Your retirement benefit is determined by four factors: age, service credit, your benefit formula and your Final Average Compensation (FAC). Usually, if any of these factors increases, your benefit also increases. To increase their retirement benefit, SBCERA members generally follow the notion that you have to either work longer or aim for a salary increase. If eligible, some members are able to purchase Service Credit (eligibility guidelines were covered in the spring 2014 edition and are also available online).

While many of us realize that you can’t work longer without getting older, we frequently forget that it is possible to get older, without working longer. The simple act of aging could increase your benefit amount. For General Tier I Members your retirement benefit formula continues to increase every three months past your birthday up to age 65. For General Tier II Members it increases up to age 67. For Safety Tier I Members it increases to age 50 and for Safety Tier II Members it increases up to age 57. Once you terminate employment, even if you are eligible to take a retirement benefit, you don’t actually have to do so. If you are younger than your maximum age factor, you might benefit by putting off your official benefit effective date by days, months or years. Keep in mind that the decision to defer must also be weighed against the total benefits you will forego during your deferral.

Eligibility to defer retirement requires that you have earned five or more years of service credit. Members still must meet the retirement eligibility requirements before drawing a benefit. For example, all Tier I Members age 50 or older may begin receiving a benefit when they would have earned 10 years of service credit had they remained a full-time employee. General Tier I Members may begin drawing a benefit, regardless of age, when they would have earned 30 years of service credit had they remained a full time employee; for Safety Tier I Members this would be 20 years. So, if you are a General Tier I Member, age 47 and have 15 years of service credit before leaving employment, your only option to receive a service retirement is to defer your benefit until you reach at least age 50. If you are a Safety Tier I Member who began full-time at age 19 and earn 12 years of service credit, you may defer until you are at least age 39, the point at which you would have earned 20 years of service credit had you kept working.

If you terminate employment and want to work for another employer, or don’t need your retirement benefit right away, you can choose to defer your retirement benefit until you are eligible and ready to apply. If a General Member waits until age 50 years and three months, you will receive more than you did at age 50. At age 50 ½ you will receive even more, and so on, until you reach age 65. If you are already at, or older than, your maximum age factor (as already mentioned), it does not benefit you to wait until you are older unless you continue to work.

So, as you go about retirement planning, don’t forget your option to defer. Take it or leave it, the choice is yours.