Luck Has Nothing To Do With It

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With all of the discussion about luck surrounding St. Patrick’s Day, I began to think about how lucky my Dad will be in a few short months when he will be retiring. As I continued to think about how lucky my Dad is for being able to retire, I began to realize that luck really has nothing to do your ability to retire.

During my father’s 40+ year career he has worked a public sector job and a private sector job. The retirement plans that were made available to him at the two employers were vastly different. However, both took dedication. For public sector, dedication to his job increased his pension benefit. Just like what you have with your LAGERS. Whereas, when he moved to the private sector, it took a dedication to saving money through his 401(k). A combination of a pension and personal savings throughout your entire career is best to ensure your financial independence throughout retirement.

As a LAGERS member, you do have the advantage of receiving a guaranteed pension benefit upon retirement. This pension benefit will be a direct reflection of how much you made and how long you worked for your LAGERS employer(s). In other words, the longer you work, the more you earn, the larger your LAGERS monthly benefit will be. See, no luck to it.

LAGERS benefits use a three component formula that multiplies together to calculate your monthly pension payment: Benefit Program x Credited Service x Final Average Salary

  • Benefit Program is an employer elected percentage that ranges from 1.00% - 2.50%. This is the one employer election that has the largest impact on your monthly benefit.

There are two different types of benefit programs that you may have at your employer:

  • Life Programs: Pay the same percentage for the lifetime of the member
    • Example L-7: 50% x 25 Years x $3,000 = $1,125 paid for life
  • Life & Temporary Programs: Pays a base life percentage, just like the Life Programs. However, these programs also pay an additional temporary benefit until 65 (unless the program is a LT-62 program).
    • Example LT-8(65):  1.50% x 3000 x 25 years = $1,125 paid for life

    0.50% x 3000 x 25 years = $   375 paid until age 65

  • Credited Service is the sum of your prior service (if any) and membership service. Prior service may be granted to you if you worked for your employer prior to it joining the LAGERS system, you didn’t have a previous plan similar to LAGERS, and your employer elected to cover the service under LAGERS.
  • Final Average Salary is employer-elected as either the highest consecutive 60 or 36 month average from the last 120 months of LAGERS credited service. The salary used for this calculation is based on your gross wages.

So, as you enjoy your corn beef dinner and other St. Patrick’s Day festivities, remember that retirement is not something that you can just luck into. It takes dedication to your employer and saving money to ensure your retirement security.

JPabst Jeff Pabst, CRC Communications Specialist


Tagged Employers, Members, Prospective Members, Retirees

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