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There are a number of different retirement options available to a person when he/she retires. These options are referred to with different names and numbers. The Unmodified Retirement Allowance is the highest equal payment annuity which a retiree can receive. All other options, except for the Social Security Advancement, can result in a monthly allowance that is significantly less than what the Unmodified Retirement Allowance will provide the person, who retires before age 62, with a benefit that is higher than the Unmodified Retirement Allowance until age 62. At age 62 the benefit will be reduced to a monthly amount less than the Unmodified Retirement Allowance for the remainder of the retiree's life.
Unmodified Retirement Option
If you have received a retirement estimate from the retirement office, you probably have received the unmodified calculation. This is a monthly benefit payment that will be paid to you for the rest of your life. It also provides for a continuing benefit of 60% of your benefit to be paid to your qualified spouse for the rest of his/her life. A qualified spouse is someone you are married to for at least one year prior to your retirement. If you should marry or remarry after you have retired, that new spouse is not entitled to any continuing benefit upon your death. If your beneficiary is someone other than a qualified spouse or minor child, the remaining balance of your contributions will be paid to your surviving beneficiary. If the balance of your contributions are depleted, then the only benefit payable would be the $1000 death benefit.
Social Security Advancement Option
The benefit is based on the same basic calculation as the Unmodified Retirement Allowance. You have the right to choose this option if you retire before age 62. We will pay you a larger monthly benefit initially and a smaller benefit after you reach age 62. The calculation of the increased benefit and the subsequent reduction of that benefit is based on your age at retirement and on what the Social Security to obtain an estimate of your expected benefits at age 62 based upon your selected earlier retirement age and provide that information to the Retirement Office. To obtain this information from Social Security may take up to 2 to 3 months, include in your planning. If you should die, your qualified surviving spouse would receive 60% of the base retirement allowance plus 60% of any cost of living increase you received, which would include the Cost of Living increases on the Social Security advancement.
Option #1
This reduced annuity option results in a lifetime decrease in your monthly benefit of $10 to $20, but extends the length of time before the balance of your contributions payable to your named beneficiary is depleted. Under this option, the only benefit payable to your surviving beneficiary is the remaining balance of your contributions and the $1,000 death benefit. This option extends the time it takes for you to receive a refund of all of your contributions to a range of 10 to 12 years.
Option #2
This option provides for a 100% lifetime continuance of your reduced allowance to the beneficiary. The reduction in your allowance is based on the age of your named beneficiary. The annuity payments can be sharply reduced if your beneficiary is considerably younger than you.
Option #3
This option provides for a payment of 50% of your allowance, after you die, to the non-spouse beneficiary (mother, sister, daughter, etc.). Your retirement allowance can also be sharply reduced if the non-spouse beneficiary is considerably younger than you.
Option #4
This option enables you to specify the dollar amounts and time limits for receiving a benefit. The design of this benefit may be limited by the amount of money in your retirement account and is subject to any limitations or restrictions that may be imposed by the Retirement Board.
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