit Research Institute.

EBRI says that a study by Pew Charitable Trusts in 2013 is wrong because it “explicitly ignores future contributions to defined contribution plans.”

Print Friendly and PDF

Insurance Premiums

Posted on
Could you tell me where I could find information about your insurance premiums being reduced if you retire after 26 years of service?
If you are referring to MOSERS life insurance, your premium for optional life insurance coverage will depend on your age (see Schedule of Monthly Premiums in the Basic & Optional Life Insurance Handbook) and the amount of coverage you have selected, but is not connected to how much service you have at retirement. You may choose to reduce your optional life coverage amount after retirement; however, you cannot increase your coverage amount after retirement. To calculate your monthly and annual premiums, there is a convenient Optional Life Insurance calculator on MOSERS’ website. Click on Members, then Calculators.

You might be thinking about your medical insurance premiums in retirement. This is administer by the Missouri Consolidated Health Care Plan (MCHCP). If so, there is a premium calculator under the State Members tab on www.mchcp.org. This public calculator can be used to figure your estimated premiums based on your full years of service as reported by MOSERS. If you have Medicare, you can also determine your estimated premiums. For more information, MCHCP members may ask secure questions using myMessages through their myMCHCP account.   MCHCP Member Services is also available at 1-800-487-0771.

Print Friendly and PDF

Insurance and Retirement

Posted on
When I retire will I have insurance?
Yes, as a MOSERS benefit-eligible member, if you retire directly from active service you will have $5,000 of basic life insurance provided at no cost to you. Regardless of whether you elect normal retirement (unreduced benefit) or early retirement (reduced benefit), as long as you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance. Coverage is automatic; no forms are required.

If you wish to retain more life insurance coverage, you have 60 days from the end of the month in which you leave state employment to make an election to convert the remaining basic life insurance to an individual policy through Standard Insurance Company.

Additionally, if you were enrolled in optional life insurance coverage on your last working day, you may continue some or all of that coverage into retirement. However, the amount of coverage you carry into retirement cannot exceed the amount you carried while actively employed. If you retire under the “Rule of 80” (MSEP 2000), or “Rule of 90” (MSEP 2011), you may retain all of your optional life insurance coverage until age 62. At age 62, your coverage will automatically reduce to a maximum of $60,000. If you terminated (or did not have any) optional life insurance coverage through MOSERS at retirement, it cannot be reinstated or added after retirement.

Note: members employed by the following agencies should contact their HR office for details because they have their own life insurance contract (not eligible for life insurance thought MOSERS):

  • Department of Conservation
  • Missouri State Highway Patrol (except Uniformed Water Patrol Officers electing MOSERS benefits under the provisions of House Bill 1868)
  • Regional state colleges and universities or any other institutions of higher learning
  • Members of the College and University Retirement Plan (CURP)
Print Friendly and PDF

Friday Top Five: Retirement Related News for 8/8/14

Posted on
When wealth adviser Lisa Chapman raises the issue of longevity with her clients, some joke that they’ll just move in with her if their money runs out. As that joke suggests, it’s hard for many people to imagine living, much less planning, for 30-plus years in retirement.

Chapman, who works for UBS Wealth Management Americas in Long Beach, Calif., has a trump card to play with the doubters. She counts among her clients two centenarians, one is 104 and one is 109. “They blew out the average, and it gives me two really great examples to use with my clients,” Chapman said.

Even though the economy has improved significantly since the recession, some companies continue to cut benefits for employees. Over the past five years, employers have reduced a variety of benefits, educational assistance and perks, according to a Society for Human Resource Management member survey of 510 human resources professionals. Here’s a look at workplace benefits that are in decline:

Pensions. Less than a quarter (24 percent) of the employers SHRM surveyed continue to provide a traditional pension plan open to all employees. In contrast, 89 percent of the employers offer a 401(k) plan or similar type of retirement account, and most (74 percent) provide an employer contribution to the retirement account. “Fewer large employers provide a defined-benefit pension, shifting more of the responsibility for retirement to defined-contribution plans, which necessitates that employees be very active in the oversight and management of lifetime income,” says Shane Bartling, a retirement leader for Towers Watson in San Francisco.

Most people hope to eventually leave the stress of work behind and enjoy days spent doing what they have always wanted to do in retirement. With that goal in mind, we scrimp and save to build our retirement nest egg to a size where we can quit work and begin to live our second act. But just because you have saved what you hope is enough money does not mean you are ready or that it is safe to retire. Retirement plans can quickly go astray if you fail to address some important questions up front:

Nova Scotians we’ll call Herb, 53, and Mary, 46, have achieved on average salaries what much higher paid workers have not. On take home pay of $7,000 a month, they have raised two children into their early 20s, both in university, and have another, now 14, still at home.

They are looking ahead to early retirement. Their job pensions and savings should make their retirements work as planned. But it’s what they have not planned that could trip them up.

Pretty much everyone, at one point or another, has wished for an early retirement. The freedom and flexibility of not worrying about how to make a living is certainly very appealing. But once you start down the road of saving for early retirement, you may find these surprises waiting for you.


Print Friendly and PDF

Borrowing Against Your Plan

Posted on
Can you borrow or get a loan from your retirement plan?
No. MOSERS is a non-contributory benefit plan for members hired before January 1, 2011. For those members, your employer pays the necessary contributions into our system so that you may draw a future retirement benefit. Since those members do not pay these contributions, they are not eligible to withdraw monies from their retirement plan.

Members hired in a MOSERS covered position for the first time on or after January 1, 2011 are required to contribute 4% of their gross salary to help fund the retirement system. Those members, if they leave state employment, will have the option of requesting a refund of the contributions they have made to the retirement system plus any applicable interest. Any member who receives a refund will forfeit the right to receive any future retirement benefits from MOSERS.  

Members of MOSERS are not eligible to borrow against the fund for any reason.

Print Friendly and PDF

Friday Top Five: Retirement Related News for 8/1/14

Posted on

From BenefitsPro: ‘Robin Hood’ of fees takes aim at 401(k)s

Those worried about hidden fees in their retirement accounts might want to investigate FeeX, a service that was launched in the U.S. this spring. Free at the moment, eventually the company plans to introduce optional premium services for which it will charge.
Founders Yoav Zurel, David Weisz, Eyal Halahmi and Uri Levine — Levine being the cofounder of map software provider Waze fame, sold to Google last year for $1.1 billion — brought the new company to the U.S. to pursue its larger market. FeeX began life in Israel in mid-2012.

From Next Avenue: Women and Money Management: A Sad Story

Drumroll, please. Prudential’s eighth biennial study on the Financial Experience & Behaviors Among Women was unveiled today and the news is this: Women feel no more prepared to make wise financial decisions today than they did two years ago — or even a decade ago.
Nor has their understanding of financial and insurance products improved. Not surprisingly, the “Confidence Gap” (the measure of women's confidence in their ability to attain their financial goals) has not improved over that 10-year span either, according to the disheartening findings.

From Life Health Pro: Pensions deliver $943 billion economic punch

Defined benefit plans are helping pump billions of dollars more into the economy than the monthly pension checks collected by retirees.
So says a new study from the National Institute on Retirement Security, which calculated that DB plans supported about $943 billion in total economic output in 2012, the most recent year for which data was available.
The study also asserted that spending by pensioners supported 6.2 million jobs in the U.S., to the tune of some $306.9 billion.

From Wealth Management: Work in Retirement: Myths and Motivations

Retirement used to mean the end of work. But now we’re at a tipping point: a majority of people will be continuing to work after they retire — often in new and different ways.
Nearly half (47%) of today’s retirees say they either have worked or plan to work during their retirement. But an even greater percentage (72%) of pre-retirees age 50+ say they want to keep working after they retire, and in the near future it will become increasingly unusual for retirees not to work.

From BenefitsPro: Faring just fine in retirement

Here's what could be considered a bit of contrarian news: a lot of recent retirees are faring just fine as they sail through their golden years, thanks to their ability to draw on Social Security.
That's according to a survey by T. Rowe Price that looked at how retirees are doing one to five years after they've left the workforce and who rely, in part, on the 401(k) plans they continue to be enrolled in or savings from 401(k)s rolled into IRA accounts.

Print Friendly and PDF

When should retirees expect their COLA?

Posted on
Can you tell me when a cost of living increase for retirees might be expected? Is that under discussion? If that took place, what would be percentage be, and when would it begin?
The annual cost-of-living adjustment (COLA) is announced each January. The COLA for 2014 is 1.172%.This will be effective for MSEP retirees who have reached their original 65% COLA cap under MSEP, or who were first hired on or after August 28th, 1997, and for members retired under MSEP 2000 regardless of date of hire. COLAs are payable on the anniversary of your retirement date, except for
  • Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July
  • Retirees who elected a BackDROP will have COLAs payable on the anniversary of the BackDROP date
For more information, see the COLA page on our website that has a helpful video, and an article on how the 2014 rate was determined

Print Friendly and PDF