Retirement Related News for 11/20/2015

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From KOMU: Missouri insulated from nationwide teacher shortage by pension program

In an age where a nationwide teacher shortage is well-documented, many believe Missouri’s public school teacher retirement benefits have become quite the draw.

But, others are drawing a target on the system.

Kathy Steinhoff, a Hickman High School math teacher, who has been in the district for 28 years said, “It is the best kept secret even within the profession because, for most teachers, it doesn’t come on their radar until they’re teaching for about 25 years.”

Steve Yoakum, Executive Director for The Public School Retirement System of Missouri or PSRS, said other states are certainly paying attention.

From The Missouri Times: Pension Committee Proceeds Despite Lack of Quorum, Increased Security

The Joint Committee on Public Employment Retirement met Wednesday under two unusual circumstances. The committee did not reach a quorum, and an extra officer patrolled outside House Hearing Room 4, representing heightened security from Capitol Police.

Yesterday, Rep. Mike Leara, the committee chair, asked for increased security after Sen. Kurt Schaefer, R-Columbia, received a death threat on his office voicemail.

Leara said the move was more about making sure the enhanced media presence at a usually quiet committee did not bring out anyone seeking… well, enhanced media presence.

From Forbes: Three Secure Holiday Shopping Moves

You’re going to get annoyed this holiday season dealing with new chip-card readers, now making their way into stores. I know I have. It will take time before they perfect this technology.

In the meantime, there are some solid ways to avoid going into debt or being defrauded this time of year. You have to focus on savings instead of spending. You may not get the best deals on Black Friday or even Cyber Monday.

While the new chip readers are designed to reduce or eliminate point-of-purchase fraud — paying inside a store — there will still be ways thieves can get at your credit card information. You can protect yourself by using online encrypted sites that are certified by third parties for their security.

From PLANSPONSOR: Millennials Face Obstacles to Retirement Saving

An unwillingness to sacrifice things they believe add to their present quality of life is one of them.

Millennials face a unique set of obstacles when saving for retirement, says a new study by Schwab Retirement Plan Services.

Every generation has its reasons not to save for retirement. For Millennials, more than any other, an unwillingness to sacrifice things they believe add to their present quality of life—and crushing student debt—top the list. Schwab’s research echoes other studies of Millennial savings behavior, which find that they’re confused about the process, or squeezed by student loans, and generally need more financial education and support.

Millennials face several obstacles to meeting their retirement savings goals, which disproportionately affect this group more than any other. Moreover, although this younger generation believes they would benefit from help, they are using professional investment advice far less than their older counterparts. Forty-four percent are not saving more because they want to treat themselves to things like occasional dinners out and vacations, more than Gen Xers (34%) and Boomers (29%).

From BenefitsPRO: Spending Patterns Change in Retirement--But Not Always How You'd Think

While on average households spend less money in retirement, not all households do so—and they don’t all change their spending in the same ways.

That’s according to new research from the Employee Benefit Research Institute, which found that while households’ average spending in retirement falls during the first two years, almost half (45.9 percent) of retired households actually spent more than they did just before retirement.

Making retirement savings last may be easier in these 10 most tax-friendly states for retirees.

That spending does decline over time, the research found, and by the sixth year of retirement, only a third (33.4 percent) spend more than they did preretirement.
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Retirement Related News for 11/13/2015

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From LifeHealthPRO: Aging In America

One day, while flitting about on earth, the Greek goddess, Eos, met and fell in love with a mortal. Eos went to her father, Zeus, and said, “please, Father, give Tithonus immortality.”

“Are you sure that’s what you want?” Zeus responded.

“Yes, Father, more than anything.”

Like any father with a beloved daughter (goddess or not), Zeus bowed to her beauty and did as he was told, granting Tithonus immortality. Only there was one snag in the arrangement — Eos never asked for eternal youth along with immortality. Over the centuries, Tithonus, unable to die, but with a withered and crumbling body, lived on. Eos, blessed with eternal youth, watched her beloved age and wither, his bones reduced to dust, yet he lived on — he lived on and on and on, well beyond what anyone would consider an enviable quality of life.

Gerontologist and aging expert Ken Dychtwald loves to tell that mythical tale, the story a perfect metaphor to describe our aging population and the modern world’s God-like ability to keep people alive.

“On the first day of the 20th century,” says Dychtwald. “the average life expectancy was 47. As the century closed, it was 78. Today, it’s approaching 80 and continuing to rise.”

From The Kansas City Star: Former Missouri Lawmaker Ray Salva Says Federal Conviction Shouldn’t Affect His State Pension

Former Missouri lawmaker Ray Salva, a convicted felon, is locked in a legal dispute with the state of Missouri over whether he qualifies for a state pension.

Salva, 68, pleaded guilty in 2013 to a federal charge of illegally receiving Social Security payments while working as a state legislator. Missouri says the state’s constitution bars pension payments to public officials convicted of felonies, so it cut off his pension and has now asked a judge to order Salva to repay nearly $30,000 he has already received.

But Salva says he is entitled to the pension because his guilty plea came more than two years after he left the legislature. The constitutional prohibition on pension payments to felons only applies to convictions that take place while a public official is actually in office, he argues.

From Time: How To Solve America’s Retirement Crisis

Economist Teresa Ghilarducci knows firsthand how passionate Americans can be about their retirement dreams. In 2008, after she suggested Congress let workers trade in their 401(k) retirement accounts for annuities, talk-radio hosts accused her of trying to kill the 401(k). She got death threats.

She wasn’t deterred, though, from her decades-long crusade, via research and advocacy, to improve retirement security. Now teaching at the New School in New York City, she has, among other duties, served on the advisory board of the Pension Benefit Guaranty Corp. and been a trustee of the Indiana state employees’ retirement fund. Ghilarducci calls retirement the most important financial issue facing both families and governments. “Everybody knows that they will get old,” she says, “and everybody fears not having enough.” She offers solutions in her latest book, How to Retire With Enough Money, and How to Know What Enough Is. Read on for her proposals and practical advice.

From The St. Joe Channel: SJSD Receives New Federal Subpoena

The St. Joseph School District has received a new federal subpoena as the FBI continues its investigation into the district.

The district announced Tuesday that it received a subpoena Monday night to produce records from the St. Joseph School District to the United States District Court for the Western District of Missouri.

"This was really out of the blue and unbeknownst to us," said Superintendent Robert Newhart, during a news conference at district headquarters Tuesday afternoon.

Newhart said they received the subpoena during their Board of Education meeting Monday evening.

Many were hoping that the FBI was nearing the end of what has become a 19 month investigation. It began in April 2014 after an audit by the Missouri State Auditor's Office revealed a stipend system that paid out anywhere from $25-40 million dating back to 2000.

From Forbes: Social Security Q&A: How Can I Maximize Benefits Under the New Rules?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s Social Security column explores twelve secrets to get the highest benefits now that Social Security’s rules have changed and answers other questions.

The 2015 Budget dramatically changed Social Security claiming options. ​Every day I get a host of emails from the victims of these changes. Most are like my 64-year-old secretary, who I wrote about last week, who, thanks to Congress and the President, lost her ability at age 66 to do three things: a) get a child benefit for her severely disabled child, b) a get spousal benefit for her non-working husband who has had to stay home and care for their child for years, and c) file for her retirement benefit, immediately suspend it and wait until 70 to collect her highest possible retirement benefit.

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Federal Taxes & Temporary Benefit

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Do you pay Federal and State taxes on both the retirement and temporary benefit? Is there a calculator that would help to give an approximation on what the taxes could amount to?
Yes, retirement benefits, which may include the temporary benefit, are considered taxable income for individual tax purposes. Missouri income tax and federal income tax can be withheld from your monthly retirement payments.

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

At retirement, you may specify your federal and state tax withholding preferences by completing a Substitute W4-P form, which you can do by logging into your secure Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings:

In a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption. Print Friendly and PDF

Cafeteria Plan & Final Average Pay

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I will be retiring in 3 years (1-1-19). I usually participate in the Cafeteria Plan at $2400/yr. By doing this does it decrease my monthly retirement and if so by about how much? I'm trying to figure out if the Cafeteria savings is worth the change in benefits.
No. Participation in the cafeteria plan does not decrease your MOSERS benefit. Your MOSERS benefit is calculated using the following formula:

Final Average Pay x Credited Service x Multiplier = Monthly Benefit Payment

Your question pertains to final average pay (FAP). FAP is arrived at by finding the average of your highest 36 full consecutive months of pay. We use your GROSS pay, that is, before taxes, health insurance, cafeteria plan, etc., so contributions to the cafeteria plan do not reduce your MOSERS benefit. You may wish to contact the Social Security Administration and find out from them if cafeteria plan contributions may impact your future Social Security benefit.  Print Friendly and PDF

Sick Leave & Retirement

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Is it true that I can retire sooner if I have sick time and vacation time that I don't want to cash in. I am retiring on April 1, 2016. But if I could retire sooner by using the time I have on the books I would. 
No. While your unused sick leave can* increase the amount of your monthly benefit, it cannot be used to determine eligibility for retirement or BackDROP (if eligible). You will receive one month of credited service for every 168 hours of unused sick leave reported to MOSERS by your employer once you have terminated your employment with the state. Since credited service is one part of the formula used to calculate your benefit, the more service you have; the higher your monthly payment will be.
Your unused vacation/annual leave has no impact on your MOSERS benefits. You should discuss your employer’s policy regarding payment to you for any unused annual leave with a knowledgeable person in your HR office.
We receive many questions about sick leave on Rumor Central, so you may want to read our previous answers for more information:

*For sick leave to count as credited service:

–– You must be eligible to retire on date of termination.
MSEP 2000
–– You do not have to be eligible to retire on date of termination.

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2016 Legislation

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Will the HB 1134 be resubmitted for a vote during year 2016?
During the January – May 2015 legislative session, HB 1134 was proposed to subsidize retiree health care premiums for certain state employees.
The next legislative session begins January 6, 2016 with pre-filing of bills beginning December 1.  At this time, we do not know what legislation may be proposed.
 To track pension related proposals, you may be interested in accessing the Legislative Status Report maintained by the Joint Committee on Public Employee Retirement (JCPER) at  which is updated daily once bills are pre-filed.

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Designating Retirement Beneficiaries

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Since I have no spouse and my children are over 21 can I withdrawal all the money I contributed over the years, without a fee or penalty, and invest somewhere else where I can be sure my children will receive the money when I die and it will not go to the state? 
MOSERS administers both defined benefit (DB) and defined contribution (DC) retirement plans. It is unclear which you are asking about, so we will respond about both.

The Defined Benefit (DB) Plan
The DB plan is non-contributory for members hired before January 1, 2011. As such a member, you do not pay money toward your DB plan. Your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system. You do not have a separate account, rather the state’s annual contribution toward your benefit is pooled with investment returns and employee contributions (from members first employed on or after 1/1/2011) to fund the retirement system.

At retirement, you will elect a benefit payment option that determines whether or not a benefit will be paid to anyone after your death. Since you are single, one of the options you may wish to consider is life income with a set number of guaranteed payments. This allows you to name a beneficiary or beneficiaries to receive any remaining payments if you do not live long enough to collect the minimum guaranteed amount. Your monthly payment will be reduced in order to provide this potential survivor benefit. However, you will receive a payment each month for YOUR life, even if you live beyond the guarantee period. No survivor payments will be paid if you have received ALL payments in the guaranteed period (other than the final payment due at the end of the month in which you die).

For example, if you elect Life Income with 120 Guaranteed Payments (10 years), but die after collecting only 60 monthly payments (5 years after you retire), MOSERS will pay the remaining 60 monthly payments to the beneficiary(ies) you named.

It is true that as a member of MSEP or MSEP 2000, if you die PRIOR to retirement, with no eligible spouse or minor children, no DB retirement benefits are payable on your behalf. (Survivors of members first hired on or after 1/1/2011 will either receive monthly survivor benefits or a refund of contributions plus any interest, depending upon various factors.)

Please see our website to determine which plan you are in, find more information in your retirement handbook, or contact a benefit counselor to discuss all your options.

On a related issue, we encourage you to make sure your life insurance beneficiaries are current (if you have life insurance with MOSERS) so proceeds will be paid according to your wishes.

The Defined Contribution (DC) Plan
As for any money you’ve contributed to the State of Missouri Deferred Compensation Plan (the DC plan), you can keep those dollars invested in the Plan after you leave state employment. In order for your savings to be transferred to your children after you die, you must designate beneficiaries for your account. You can do this by logging on to your account at, clicking on My Profile in the left menu, then Beneficiaries. You can also call the Plan at 800-392-0925 to make your designations over the phone. The dollars you contribute to the deferred compensation plan are yours and will remain invested until you withdraw them. As a general plan guideline, you cannot access your savings in the deferred compensation plan until after separation from state employment. Those distribution guidelines differ when your beneficiaries assume control of your savings after your death. We encourage you to carefully read the Distribution Options Guide for more information.

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Retirement Cash-Out

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Because I am a vested employee, can I cash out a portion of my retirement now?
(Note: This member is in the MSEP 2000):

No. MOSERS is a non-contributory defined benefit (DB) plan for members hired before January 1, 2011. As such a member, your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system.

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, 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 service credit and the right to receive any future retirement benefits from MOSERS.

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Retirement Crash Insurance

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Forbes and other major financial magazines have declared "We are on the precipice of an unstoppable financial crisis," and RETIREMENT CRASH INSURANCE is being advocated. Does MOSERS have any such insurance? Is this a fraud? 
MOSERS does not have “retirement crash insurance” and prior to your question, we had not previously heard of such a concept or product.

We researched this topic and found a quote similar to the one you referenced in a 2013 Forbes article. However, nowhere in that article was “retirement crash insurance” mentioned. But we did find a blog post that quotes the Forbes piece and promotes a Retirement Survival Kit and Wealth Building Guide which includes so-called retirement crash insurance and other questionable investment products.

We reached out to the Missouri Attorney General’s office and the Secretary of State’s Investor Protection & Securities Division to find out if they have any information on “retirement crash insurance”. If we receive any information from them about this being an issue in Missouri, we will share on the MOSERS website.

While many people would agree that, as a whole, American workers are ill-prepared for a financially secure retirement, as a member who meets eligibility and retires under a MOSERS defined benefit (DB) pension plan, you will get a monthly benefit payment for as long as you live. It is calculated according to law and based upon a formula which is:

 Final Average Pay x Credited Service x a Multiplier = Monthly Benefit

While many state retirees receive modest benefits, they are assured of some level of financial security. Furthermore, the overall plan design is sustainable. MOSERS receives revenue from employer contributions, employee contributions (from members of MSEP 2011 & the Judicial Plan 2011), and investment income. The state of Missouri has consistently done the right thing by fully funding the contribution rate certified by the MOSERS board of trustees.

Because 1) MOSERS’ investments are professionally managed, 2) we have a long-term investment horizon, and, 3) our risks are pooled over a large population, we are better situated to withstand the ups and downs in the financial markets than a person who has less control over the timing of their individual retirement relative to the markets and economy. For more information, see our Key Facts regarding funding of MOSERS.

Social Security can also provide an additional level of guaranteed retirement income that, when coupled with a pension benefit, will form a solid financial foundation for state retirees. Simplistically speaking, both your MOSERS pension and Social Security benefits can be viewed as a steady, guaranteed stream of income in retirement.

To add some flexibility to that equation, more than 70% of state employees also save money in the State of Missouri Deferred Compensation Plan, which MOSERS administers. The deferred compensation plan provides a convenient way to save extra money for retirement through payroll deduction. Unlike pension and Social Security benefits, YOU have control over how much you save in this plan throughout your career, how your dollars are invested, and how you will withdraw those savings in retirement. While voluntary, many employees find this plan crucial for accumulating additional savings that can add another layer of financial security in retirement. We encourage all state employees to enroll or resume their participation in this plan as a smart, simple way to save for retirement.

Thank you for your question and for bringing this to our attention. Print Friendly and PDF

Retirement Related News for 11/06/2015

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From PLANSPONSOR: Fidelity Research Busts Five Common Retirement Myths

Retirement is a matter of when, not how much, for most people.

Conventional wisdom has it that workers plan their retirement around the amount of money they have saved. But nearly half of American workers plan to stop working on a specific date, regardless of how much they have for retirement. This is one of several myths debunked in new research from Fidelity Investments, which surveyed retirement savers and recent retirees on the nonfinancial factors that influence retirement decisions.

“It’s critical that employers understand these factors and design benefits to either retain or help transition pre-retirees based on their workforce strategy,” cautions Jim MacDonald, president of Workplace Investing at Fidelity Investments.

From The Gadsden Times: 72-year Employee of Goodyear Retires

Sid Richardson, a 72-year employee of the Goodyear-Gadsden plant and the longest-serving hourly associate in Goodyear Global history, officially retired Thursday at the USW Local 12 headquarters.

He was joined by friends, Goodyear-Gadsden leadership, USWA Local 12 members, former co-workers and family at a small celebration.

“I want to thank everyone for everything you have done for me. I’ll miss coming to work every day and seeing my family, because I spent a lot of time with my work family over the years,” Richardson said. “It’s really all I’ve ever known, so I will miss it. But the time is right.”

From Forbes: Men's Retirement Savings More Than 50% Bigger Than Women's, New Study Shows

Add this to the ongoing debate over pay inequality between the sexes: according to new research, men’s retirement accounts are more than 50% higher than women’s on average in the U.S. – despite women being far, far better savers than their male counterparts.

The results of a review of Vanguard’s retirement plan investors, released today, show men’s accounts averaged $123,262 while women’s accounts were $79,572; the median account balance for male participants was also substantially higher at $36,875 for men and $24,446 for women.

From BenefitsPRO: 10 Questions on Retirement Preparedness

How well prepared are American workers for retirement?

Not very, according to the vast majority of studies, which have found that not only do many people have nothing saved for retirement, but those who’ve managed to put money away are way short of the mark.

According to a Financial Finesse study, as people are increasingly made responsible for funding their own retirement, just 19 percent are confident that they’re on track to retire with enough money to do so.

From PLANSPONSOR: Retirement Investors Need to Understand Role of Risk

“Understanding how risk factors into your plan can help build financial confidence,” says Marcy Keckler, with Ameriprise Financial.

Seventy-three percent of American investors tend to avoid risk entirely or weigh risk very carefully when engaging in financial decisions, according to the Financial Risks & Investor Attitudes study by Ameriprise Financial.

The study found 31% of investors surveyed are what Ameriprise calls Risk Avoiders, who are the most guarded when it comes to financial risk-taking. Eighty-nine percent of this group view their outlook on risk as “cautious.” But, while nearly half (42%) of respondents in this profile claim they are not willing to take risks with their finances, many are unknowingly increasing their exposure to risk, Ameriprise says.
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Friday After Thanksgiving

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Is the Governor going to give State employees the day after Thanksgiving as a holiday this year?
We are sure many state employees are wondering this but to-date we have not received any official notice from the Governor’s office and, as the administrator of retirement, life insurance and long-term disability insurance for most state employees, such executive decisions are not within MOSERS’ purview.

If the Governor does decide to declare November 27th a holiday for state employees, we expect that he will issue an Executive Order like he did in 2014. You can subscribe to the email update list on the Governor’s website:

For our retirees who may be curious, regardless of the Governor’s decision, retirees will receive their monthly benefit payment from MOSERS on Monday, November 30, 2015.


Nov. 6, 2015
State offices will be closed on Friday after Thanksgiving, Gov. Nixon announces
JEFFERSON CITY – Gov. Jay Nixon today issued an executive order closing state offices on Nov. 27, the day after Thanksgiving.
The Governor said public safety and other essential services and facilities will continue their normal operations.
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