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
The table below shows what Sanjaya’s monthly pension would be if he started it at age 55 compared with if he waits two years and starts it at age 57.
| |
Age 55
|
Age 57
|
| Monthly pension with bridge benefit (until age 65) |
$242/month
|
$294/month
|
| Annual pension (until age 65) |
$2,904/year |
$3,528/year |
| Annual pension (from age 65) |
$2,758/year
|
$3,350/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 $2,904 per year until age 65 and $2,758 thereafter.
- In this situation, starting the HOOPP pension and bridge at 55 might be the right choice. If he starts his monthly HOOPP pension of $242 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 any COLA that HOOPP may approve in the future.
- 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, provided that he and his family will still have sufficient retirement income after 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 $3,528 per year until age 65 and $3,350 thereafter.
- If Sanjaya is more focused on ensuring he can afford to retire later, 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 COLA that HOOPP may approve in the future. 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.
- No matter when he retires, Sanjaya’s pension is higher because he qualified for past service benefit improvements. These increases mean the bridge benefit is a smaller portion of his overall pension so he will see less of a change in his monthly payments when his bridge benefit ends at age 65.
By thinking carefully about your personal situation before choosing a retirement date, you will be able to make well-informed decisions about your pension and enjoy the peace of mind that comes with financial security in retirement. Contact our Member Services team to help you make the right choice for your personal situation.