Let's compare scenarios
At his HOOPP employer, Sanjaya worked part-time and had:
- 4 years of contributory service
- 8 years of eligibility service
- average annualized earnings of $50,000
Sanjaya is considering whether to start his pension at 55 when it is first available or wait until age 57. The table below shows Sanjaya’s pension at these two ages.
| |
Age 55
|
Age 57
|
| Monthly pension, with bridge benefit (until age 65) |
$257/month
|
$313/month
|
| Annual pension (until age 65) |
$3,082/year |
$3,758/year |
| Annual pension (from age 65) |
$2,697/year
|
$3,288/year
|
| Percentage of unreduced pension received |
70% |
82% |
Option 1: Retire at age 55
If he retires at 55, Sanjaya’s lifetime pension, with his bridge benefit, is $3,082 per year.
- In this situation, starting the HOOPP pension and bridge at 55 might be the right choice. If he starts his monthly HOOPP pension of $257 now, the extra money will supplement his other sources of income and help him to pay off some debts. He will also
collect his pension and bridge benefit for longer.
- The early retirement adjustment is based on Sanjaya’s age and eligibility service at retirement. As a deferred member, he is no longer actively participating in and contributing to HOOPP, so his pension does not grow based on future earnings or service. Instead, his pension
will increase with COLA, as approved annually by the Board of Trustees.
- That means he may receive a higher total value in pension payments than he would if he waited until age 57. Sanjaya should consider this, assuming that he and his family will still have sufficient retirement income once he fully retires, considering
all income sources.
Option 2: Retire at age 57
If he retires at 57, Sanjaya’s lifetime pension, with his bridge benefit, is $3,758 per year.
- If Sanjaya is more focused on ensuring he can afford to retire later on, continuing to defer his pension up to age 57 will increase his annual pension. This is because with each birthday, Sanjaya qualifies for a better early retirement adjustment. In addition, as a deferred member, Sanjaya’s pension continues to grow with
any approved annual COLA adjustments. This can help his pension to keep up with inflation, before and after he retires.
- This will also increase any survivor benefits for his qualifying spouse or beneficiaries.
- This can make a meaningful difference in his retirement income and provide greater security and predictability of pension income for the years to come. But, by waiting, he will receive the bridge benefit for a shorter period since it’s only
payable until age 65.
By considering the right things before choosing a retirement date, you will be able to have peace of mind while enjoying your lifetime pension in retirement. Contact our Member Services team to help you make the right decision for your personal situation.