Retirement is a personal decision that looks different for everyone. Depending on your age, years of service, and your employer’s plan provisions, you may have the option to retire earlier than your normal retirement age. Whether you’re planning to retire in a few years or decades from now, knowing the requirements and available options can help you prepare.
Before deciding to retire early, it’s important to understand how it could affect your monthly LAGERS benefit.
To begin receiving a monthly LAGERS retirement benefit, you must:
- Work in a LAGERS-covered position
- Be vested with at least five years (60 months) of service credit
- Reach your retirement age based on your type of work
Once you’re vested with 60 months of service credit, your LAGERS benefit is guaranteed for life, even if you leave LAGERS-covered employment before you’re eligible to begin drawing your benefit.
Normal Retirement Age
Your normal retirement age is the age you are eligible to retire with full, unreduced benefits. Your normal retirement age depends on your job and how it’s classified with your employer.
There are four job classifications for LAGERS:
- General employees: Age 60
- Police officers: Age 55
- Firefighters: Age 55
- *Public safety personnel: Age 55
Most employees will fall under the “General employee” department. The normal retirement age for vested general employees is age 60.
Many employers may also have police or fire departments. The normal retirement age for these jobs is age 55.
The public safety department is an option that your employer may choose to elect for EMS personnel, emergency telecommunicators, and jailors. To qualify for a normal retirement age of 55, employees in these categories must work for an employer that has adopted the public safety classification. If your employer has not adopted this provision, these roles are considered general employees and will have a normal retirement age of 60.
Early Retirement Age
If you are vested, you may be eligible to retire early and receive a reduced benefit at your early retirement age.
- General employees: Any age between 55-59
- Police officers: Any age between 50-54
- Firefighters: Any age between 50-54
- *Public safety personnel: Any age between 50-54
*If your employer does not have a LAGERS public safety department, these roles are considered general employees.
If you decide to retire and begin drawing your benefit before your normal retirement age, your monthly payment will be reduced by 6% for each year you are younger than your normal retirement age on a pro-rated basis.
Rule of 80
Some employers offer an alternative retirement option called the Rule of 80. If you’re vested and your employer offers this option, the Rule of 80 may allow you to retire before normal retirement age without reducing your monthly benefit.
If your employer provides the Rule of 80, you can retire with full, unreduced benefits when
your (Age) + (Years of Service) = 80
Keep in mind:
- You must remain employed in a LAGERS-covered position until you reach your Rule of 80 age
- The Rule of 80 is an optional employer provision; not all employers offer it
- Depending on your age when you first entered LAGERS-covered employment, you may reach your normal retirement age before you ever qualify for the Rule of 80. In this case, you could retire at your normal retirement age
You must leave all LAGERS-covered employment to be eligible to draw any of your LAGERS benefits.
If you’ve worked for multiple LAGERS employers, one with and one without the Rule of 80, service credit from both employers will count towards your Rule of 80 age, but you won’t receive the non-Rule of 80 employer’s benefit until you reach retirement eligibility age.
In other words, you can retire at your Rule of 80 age, but you’ll only get part of your benefit until you reach normal retirement age.
If your early retirement age is less than 55 for general employees or 50 for police and fire, and you choose to receive a Partial Lump Sum (PLUS), that payment may be subject to additional early withdrawal penalty. Please consult your tax professional to ensure you understand the tax implications of early retirement.
You Don’t Have to Retire as Soon as You’re Eligible
Becoming eligible to retire doesn’t mean you have to stop working.
The longer you work and the higher your salary, the larger your benefit may be. Many LAGERS members choose to continue working after reaching their early, normal, or Rule of 80 retirement age to increase their future benefit. Others decide that retiring a few years early may be a better fit for their personal and financial goals.
Before making your decision, consider your retirement goals, financial needs, and how your retirement date may affect your lifetime benefit. It may also help to log in to your myLAGERS account and run benefit estimates for several retirement dates. Comparing different retirement dates can help you see how retiring earlier or working longer may affect your monthly benefit. Taking the time to understand your options today can help you make the retirement decision that’s right for you.
