Retirement Benefit Payment Options

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At retirement, you must elect one of the payment options described below. On average, the payment options are mathematically equal to one another. That is, each option is calculated so that its total value is the same as the value of the other options if you and the beneficiary you name (if any) to receive a monthly payment after your death live your expected life spans.

You cannot change your selected payment option once you cash your first retirement check or after the 25th of the month following the month your first check is mailed (whichever is earlier) except under one of the following two conditions:

  • If you select an option that provides a monthly benefit to your spouse as a beneficiary after your death (Option 2, 3, 6-2 or 6-3) and later become divorced from that spouse, or
  • If you are rehired in a position covered by the same system from which you retired and contribute to your new account for at least three years.
Learn more about monthly payments on our Monthly Payments help page.

Here are your retirement benefit payment options:

Maximum Allowance

When you retire with a full service retirement benefit, your basic benefit is the maximum allowance and is calculated under the formula in the section called "Estimating Your Retirement Benefits." If you retire early, your maximum allowance is calculated using the same formula, which is then reduced for early retirement. In either case, you will receive your maximum allowance for as long as you live. All monthly payments stop at your death. A survivor benefit is not available for this payment option.

Option 2: 100% Joint & Survivor

  • You receive reduced monthly payments for life.
  • After you die, your monthly survivor beneficiary receives the same amount monthly for life.

Option 3: 50% Joint & Survivor

  • You receive reduced monthly payments for life which are slightly larger than the payments in Option 2.
  • After you die, one half of your payment continues to your monthly survivor beneficiary for life.

Option 4: Social Security Leveling

  • You must be younger than 62 to qualify for this option.
  • The Retirement Systems is not paying your Social Security. We are paying a higher retirement benefit every month until you reach age 62.
  • You receive larger monthly payments than you would otherwise be entitled to receive until you are eligible for Social Security at age 62.
  • Beginning the month after the month of initial entitlement for Social Security age 62 benefits, your monthly payments will be reduced to an amount that is less than what you would otherwise be entitled to receive. Nevertheless, your reduced retirement payments after age 62, plus your allowance from the Social Security Administration, should be approximately the same amount as the inflated payment you received from the Retirement Systems before age 62.
  • The actual amount of your retirement payments both before and after age 62 will be based on the estimate of benefits you provide to us from the Social Security Administration before your retirement. This Social Security estimate should show the benefits you would receive at age 62.
  • All monthly payments stop at your death. A survivor benefit is not available for this payment option.

The reduction in your monthly retirement payments after age 62 allows us to recover the inflated amounts you received before age 62.

Any percentage increase you are granted in your retirement benefit before age 62 will be applied to the inflated benefit you are receiving at that time. However, when you reach age 62, your retirement benefit will be reduced to the original amount promised after age 62 plus the percentage increases (not the dollar amount of increases) granted before age 62.

Option 6–2: Modified Joint & Survivor (combination Maximum Allowance and Option 2)

  • You receive reduced monthly payments for life.
  • After you die, your monthly survivor beneficiary receives the same amount monthly for life.
  • However, if your beneficiary dies before you do, your monthly payments increase to the amount payable under the maximum allowance.

Option 6–3: Modified Joint & Survivor (combination Maximum Allowance and Option 3)

  • You receive reduced monthly payments for life.
  • After you die, one half of your payment continues to your monthly survivor beneficiary for life.
  • However, if your beneficiary dies before you do, your monthly payments are increased to the amount payable under the maximum allowance.

It is important to note that if you select a retirement benefit payment option that names a beneficiary, you should immediately notify the Retirement Systems if that person dies before you.

NOTE: Under Options 2, 3, 6-2 and 6-3, you may name only one beneficiary to receive a monthly survivor benefit after your death. You may not change your survivor beneficiary after you retire except under one of the following two conditions:

  • If you select an option that provides a monthly benefit to your spouse as a beneficiary after your death (Option 2, 3, 6-2 or 6-3) and later become divorced from that spouse, or
  • If you are rehired in a position covered by the same system from which you retired and contribute to your new account for at least three years.

Redesignations must be requested within 90 days of remarriage and the election must be filed with RSD no later than 120 days after remarriage.