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A Publication for VRS Members
May 2018 | Archives

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Tips for Saving From VRS Retirees

VRS retirees have been there. They know what you’re going through as you pay your mortgage, buy groceries, pay the orthodontist, pay for college and save for retirement. And from the vantage point of hindsight, they’re happy to share what they have learned.

Cathy Murphy, who retired from James Madison University and worked at Western State Hospital and the University of Virginia Medical Center, shares her insights on saving:

"I knew I wanted to retire when I hit my 30 years of service, so that was my goal. I took advantage of purchasing prior service as well as contributing as much as I could to the Commonwealth of Virginia 457 Deferred Compensation Plan. I worked to pay my mortgage off early (even if it meant just sending in extra money each month to get the principal down). When my principal reached $10,000, I paid it off and the house payment I would be making each month went into my retirement fund (IRAs, annuities, CDs, etc.). At age 56, I was able to retire comfortably with 30 years of service. Younger people should plan way ahead and take advantage of all the options to increase their retirement payout when the time comes. I only wish my generation had been able to do more when we were younger, but it's never too late to set one's goals!"


VRS Quick Notes: How to Find Out What Plan You're In

Take 60 seconds to learn how to determine your VRS plan.


 

Getting Ready to Retire: VRS Can Help With That

From planning your retirement date to turning in your application, VRS has you covered. Web pages, web tools, webinars, classes, publications, calculators, counseling and other free resources get you started, guide you through the process, and help you complete your application accurately and completely.

Go to myVRS

Start with the Benefit Estimator in myVRS to see your retirement benefit payment estimate using different retirement dates or payout options. Then use the myVRS Retirement Planner to create a Quick Plan or Detailed Plan that will estimate your income needs in retirement. Base your plan on different retirement dates, add income from other sources such as your spouse or part-time employment in retirement and build in estimated retirement expenses.

Try a Class

Attend a class or view a webinar on retirement decisions, retirement planning and retirement living. Are You Ready to Retire, Your Next Steps, Building Retirement Security, are available at locations throughout the state and as recorded webinars, so you can access the information when it’s convenient for you.

If your employer participates in the Commonwealth of Virginia 457 Deferred Compensation Plan, sign up for a Defined Contribution Plans individual appointment or seminar held around the state. Learn more about managing your plan, distribution strategies and planning for financial security.

Use myVRS Financial Wellness to review your financial awareness through free articles, videos, educational games and mini-courses to help you with budgeting, saving, managing credit, making smart purchases and more.

If you have specific questions and would like to meet with a member counselor, call VRS toll-free at 1-888-827-3847. Counseling hours are 8:30 a.m. – 4 p.m., Monday through Friday at 1111 East Main Street, Richmond, VA 23219.

Read and Watch

You’ve almost reached your goal and are ready to take the final steps and complete your Application for Service Retirement PDF Icon (VRS-5).Take a look at the Getting Ready to Retire page on the website for an overview of all your VRS resources, then review the Getting Ready to Retire Guide PDF Icon and go over the Retirement Readiness Checklist PDF Icon to make sure you have completed the steps to start your retirement off right.

An incorrect or incomplete form can delay your retirement benefit, so be sure to read the detailed instructions on the VRS-5 and watch the tutorial, How to Complete Your Retirement Application, which provides step-by-step instructions.

Remember to apply at least 60 days, but not more than four months, from the date you want to retire.

 

 

Plan for the Unplanned With an Emergency Account

Many factors contribute to the overall state of an individual’s financial health and one of these factors is the ability to plan. Assuming a big-picture mentality will help you understand the importance of planning and one of the smartest strategies for doing so is to start an emergency fund.

An emergency fund is intended to cover the unplanned expenses that arise when life throws you an unexpected curve ball. Since this is a fund that you will ultimately depend on to get you through any unpredicted financial setback, it must be completely reliable in its ability to provide access at any time.

To make the most of your investment, it is a good idea to split your emergency fund into two separate accounts based on specific needs:

Short-Term Emergency Funds
  • Use for smaller, immediate emergencies (having a car repaired, replacing a laptop).
  • Use to hold you over until you’re able to access a long-term account in the event of a more serious emergency.
  • Store in easily accessible account.
  • The account should have a debit card attached and check-writing privileges.
Long-Term Emergency Funds
  • Use for bigger, more extreme emergencies (natural disasters, medical costs).
  • Account accessibility is less important. (If you have a short-term fund, this can cover you during the time it takes to liquidate your long-term funds.)
  • Store in an account that earns a slightly higher level of interest.

Essentially, an emergency fund gives you a form of financial security that you can depend on to help you out in a bind.

These tips are excerpted from one of many available resources in myVRS Financial Wellness. Go to your myVRS account to explore topics like saving for large purchases, paying off debt, lowering bills and repaying student loans. Take courses on paying for college, protecting yourself from identity theft, creating a budget and reviewing your credit score. Use the calculators to figure out budgets, mortgages, car loans and student loans.

 

2018 Legislative Summary

The 2018 General Assembly regular session ended April 5. The legislature passed only a few bills affecting VRS, which are summarized in the 2018 Legislative Summary PDF Icon.

 

PLOP Facts…Continued

The Partial Lump-Sum Option Payment (PLOP) is one of the most asked-about payouts for retirees who select the Basic Benefit or Survivor Option. The February issue offered a number of PLOP facts; in this issue, we explore key considerations in choosing the PLOP.

The PLOP is a one-time partial lump-sum payment based on the amount of your annual basic benefit. You are eligible for the PLOP if you work at least one year beyond the date you first become eligible for an unreduced retirement.

Before choosing this option, there are a few things you should consider.

  • Taking the PLOP reduces the amount of your monthly benefit over your lifetime by the amount of the lump-sum payment.
  • Your monthly benefit is paid first from your member contribution account until it is exhausted (usually within the first two or three years after you retire). Taking the PLOP, which is also paid from your member contribution account, will reduce the amount of money remaining in your account that would be paid to a beneficiary in the event of your death.
  • Your cost-of-living adjustment (COLAs) in retirement will be based on the reduced amount of your benefit.
  • You pay taxes on your lump-sum payment. If the PLOP is paid directly to you, VRS will deduct 20 percent for federal income taxes and, if you live in Virginia, 4 percent for state income taxes on the taxable portion. To save on taxes, you can roll over the PLOP to the Virginia Cash Match Plan, if applicable, or to an Individual Retirement Account (IRA) or other savings plan

Find out more about the PLOP and how it works.

 

Hybrid Retirement Plan Members: Voluntary Contributions Increase Savings Over Time

As a Hybrid Plan member, you know that if you put money in your Hybrid 457 Deferred Compensation Plan account (up to 4 percent of your creditable compensation), your employer matches a portion of that contribution (up to 2.5 percent). But did you ever think how much your voluntary contributions can add up to over time? View the chart to see how modest savings begun early make a difference in your retirement account.

Value of Contributing More Money Over Time

Note: The above representation is based on a monthly income of $3,000, assumes bi-monthly employee contributions and a 6-percent average annual return after 30 years. The final account balance does not account for plan fees or expenses, which would reflect lower net returns. Investment return and principal value fluctuate, so when shares are redeemed they may be worth more or less than the original cost.

 

Don’t Fall for Unsolicited Retirement Counseling Services

VRS has received reports that groups or individuals are contacting members offering retirement counseling services.

VRS does not use unsolicited calls or emails to offer its services. All correspondence from VRS will be sent by U.S. mail on official letterhead. Also, VRS counselors do not come to members’ homes to discuss benefits.

VRS counseling services are free, whether in person in the VRS counseling center or by phone:

  • Call: 1-888-827-3847
  • Hours: Monday through Friday, 8:30 a.m. to 5 p.m.

VRS also offers free retirement planning sessions held at colleges and universities throughout the state, other public locations or the VRS offices in Richmond. If you are uncertain if a communication originated with VRS, call 1-888-827-3847.

 

Save More Using Catch-Up Options in Your 457 Plan

Your Commonwealth of Virginia 457 Deferred Compensation Plan is one of the best ways to save for your future – and the closer you are to retirement, the more you can save. Throughout your career you can set aside money, up to a regular contribution limit set by the Internal Revenue Service, to your Commonwealth of Virginia 457 plan, if offered by your employer. The 2018 limit is $18,500. This amount is your regular contribution limit. As you get closer to retirement, you can contribute even more.

During the three years before your normal retirement age, you can contribute up to twice this regular contribution amount or the amount of your Standard Catch-up, whichever is less. The Standard Catch-Up helps you make up for the years you were eligible but didn’t contribute at all, or didn’t contribute the maximum allowed. Use the Standard Catch-Up worksheet, part of the Standard Catch-Up Form, to see the amount of your standard contribution limit.

If you are age 50 or older, you may contribute an additional amount over the regular IRS contribution limit to the Commonwealth of Virginia 457 Plan. In 2018, the Age 50+ Catch-Up limit is $6,000. Make note, however, you cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year.

 

FAQ: Whom Do I Contact to Update Information in My Account?

Whether you contact VRS or ICMA-RC, the third-party administrator of the Commonwealth of Virginia 457 Deferred Compensation Plan and Hybrid Retirement Plan, depends on the changes you need to make.

If you need to change or correct your name, correct your birthdate or change your marital status, contact your employer. To change your address, log into your myVRS account. Change your beneficiary designation for the defined benefit plan by submitting the Designation of Beneficiary (VRS-2) PDF Icon to VRS.

If you participate in a defined contribution plan, log into Account Access or contact ICMA-RC Investor Services at 1-VRS-DC-PLAN1 (1-877-327-5261) for administrative information such as deferral elections, investment elections, updating beneficiaries for the defined contribution portion of the hybrid plan and requesting rollovers or distributions.

Member Education Icon  Member Education

Classroom and webinar courses are posted on the VRS website as they are scheduled. Register from our Education and Counseling pages.

Retirement Planning
Copyright © 2018 Virginia Retirement System

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