Challenging Common Retirement Myths
As Member Communications staff present retirement seminars, they often hear urban legends about retiring from
City Service. The best possible way to understand your retirement benefits is to attend a Planning for Retirement
seminar as early as possible in your City career. On average any person who attends a retirement seminar will
increase their net worth by 20% according to a financial literacy study by Annmaria Lusardi, a professor of Economics
at Dartmouth College. In the meantime, let’s debunk those myths!
Myth #1 I don’t have to save
for retirement; I have a City
retirement allowance.
The foundation for a
financially secure retirement
should be your City retirement
allowance. However, most
of us will want additional
retirement income to fill in the
gaps since retiring with 30 years
of Service Credit will yield a
retirement benefit of about
65% of our working income.
To fill in any income gaps you
should consider savings and
investments.
|
Myth #3 Social Security
will help me make up the
difference in retirement.
Some City workers may not
receive Social Security benefits.
Most often, it is because
they haven’t paid into Social
Security for 40 quarters (10
years), or because of Social
Security’s Windfall Elimination
Provision. In addition, there
is no certainty that Social
Security itself will remain
stable in the future.
For additional information,
check Social Security online
at www.socialsecurity.gov.
|
Myth #2 After 30 years of
Service, I will receive 100%
of my pre-retirement income.
There is a retirement formula
that determines the amount of
your retirement allowance (see“Your Retirement Allowance is
Not 100% of Your City Salary” on page 15). In order to get
100% of your pre-retirement
income, you would have to be
a full-time employee of the City
for more than 46 years. |
Myth #4 I can work
for the City after I retire.
If you are receiving
a retirement allowance from
the Plan, you cannot be paid
for working for the City unless:
You are an election officer,
an elected officer of the
City, or serving as a retired
Member of LACERS Board
of Administration.
You have the Mayor’s
approval to work under
special circumstances and
your period of employment does not exceed 90
days in any fiscal year.
You work as a temporary
election employee for no
more than 120 days in a
calendar year.
You work as a contractor.
In these cases, the payment
of your retirement allowance
will continue, but you will not
contribute to the Plan or earn
additional Service Credit.
But working elsewhere after
retirement is a great idea.
A study by the National Bureau
of Economic Research shows
that retirees who work parttime are generally healthier and more optimistic than those who don't work. |
|
|
