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UNDERSTANDING YOUR PERSI RETIREMENT OPTIONS
This booklet explains the various Base Plan (pension) retirement options available through PERSI. Some
options are very easy to understand, and others are a bit more complicated. Before choosing a retirement
option, you are encouraged to make an appointment with a PERSI Retirement Specialist. This will help
ensure you make an informed selection based on your personal needs and goals. Examples in this booklet
are for the purpose of comparison and may not reflect your particular benefit. The percentages and
factors cited throughout this booklet are actuarially determined and set by rule. The terms allowance
and benefit are used interchangeably throughout the booklet both refer to retirement payments.
BASE PLAN RETIREMENT OPTIONS
There are six PERSI retirement options from which to choose. It is important you understand each
option so you can make an informed decision. (The dollar amounts shown in the following examples
are used to explain the options; they do not represent your actual benefit.) All benefits are actuarially
equivalent, so it makes no difference to PERSI which option you select.
If you retire before service retirement age or the Rule of 80/90, your retirement benefit will be
reduced based on how early you are retiring regardless of which retirement option you choose.
Example: If you were to retire 2 years before reaching service retirement eligibility and your benefit
was reduced by 6 percent, you would receive a benefit equal to 94 percent of your calculated service
retirement benefit. Actual calculations for reduced benefits are based on years and months,
and will be computed using the reduction rate in state law at the time of your last Base Plan
contribution. A Retirement Specialist can help you calculate your service retirement benefit.
1) Regular Retirement Allowance
This option is based only on your life and terminates at your death. Your benefit is calculated based on your
highest average monthly salary (gross salary) over a base period and your total months of service. A base
period is the period of consecutive months during which you received your highest average monthly salary.
This is usually near the end of a member's career, but not always. The number of months used in a base
period has changed over the years, improving the benefit formula. If you made your last PERSI contribution
after October 1, 1994, your base period is 42 months; if you made your last contribution before this, your
base period will be either 48, 54, or 60 months. If you are unsure which base period applies to you, talk
to a PERSI Retirement Specialist for clarification.
Example: You would receive a monthly benefit for your lifetime. If your monthly benefit is $1000,
you would receive that amount until your death, at which time retirement payments would end.
A death benefit may be available to your beneficiary if payments made to you have not exceeded
your total employee contributions plus interest.
2) Option 1 - 100% Contingent Annuitant (CA)
This retirement option provides a reduced monthly benefit to you as long as you live, and then the
same monthly benefit to your contingent annuitant after your death. The monthly benefit will be paid
to your contingent annuitant for the remainder of his/her life. If your contingent annuitant dies before
you, your benefit will "pop-up" (revert) to the higher regular retirement benefit amount.
Example: If your monthly benefit is $1000, upon your death your contingent annuitant would receive
$1000 for the rest of his/her life.
3) Option 2 - 50% Contingent Annuitant (CA)
This retirement option also provides a reduced monthly benefit to you as long as you live; but when
you die,one-half (50%) of your monthly benefit will be paid to your contingent annuitant for the
remainder of his/her life.
Example: If you receive $1000 as your monthly benefit, upon your death your contingent
annuitant would receive $500 (one-half) for the rest of his/her life.
If your contingent annuitant dies before you, your benefit will "pop-up" to the higher regular
retirement benefit amount.
4) Option 3 - Social Security Adjustment
This retirement option is the most misunderstood. It is only available if you retire before Social
Security Full Retirement Age (SSFRA), and only for your lifetime. This option does not provide
for a contingent annuitant. In a nutshell, it provides an increased retirement benefit from PERSI
until you reach SSFRA, and a reduced benefit thereafter. This option is intended to keep your
retirement income at a constant level. (Social Security benefits claimed before SSFRA are reduced
by the Social Security Administration using factors specified in the law.)
This option is sometimes called the "accelerated" option because you receive more money initially
(an acceleration) from PERSI. When you reach SSFRA and begin receiving your Social Security
benefit, the PERSI amount is reduced although your income remains somewhat constant. The
accelerated amount is based on the number of years and months you are away from SSFRA when
you retire under PERSI's plan. The reduction is based on the Social Security quote you provide
to PERSI when you apply for retirement, not by the actual amount you may receive. (See page 3
for information about obtaining a Social Security quote.)
The following examples assume a full Social Security quote indicating a monthly benefit of $1200.
Example: PERSI benefit before you reach SSFRA = $1541 (accelerated amount)
PERSI benefit after you reach SSFRA = $341 (reduced amount)
[Social Security $1200 + PERSI $341 = $1541; income remains fairly constant]
Option 3 is intended to provide a reasonably level income before and after SSFRA. You won't lose or gain
money by selecting this option. It's simply a matter of choosing how and when your benefit is paid out.
5) Option 4a - 100 % Social Security Adjustment with Contingent Annuitant (CA)
This retirement option is a modification of Option 3. This choice reduces your monthly PERSI
benefit, but upon your death the same monthly payment you were receiving goes to your contingent
annuitant for the rest of his/her life. If your contingent annuitant dies before you, your benefit
will "pop-up" to the higher Option 3 amount.
Example: PERSI benefit before you reach SSFRA = $1341 (accelerated amount)
PERSI benefit after you reach SSFRA = $141 (reduced amount)
[Social Security $1200 + PERSI $141 = $1341; income remains fairly constant]
If you were to die before reaching SSFRA, your contingent annuitant would receive $1341 until the
date you would have reached SSFRA. On the date you would have reached SSFRA (had you not died),
your contingent annuitant's benefit would be reduced to $141 for the remainder of his/her life.
How much do I need to retire comfortably at 65?How much money do you need to retire comfortably at age 65? With that in mind, you should expect to need about 80% of your pre-retirement income to cover your cost of living in retirement. In other words, if you make $100,000 now, you’ll need about $80,000 per year (in today’s dollars) after you retire, according to this principle.Dec 8, 2021
Title: Retirement Options
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