Someday, I'll get fed up with working and do something like retire. First step is to earn 80 points in the Arizona Retirement System. (Points are the sum of your age plus years of service.) Next step is figure out how to afford to take the cut in pay that ensues. I hired on in November of 1979 , So in November of 2009 I will have my 30 years of service, but we are getting ahead of ourselves. It has been recommended to me that I actually retire in January of 2010 so that the various lump sum payments come at the start of a leaner tax year. One of many considerations.

Take a look at:

The Arizona State Retirement System

In particular, the ASRS member handbook describes how things work. (Note this is a local download of the handbook from back in early 2007 or so, you would be wise to check the ASRS link above for the latest and official copy). I am unable to find this or a more recent version on the ASRS website as of late 2008, so take this with a grain of salt. My impression is that there is so much legislation ongoing that affects the ASRS that things are too much in a state of flux to warrant publishing an updated handbook.

If you are crazy (or desperate, or both), you can take early retirement with less than 80 points. There are some pretty severe penalties for doing so, and the point is moot for me, since as of November 2008 I will have 85 points. Once you are past 80 points, you don't need to count points anymore, the only relevant variable is your years of service.

Your retirement benefit is calculated as some fraction of your base pay determined by years of service and a magic "multiplier" as follows:

benefit = base_pay * years_service * multiplier.

The multiplier comes from the following table:

• 0.0210 - less than 20 years of service.
• 0.0215 - 20 - 24.999 years of service.
• 0.0220 - 25 - 29.999 years of service.
• 0.0230 - 30 years of service (or more).

The base pay is the average of the highest 3 years out of the last 10 years you worked (there is also a 5 year (60 month) alternate scheme described in the manual, go read it for all the details).

Here is a short table of how this works, assuming a

• 28 years of service: 28 * 0.0220 = 61.6 percent of base.
• 29 years of service: 29 * 0.0220 = 63.8 percent of base.
• 29.99 years of service: 29.99 * 0.0220 = 66 percent of base.
• 30 years of service: 30 * 0.0230 = 69.0 percent of base.
• 31 years of service: 31 * 0.0230 = 71.3 percent of base.

Clearly if you have 29 years of service, it is worth holding out for the 30 year multiplier jump. Let's assume a $50,000 annual base salary and look at monthly income:

• Pre retirement (100 percent) 4167 per month
• 28 years of service: 2567 per month
• 29 years of service: 2658 per month
• 30 years of service: 2875 per month
• 31 years of service: 2970 per month

Social Security is another issue. You can choose when to start getting benefits, and the longer you wait the larger the benefit. The typical age to begin claiming social security is age 65. My present view of social security is that it will be a nice thing to have kick in given a fixed income and almost inevitable inflation.