Preparing for Retirement

By Philip J. Beavers, CFP,
WEAC's Member Benefits Specialist

June 1999

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Contact WRS within 12 months of retirement date

When you are within 12 months of your anticipated retirement date, you should contact the Wisconsin Retirement System (WRS) to request a retirement packet and benefit estimates. The WRS has two locations: Madison (608) 266-3285 and Milwaukee (414) 227-4294.

The WRS will need to know your Social Security number, your anticipated termination date, last year’s gross earnings, this fiscal year’s anticipated gross earnings, and a joint survivor’s name and date of birth if you want joint survivor estimates.

If you will be under age 62 at your anticipated retirement date, it is helpful to have an estimate of your future Social Security benefits to avoid a possible decrease in your total income at age 62 if you choose an accelerated payment option. WRS will use your actual projected Social Security amount if you provide it rather than the estimated amount from generic tables. To receive a projection of your Social Security benefits, call 1-800-772-1213, visit your local Social Security office or go to the administration’s Web site at www.ssa.gov. Be prepared to provide earnings data for your most recent two years and your age at retirement.

Depending upon the time of year your request is made, it will take three to eight weeks to receive the retirement packet and benefit estimates. During this time you should consider reviewing with your union representative or employer your locally negotiated retirement provisions. Many local contracts have provisions dealing with severance compensation, pay for unused sick days, continuing group life insurance, and continuing group health insurance. Typically, to be eligible for any locally negotiated retirement benefits, you must indicate an intent to retire by a certain date (the date is February 15 in at least one current teachers’ contract).

Life Insurance

Most WEAC members have a substantial need for life insurance during their working years when they may have debts and dependents. However, most retirees have little need for life insurance. A large percentage of retirees may continue to be covered by their group life insurance plan. For early retirees (age 55-65), premiums are paid by the employer or employees to the retiree’s 65th birthday. Upon reaching 65, a portion of your coverage will continue without need for premiums. Upon reaching 67, you will have a paid-up policy equal to 25% of your last year’s wages.

Health Insurance

There are a number of group health policies and they do not all have the same benefits for retirees. Features which you need to explore with your union representative, insurance carrier, or employer include:

• How long do I have a right to stay in the plan?
• What happens when I become eligible for Medicare?
• What are the costs?
• What are a surviving spouse’s rights to the coverage?

You can get brochures from the Medigap Hotline (1-800-242-1060) or contacting the state insurance commissioner’s office. Brochures include: “Buyer’s Guide to Life Insurance,” and “A List of Approved Health Care Policies.”

If staying in your group health plan is not an option, the State of Wisconsin has a major medical plan for retirees under the age of 65 and a Medigap Supplement for retirees age 65 or older under the local annuitant health insurance program. This information will be included in the retirement packet.

Retirement Packet

Your retirement packet will include informational brochures, retirement benefit estimates/application, and a form for direct deposit of monthly payments.

A major issue for most retirees is the selection of the annuity option. There is a clear explanation of the various annuity options in the retirement packet.

In addition to selecting an annuity option on the retirement benefit application, you also make a decision concerning income tax withholding. Most retirees choose to have income taxes withheld. You should submit your retirement application when you get to within 90 days of your last day of work. If you apply more than 90 days after you terminate, you will lose one or more months of benefits.

Annuity checks are dated the first of the month and mailed on the last working day of the previous month. Your first annuity payment will be based upon the amount shown on your annuity estimate for the option you selected. After your employer reports your final earnings and service, the WRS does a final calculation of your annuity, and your monthly payment amount is adjusted retroactively to your annuity starting date.

If you apply 45 to 90 days before your annuity effective date, you should receive your first payment about six weeks after your termination date. Your check will include payments retroactive to your annuity effective date. The payment on the first of each month is for the preceding month.

Posted June 9, 1999