I reached 30 years of service at the University of Arizona and retired in December of 2009. I put these notes together at that time, with the help of several others who were retiring at the same time and working hard to figure out all the details.
I should point out that if you are reading these, they are several years out of date, and who knows what has changed. It is over and done and cast in concrete for me, and I am not following changes and maintaining this page. Odds are these notes are correct about most things, but they are by no means official and you should cross check anything important.
First step is to earn 80 points in the Arizona Retirement System. (Points are the sum of your age plus years of service.) There are people working for the University who are not participating in ASRS, those people won't find much here that is relevant to them.
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 (and there are some fine points on the date for 30 years of service).
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, and ultimately a piece of good advice that I chose not to follow.
Take a look at:
The Arizona State Retirement System
I have a User access ID there.
I signed up for a "getting ready to retire" seminar 9/3/2009 8:30AM
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. Either that or they are lazy do-nothings, but the people I have met at the ASRS have not struck me in that way.
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:
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
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:
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.
A decision on when to take Social Security is greatly benefited by having a crystal ball, or some other way to predict how long you are going to live. The statistics of this have been intensely studied, and you may want to read some of my
As it turns out, for partial years, each month is worth 0.11 years (in other words 1/9 of a year) not the 0.0833 years (1/12 of a year) that most folks would expect. This is the case for the University anyway, and would seem to have its roots in a 9 month academic year. You can verify this by looking at your yearly report from the ASRS (which reports ending on June 30 of each year). For someone like me, who hired on in November, the month of November counts as a whole month (part of how things are done), so there would be 8 months (Nov thru June) in my partial first year, this should show up as 0.111 * 8, i.e. 0.88 or 0.89 depending on how they handle rounding. You would expect 0.66 or 0.67 if not for the amazing 0.11.
The upshot of this is that if a person like me worked just one day in August, they would get full credit for July and August (getting 10 months credit, yielding 1.11 years, which does get truncated to 1.0 year).
This algorithm has been confirmed by several careful people, including the amazing Howard Lester, who is never wrong about such things. I see people in the back row muttering and raising their hands. Remember, this is accounting not mathematics.
I began hacking it into html and making ammendments and notes to produce: The Retirement Guide ++
More accurately, what they call the 20/20 rule applies during the first year after retirement. Namely if you work for 20 hours or more for more than 20 weeks in a fiscal year, you forfeit your retirement.
These limitations only apply if you work for an ASRS participating employer. If you go to work for Microsoft or Raytheon, anything goes.
For a lot more details, check this link: ASRS working after retirement guidelines (I have a copy of this as of 9/2009 right here.
Tom's Info / firstname.lastname@example.org