It’s safe to say your budget will change when you retire. Now you’re saving for retirement, and you’ll likely have other expenses that may drop off in retirement, like your mortgage or a car payment. Depending on your lifestyle, you may spend more or less than you do now. Continue reading...
Doing a KPERS Retirement Right.
The process can seem intimidating but if you have all your ducks in a row, it’s not bad at all. Use this list to navigate the retirement process.
- Attend a KPERS pre-retirement seminar or webinar.
- Find out when you can retire. This depends on your age and years of service. As soon as you know when you're eligible, then you can decide when you want to. When can I retire?
- Calculate a benefit estimate in your KPERS account.
- Know your payment options: KPERS 1 | KPERS 2 | KPERS 3 | KP&F
- Apply for retirement at least 30 days before the day you want to retire. Remember, your benefits don't start automatically.
- Consider if you want to continue basic or optional life insurance. Convert to whole life or continue "port" term life (if under 80).
- Use the IRS withholding calculator to determine your tax withholding.
- Estimate your Social Security benefits.
- Figure out your health insurance.
- Look at other retirement income sources. Figure out what is the best way to turn your savings into income.
It’s a good idea to request a benefit estimate now so you have an idea of how much retirement income you can expect. You can calculate an estimate in your KPERS account. This calculator uses your own account info and lets you save estimates for later. We also have a generic calculator that you can use, but it won’t have your personal info. You’ll have to enter it on your own. If you prefer the old-fashioned route, you can request a Benefit Estimate and we’ll do it for you. Keep in mind, estimates are just estimates. They can vary from your actual monthly benefit, which won’t be calculated until you apply for retirement.
Pick Your Date
KPERS & KP&F: 1st day of month, must be off payroll
School members under continuing contract law: June 1 or after, 1st day of month
Remember, your service quarters round up or down. Two quarters round up to equal one year of service. Working even a few extra days may push you into the next quarter and help boost your maximum monthly benefit. Contact us if you need help.
Time For a Health Care Checkup
Health care is one of retirees’ largest expenses. If you’re not prepared, unexpected health care costs can quickly deplete your savings. Make your health a priority now to get on the path to a healthier retirement.
Health Care Gap and Medicare
Depending on your age when you retire, you may have a gap between your employer-sponsored insurance and Medicare. Kansas law lets you stay on your employer’s insurance plan if you pay the full premium. KPERS doesn’t offer health insurance to retirees.
If you’re waiting to qualify for Medicare, you may want to consider joining your spouse’s insurance plan, buy a private insurance plan, or buy one in the Health Insurance Marketplace.
You’ll qualify for Medicare when you reach age 65 or have certain disabilities or illnesses. Use the calculator to see when you’re eligible and estimate your premium. Keep in mind, there are four parts to Medicare.
|Medicare Plan||What it Covers|
|Part A (hospital insurance)||Inpatient care in hospitals
Skilled nursing facility care
Home health care
|Part B (medical insurance)||Care from doctors or other health care providers
Home health care
Durable medical equipment
Some preventative services
|Part C (Medicare Advantage)||Care from doctors or other health care providers
Includes benefits covered under Part A and Part B from Medicare-approved private insurance companies
Usually includes Medicare Part D
May include extra services/benefits at additional cost
|Part D (prescription drug coverage)||Care from doctors or other health care providers
Helps pay for prescriptions
Staying Fit as You Age
As the saying goes, an apple a day keeps the doctor away. So can 20 minutes of moderate exercise. The Center for Disease Control recommends 150 minutes of moderate exercise per week to help reduce your risk for common diseases like heart disease, cancer or diabetes. And you don’t need a gym membership to stay fit. You can start by walking in your neighborhood or lifting free weights at home. Be sure to check with your doctor before you start a new workout regimen.
Retirement Budget - It's a Whole Different Ballgame
It’s safe to say your budget will change when you retire. Now you’re saving for retirement, and you’ll likely have other expenses that may drop off in retirement, like your mortgage or a car payment. Depending on your lifestyle, you may spend more or less than you do now. To get your head in the new budget ballgame, here’s a glance at what you can expect to come in and go out.
What’s Coming In
- Your pension
- Your Social Security benefits
- Income from your 457, 403(b) or IRAs
- Other income
- Retirement plans or pensions from other employers
- Business income
- Part-time job
- Taxes, utilities and home maintenance
- Health insurance
- Long-term care insurance
- Medical bills and prescription costs
As you’re making your budget, add up how much you need to pay the bills and subtract that from what’s coming in. Then factor in the fun stuff, like entertainment and travel.
If you have enough to cover the essentials and then some, you’re probably on the right track. But if your estimate falls short, you may want to delay retirement.
Converting Savings to Income
By now, you probably have a sizable nest egg to help support your retirement needs. In retirement, you’ll have a few options on how to use it. You can choose to draw income from your savings to maintain your lifestyle. This could mean funding travel or entertainment. Or you can keep your savings in reserve to help pay for insurance or future health care costs.
The important thing is to create a withdrawal plan that helps your savings last through retirement. You may want to visit with your KPERS 457 or other plan counselor, or contact a certified financial planner for help building your plan.
Taxes and penalties
Not only does your budget change in retirement, so will your taxes. In general, your KPERS benefits are subject to federal income tax, but not Kansas income tax because you paid state taxes on your contributions. But if you are considering a move to another state, you’ll want to check if your benefit is taxable in that state.
You decide how much tax is withheld from your monthly benefit payments in your online account. Keep in mind, you may be subject to penalties under the “Estimated Tax Payment” rule if your withholdings aren’t enough. You can change your withholding amount any time in your online account.
If you take a lump sum, KPERS will withhold 20% for federal taxes. But you can avoid this by rolling the money into an eligible plan, like a 457, 403(b) or IRA.