When you retire, you must decide how your monthly benefit will be paid – either in the form of the Maximum benefit or an option. There are many important factors to consider when choosing, including:
Your family’s financial needs and goals;
Retirement income beyond your pension, such as investments; and,
Your health and age at retirement.
There is no one-size-fits-all benefit choice, so use the information as a guide based on your unique situation. Review the features each choice provides, consult with your family and financial advisor, and by all means review your options with a NYSTRS information representative before selecting.
Regardless of payment choice, please know:
You can only choose one payment option and you must indicate your payment choice on your application for retirement.
You have 30 days from your date of retirement to change your mind. After that, you cannot change your selection, even if your circumstances change (e.g., divorce or death of a member or beneficiary).
Your monthly payments continue without exception until your death.
The Choices
The Maximum Benefit
This provides the largest monthly payment to you for life, but provides no continuing payment to a beneficiary.
Beneficiaries of eligible Tier 2-6 members may receive a one-time payment under provisions of the Paragraph 2 Death Benefit, regardless of whether the Maximum or an option is selected at retirement. See the Benefit Profile you receive annually from NYSTRS for details.
Features:
The largest benefit you can receive, paid to you for life.
There are no beneficiary payments upon your death (except as may be provided by the Paragraph 2 Death Benefit available to Tiers 2-6).
You Might Consider if You:
Are single with no dependents.
Have a spouse who will not need income from your pension because he/she has sufficient income/assets.
Have private insurance that will comfortably protect your beneficiary(ies).
Pop-Up Survivor Option
Selecting an option means a lower monthly benefit for you, but it can, depending on the option you select, provide a payment to a beneficiary upon your death.
Options serve much like life insurance coverage and might be a wise choice if you are unable to obtain adequate private insurance. How much lower your monthly benefit would be compared to the Maximum depends on the payment type you select and, in some cases, the beneficiary you name.
Features:
A payment lower than the Maximum benefit, paid to you for life.
You name one beneficiary who cannot be changed more than 30 days after you retire.
Your age and your beneficiary’s age are factors in the calculation of your benefit.
If your beneficiary dies before you, your future monthly payments increase to the Maximum after NYSTRS is notified of your beneficiary’s death.
Upon your death, your beneficiary receives a percentage* (selected at retirement) of your benefit for life.
A surviving spouse is eligible for 50% of the cost-of-living adjustment you (if eligible) would have received.
You Might Consider if You:
Have a spouse (or other beneficiary) who needs a guaranteed lifetime income if he/she survives you.
Need the additional income of the Maximum if your beneficiary predeceases you.
What does this mean in real life?
Let’s look at this real example of a NYSTRS teacher who recently retired.
In this example their maximum pension was $61,069 a year and if something were to happen to them their spouse would receive $0. This makes the most sense for teachers that are not married or have a large amount of private insurance in place for their families.
If they wanted to leave the same income to their spouse if something were to happen to them then they would only receive $55,318. That means that leaving $55,318 to their spouse has a cost of $5,751 every year.
The lower the amount you are ok with leaving your spouse, the lower this annual cost of insurance is and the higher your pension is for as long as you are alive.
Which option do you plan on choosing?
Want to learn more about your NYSTRS benefits and general financial planning concepts?
The Process
You can receive benefit payment estimates at a consultation with a NYSTRS representative, by using the Pension Estimator in the MyNYSTRS’ website, or by requesting benefit projections be mailed to you (call 800.348.7298 Ext. 6020). In all cases, provide the following information:
Retirement date(s). Request estimates for different dates to see how much your benefit increases if you continue to work.
Current and future salaries, including additional earnings (e.g., summer school, coaching, etc.). If you do not know your salaries, we will assume 2% increases per year over the last known salary.
The date of birth and gender of your beneficiary for estimates of the survivor options that guarantee a lifetime income for one beneficiary.
Review all sources of income and research your eligibility for (and the cost of) private life insurance. If another person is dependent on your income, determine what he/she will need to live comfortably should you predecease him/her.
File your retirement application with NYSTRS. (Resigning from your employer does not automatically trigger your retirement from NYSTRS and the payment of your benefit.) Complete your retirement application online in MyNYSTRS (age 55+) or submit a paper application (RET-54). Be sure to select the benefit payment choice that best meets your needs and those of your beneficiary.
You may change, if necessary, the benefit payment you selected at retirement up to 30 days after your date of retirement. To do so, complete and file with NYSTRS the Election of Retirement Benefit (RET-54.6) form.
