EARLY RETIREMENT

How an early exit affects your pension

You might be interested in retiring early. If you do, your benefit must be reduced because you will be receiving it for a longer period of time. “Early retirement” is any age earlier than 66, and the younger you retire before age 66, the higher the reduction — similar to Social Security.

Q. I’m interested in retiring before age 66. How might this affect my pension?

The normal retirement age (NRA) for post-1989 TRA members is age 66. “Early retirement” is any age earlier than 66, and there is a reduction in benefits for retiring prior to that age.

The younger you retire before age 66, the higher the reduction—similar to Social Security. For example, if someone with a normal Social Security retirement age of 66 (those born between 1943 and 1954) retires at age 62, the Social Security benefit is reduced 25 percent.

Q. WHAT IS “62/30”? AND Will “RULE OF 90” ever come back?

Rule of 90 allowed Minnesota public employees to retire with an unreduced pension once their years of service plus their age equaled 90. This meant that teachers as young as 55, with 35 years of service, could begin receiving unreduced benefits.

There is a significant cost to the pension system when active members retire early, and in 1989 a change in the law made Rule of 90 unavailable to those who began teaching after June 30, 1989. Eliminating Rule of 90 was one of many ongoing reforms to help make pension systems sustainable for the long term.

However, in response to teacher concerns, in 2013 the TRA Board supported legislation that reduces the penalties for members retiring at age 62 and older with 30 years of service. Those with 30 or more years of service who work to age 62 will receive a more favorable early retirement calculation and higher initial monthly benefits.

Q. What is the reduction for retiring early?

The reductions vary depending on number of years prior to normal retirement age 66.

For example, under the law, a post-1989 member choosing to retire at age 64 rather than age 66 will have their benefit reduced by 14 percent if s/he has less than 30 years of service and 6.6 percent if s/he has 30 years of service. The same member retiring at age 60 will receive a benefit that is reduced by 42 percent. A member retiring at age 55 will receive a benefit that is reduced by 65 percent. The 2013 law improved the calculations for longer-service (30 years) teachers retiring at age 62 or later.

Log in to your MyTRA online account to get a benefit estimate or call TRA.

Q. HOW MIGHT changes in the law AFFECT my planned retirement date?

To find out how early-retirement reduction formulas affect you, call the TRA offices to schedule an appointment with a retirement counselor.

Q. How can I learn more about early-retirement options?

If you are close to retirement, our counselors can answer your questions about how choosing to retire early might impact you personally. Call TRA or go to your MyTRA online account to make an appointment with a retirement counselor.