SBCERA Cover Story

Each year, the Auto Club Speedway in Fontana plays host to one of the nation’s largest motorsports events, the Auto Club 400, which involves the most skilled stock car drivers in the world. During the race, drivers must strategically and precisely maneuver their cars around the track at speeds of up to 200 miles per hour.

Behind the wheel, drivers weigh a variety of factors and make split-second decisions while seeking to reach maximum speeds, such as when to pull-in for a pit stop, how to avoid excess braking, and when to pass or block another driver battling for position.

As the driver on your own track to retirement, you must also weigh various considerations before reaching the finish line. Knowing when you are ready to retire and what financial actions to take prior to retirement is something that only you can answer, as there is no single time or set of decisions that work best for everyone.

Thankfully, unlike a NASCAR race, you have ample time to weigh all of the variables before you choose your retirement date. To serve as your pit crew, SBCERA can provide you with helpful considerations to guide you in timing your retirement to maximize your benefit.

Your Birthday: As Active Members, every ¼ year increase in your age (up to a maximum) increases your future benefit amount. When trying to decide the best date to retire, you may wish to consider retiring on your birthday or any three-month interval thereafter.

Leave Accruals: If you are a Tier I Member, you may be eligible to complete a cash-out of leave accruals prior to retirement, which would increase your Final Average Compensation and thus, your lifetime monthly retirement benefit. However, it is worth noting that an end-of-year cash-out on top of your full annual salary might place you in a higher tax bracket for that tax year, whereas a mid-year cash-out in the following year (on top of less annual income), might be less likely to change your marginal tax rate.

Spring: If the Board of Retirement approves a Cost-of-Living Adjustment (COLA) during a given year, it is applied to all Retired Members who are retired on or before April 1 of that year. The Board makes its decision each February, which gives you enough time to factor this into your retirement decision.

Service Credit: Within a pay period, each hour you work increases your service credit, which is one factor used in calculating your lifetime monthly benefit. If you still have a desire to work, you may consider working a bit longer before retiring in order to increase your future benefit amount. Of course, it is also worth remembering that your benefit will not exceed 100% of your Final Average Compensation.

Before choosing your retirement date, we encourage you to take your budget for a test drive. Members are well-served to obtain a benefit estimate from SBCERA and get accurate estimates of any other sources of retirement income, and try living off that amount for a period of time prior to retirement. You may also want to consider the costs of retiree medical and dental coverage, which you can learn more about from San Bernardino County Employee Benefits and Services Division (EBSD) at http://cms.sbcounty.gov/hr/Benefits/RetireeBenefits.aspx.

As always, an SBCERA Retirement Specialist can take the time to explain these items in more detail. Request an appointment with us through MemberDirect,www.SBCERA.org/MD, or register for one of our seminars through www.SBCERA.org/Seminars. Our goal is to provide you with all the facts and information to allow you to make the best decisions and reach your max in the race to retirement.