Waiting to Retire at the Right Time is a Good Idea

Choosing the right retirement date will be a very important factor in helping to ensure a retirement income that will be adequate throughout your lifetime. Retiring early is a tempting choice but it is important to remember that we are living longer and life expectancies are expected to increase. Over time, the effects of inflation, and especially rising health costs, will deteriorate the buying power of your retirement income. As a New York state public employee, you will likely be entitled to a pension benefit from your public retirement system and Social Security. Your assets in the Plan and any other savings and investments will provide additional income to supplement these sources. You should consider how these sources of retirement income are impacted by your retirement date:

1. Your pension plan – Your New York state pension benefit is based on your "final average salary", years of service and age. For most employees, the longer you work, the higher your final average salary and years of service. If you retire early, your benefit may be reduced due to your age and will be subject to greater erosion by inflation.
2. Social Security – Your Social Security benefits increase by working longer or deferring the receipt of benefits to a later date.
3. Catch-up Contributions – If you continue working, you can boost your contribution level and play catch-up with your savings. Oftentimes, the mortgage or college expenses have been paid off and it is possible to save more. The 50+ Catch-up option allows you to save up to $6,500 over the current annual maximum of $19,500. The Special 457(b) Catch-up option allows you to contribute up to double the annual limit for three years prior to the year you retire. You can only use one of these catch-up options at a time, but both can help you invest more during your last years of work.
4. You allow more time for possible growth – You may be surprised at the difference a few extra years may make in your Plan account balance and other investments.
5. Create a retirement Budget - According to the National Retirement Risk Index, 53% of workers who retire at or before age 63 will be in danger of having insufficient funds during retirement, while only 32% of those who retire at age 67 will be at risk.* Just waiting five more years could make quite a difference. Want to make sure you have enough? Use My Interactive Retirement Planner^SM to plan for your retirement needs.

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*Source: National Retirement Risk Index (NRRI), 2010. Includes health and long-term care costs