Pension/Retirement Question

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marcinpl92
Walking Post
Posts: 33
Joined: Tue Dec 26, 2017 4:39 pm

Pension/Retirement Question

Post by marcinpl92 » Wed May 01, 2019 5:37 pm

This may or may not be a ridiculous question but I'm sure I'm not the only one who has wondered about this. It is a known fact that most departments require at least 25 years of service to receive a pension that equals X% of your final salary, or 30 years for a slightly higher percentage. If for whatever reason you wanted to, can you retire much earlier with a smaller pension? Lets say HYPOTHETICALLY you're 13-15 years on the job and you win $2 million on a scratch-off ticket, or suddenly come into a sizeable amount of money from another source and choose to retire 10 years early, will you still receive anything?

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cop91
Radio Car
Posts: 140
Joined: Thu Dec 07, 2017 10:05 pm

Re: Pension/Retirement Question

Post by cop91 » Wed May 01, 2019 10:20 pm

marcinpl92 wrote:
Wed May 01, 2019 5:37 pm
This may or may not be a ridiculous question but I'm sure I'm not the only one who has wondered about this. It is a known fact that most departments require at least 25 years of service to receive a pension that equals X% of your final salary, or 30 years for a slightly higher percentage. If for whatever reason you wanted to, can you retire much earlier with a smaller pension? Lets say HYPOTHETICALLY you're 13-15 years on the job and you win $2 million on a scratch-off ticket, or suddenly come into a sizeable amount of money from another source and choose to retire 10 years early, will you still receive anything?
Yes, once you reach 10 years you are "locked-in" or "vested". At 10 years you would receive 20% of your annual salary, then every year after that you would receive 2%, until you reach 20 years. At that point it becomes 50%. BUT you CANNOT start receiving money until you're 55 years old. You would not be eligible for retirement benefits either, which is definitely something to consider! because some health benefits for a family of 4 could be around $26,000 a year. Take a look at your pay, and see how much you pay, then check to see how much your employer pays.. add that together and that's basically what you would be paying each year for the same coverage.

IF you're HYPOTHETICALLY leaving with 13 - 15 years on the job you would receive between 26% - 30% of your annual salary. Just remember if you're a Tier 3 member as of June 28, 2011, Final Compensation means the average salary upon which pension contributions were based for any three fiscal years of membership preceding retirement that provides the largest possible benefit. So if you're currently making lets say $100,000/year but the past 2 years you made $90,000 and $95,000 you would pension off of the 3 years combined divided by 3, so $95,000 in this example.

Log into your MBOS which will give you good information, or if you have a human resource department or person ask them as well. I included a telephone number which connects you with the NJ PFRS division of benefits. (609) 292 - 7524. Ultimately if you were thinking about retiring you would have to make an appointment with the state in Trenton and they would give you all the answers. The information I am giving you is just based upon officers retiring, and what I have learned over the years so take it with a grain of salt... Good luck in your hypothetical scenario, don't hypothetically spend it all at once! :D

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