Think of the equated plan as if you are borrowing against your pension until age 65.
Your pension is reduced at age 65 regardless of when you actually begin receiving your social security and regardless of how much it actually is.
This plan pays you a higher pension until you are age 65, and then your monthly pension is permanently reduced. You might choose to receive the equated plan if you want your overall income to remain fairly even both before and after social security begins.
So that your income (pension only) before age 65 is close to your combined income (pension and social security) after age 65, the increased pension before age 65 is based on a portion of your projected social security benefit. When you apply for your pension, you provide us with an estimate of your full social security benefit. To obtain your estimate, you'll need to request a statement from the Social Security Administration website, documenting your estimated full retirement age social security benefit. We will convert this full benefit amount to the age 65 amount.
Because calculating your "before and after" pension involves so many variables, it's not possible to provide tables and worksheets here. However, our online pension estimator will do it for you simply and quickly. Obtain your social security estimate as noted above, and plug in your numbers using the Estimate Pension option in miAccount.
The equated plan can be confusing. It is important to have a full understanding of it, because you can't change your mind after your retirement effective date.
When to choose the equated plan.
CONSIDER the equated plan if:
- You believe you would be financially ahead by investing the pension "advanced" to you before age 65.
- You want to receive as much as you can as soon as you can because your life expectancy is uncertain.
- You prefer having a relatively even income throughout your retirement.
DON'T choose the equated plan if:
- You don't want your pension permanently reduced at age 65.
- You like the idea of having more monthly income when social security begins.
- You don't want the higher pre-65 income to put you in a higher tax bracket (remember that extra IRS exemptions kick in at age 65).
- You expect to live longer than the life expectancy tables say, and you believe that the permanent reduction will end up costing you money.
Note: An employee in a covered position who retires under the early reduced retirement plan cannot also receive the supplemental pension.
As you can see in the illustration below, under the equated plan your pension amount goes down at age 65.
Additional notes on the equated plan.
- Your pension is reduced at age 65 regardless of when you actually begin receiving your social security and regardless of how much it actually is.
- If you are age 65 or older, eligible for a disability retirement, or qualify for a supplemental pension as a covered employee responsible for prisoners, you can't choose the equated plan.
- The equated plan has no bearing on postretirement increases, so you'll get the standard increase (3 percent, not to exceed $25 per month) that is based on the initial pension amount calculated before the advance.
- Your "full retirement age" for social security benefits is later than age 65 if you were born after 1937. We adjust for this when we calculate your equated plan pension. (We determine your age 65 social security amount based on the "full retirement age" social security estimate you provide.)
- Your pension payment reduction under the equated plan takes effect the month after your 65th birthday.