Episode 99 – Need to retire in a hurry?
When you retire through DRS, we recommend that you start the process 3-12 months before you plan to retire. However, life happens, and sometimes people need to start retirement sooner than planned. Whatever the reason, we’re here to help you start your new chapter. Find out what you need to do.
Episode transcript:
[music intro]
Jenny
Welcome back to Fund your Future with DRS. Well, we know that lots of customers plan for their retirement usually years in advance. But sometimes life happens and you need to retire in a hurry. Maybe immediately. Maybe it’s a job restructuring. Or oftentimes folks may choose to retire early because of their own personal health, or maybe that they have a family member that they need to take care of. And we’ve invited Melissa from our contact center to talk with us about how to navigate this particular situation. So welcome, Melissa.
Melissa
Hi. Thank you for having me.
Seth
Melissa, so, this question came up because frequently in our contact center, people call in and say, oh no, I read something on your website and I believe that I’m behind, I’m late, I’m in trouble. And so, could you just first share with our listeners what general guidelines we provide on our website or materials for customers?
Melissa
Yeah. Most of the time we like to have a little bit of time to prepare your estimate and get the information to you. So, we ask for 3 to 12 months before your planned retirement date. However, that’s not always the case. So, if you’re able to give us that, we take that time to create the estimate for you and get an application sent out to you roughly 5 to 8 weeks before your actual date of retirement.
And we ask for that back so that we can process 3 to 5 weeks. So, there’s a timeline there that gives us the opportunity to gather information from your employer. Take all of your information into consideration, make sure we have all of your documents and can get things out and ready to you on time.
Seth
And generally, that is…
Melissa
Pretty easy.
Seth
Yeah, lots of people are planners. As Jenny was saying, people are getting things, their ducks in a row, as they’re getting ready for retirement. And we have those guidelines because people like to plan ahead. But we know, as Jenny was saying, some people need to retire immediately or close to immediately. Do you have any other examples of like what could come up for a person, why they might need to retire quickly?
Melissa
Yeah, we do hear from members that, again, health concerns do come into play there. Sometimes job loss, where they have had an unexpected change, or sometimes they are preferring to be close to retirement age and they just want a job change. So, they’re going to go into private industry instead and would rather do that. And they’re able to retire because they’re eligible.
Seth
Yeah. Some great situation came up. Frequently, it’s an unfortunate situation or something somebody was unexpected. But sometimes it is a positive thing. Family members decided to have them move in with them or yeah, have some other job opportunity in a different state or something like that.
Jenny
So, maybe you can just walk us through a little bit about, even though we say it may take a few weeks. How does DRS process those retirements when they need to be done a little bit quicker?
Melissa
Yes. When you call as a member, because this is an unexpected change or a good change, we ask that you actually call us. You are able to request formal estimates, either through your online account or over the phone with us. In this situation, it is best to give us a call. We can then go over answer questions for you about survivorship, about what your different options are and things like that.
And that allows us to make sure that we have all the necessary information. Once we have that information, then we can work with our processing department to let them know, hey, heads up, this is coming in at short notice and we can go forward from there.
Jenny
Okay. And what are some of those things that folks should consider?
Melissa
Yeah. When you are retiring, the two big questions on that application are your retirement date and survivorship. So those two things come into play. For us retirement is not necessarily the day you stop working, but it’s the first of the month following your separation. So whatever your last day of work is it’s going to be the first of that next month.
And so that’s important to line up to make sure that we have all the information we need. And then survivorship can vary depending upon who you’re going to leave as your survivorship. And we have four different options here. The first one is no survivorship. The other three are percentages that get left to that person. And sometimes it’s nice to be able to walk through that information and know how that leaving a survivorship will affect your benefit.
Seth
We’ve done other episodes on survivorship. We can remind people if they if they want to go back and listen to those episodes, that’s a good resource to think about what options you have for that. And I think the question around separation is important in this conversation of, are you anticipating that you need to start your pension right away or not?
And that is really a person-specific question. Maybe I need to start this income because I’m taking care of someone else. Maybe I have another job opportunity and I don’t need to start this income. I’m not yet 65. I’m not quite ready to start that pension. And in that case, there isn’t. If you’re not going to start your pension, you don’t actually need to let DRS know we’re going to wait.
But you may need to talk to the Health Care Authority. I think we learned this in a previous episode that if you’re going to defer your medical coverage, that’s something you might want to check on. So, checking those boxes and make sure you’re checking with everybody involved. I think one of the things around separation that you mentioned, it’s really important for people to realize, is that we’re not actually even starting to calculate your benefit until the month after you separate into that retirement month.
And so, to Jenny’s question, that is one of the ways where we’re able to make this happen a little more quickly. We still have time in the process because we only pay once a month. So yeah.
Melissa
Yeah, I think too, like you had mentioned, the deferral. If you’re in a position to separate and wait, great. If you’re eligible for early retirement, that’s great to. Our plans are different. Plan 2 versus Plan 3. And even our Plan 3 members, if they are separating, they have access to their investment account where they can choose to do different things as well. Also, DCP allows some flexibility.
Seth
Yeah. So, it might feel like a big life change. But if you have an investment account in Plan 3 or DCP, you have maybe a little more time to think about it or a little bit more flexibility. The thing I think to also keep in mind, though, is that all of those things, including your pension, will take a little bit of time to kick in.
Yeah. And so, it’s another reason we talked about this a long time ago on another podcast episode about having an emergency fund, making sure you have a little bit of wiggle room to help cover that transition. And this is true, I think, for all of our retirees, but especially when folks are having to retire in a hurry, making sure they have a little bit of a cushion that can help navigate that transition is really helpful.
Melissa
Absolutely. I think the important part is to make that phone call, and so we can help them walk through what their options are, and to think about different things and be able to provide them with maybe scenarios they weren’t thinking about or things they hadn’t considered.
Seth
Yeah, I think part of one of the reasons we wanted to do this specific episode is this is a call we get pretty frequently, and I think every time the person feels like, oh, I must be the only one. Like it feels like, I don’t want to say a failure, but when your plans have changed, it can be disorienting or confusing or concerning.
And letting folks know that we’ll help walk you through the options you still have to make these decisions. The other thing I really like to remind people about is even in a situation where it ends up like you quit a month ago and you forgot to contact DRS, we’ll pay a retroactive pension benefit for anything you missed. And as you were saying, we have to sometimes communicate with employers and get additional information.
We’ll pay a first pension benefit and then make adjustments as needed down the road as well. So, people don’t have to worry about missing a pension check. If we have time, we’re going to get that first pension check out the door.
Melissa
I think the most common thing that I’ve run across in that situation is people are sometimes so thankful and so surprised that we can do it early, so being able to do that for them is a great thing that we enjoy doing when we take calls. And like you said, that person can be a little anxious or unsure of what’s going to happen. It’s nice to be able to reassure them that we can help them through this process and give them what they need.
Seth
It is one of the great things about making that phone call. The person that you’re talking with is likely going to be able to give you a pretty good idea of what your monthly benefit amount is going to be, and that can help maybe put some minds at ease if like, okay, I at least now have something to work with.
Melissa
Yeah, having a ballpark estimate in that moment to say, oh yeah, this this will be okay. We can figure this out. Yeah, absolutely.
Jenny
Excellent. Well, I love that we have some time padded in there so folks don’t have to feel like, oh, no, I missed the 12-month window. What do I do? So great. Is there anything else that you can think of that our members should know about? That crunched maybe unexpected retirement timeline?
Melissa
Nope. I think the best thing is, when that moment comes, it’s just to call that we will do everything we can to be able to walk you through it and answer your questions. Recently I worked with another member and similar situation where they were like, “oh, I don’t know what to do. I don’t know how to do.”
So, it’s nice to share information. They actually have forgotten they were a Plan 3 member and didn’t realize they had that option. So being able to talk to somebody directly I think is very beneficial. Even though it’s available online, it gives us more details and a better option to be able to line everything up.
Seth
Yeah, and I think we couldn’t handle this situation if everybody waited until the last minute. And we know most people won’t or don’t need to and maybe don’t want to. We have lots of planners, lots of people who are thinking well in advance, and that’s great too. We can accommodate people no matter where they’re at in that journey or spectrum of situations.
Melissa
Yeah, we have some months that are very busy and some that are not, and so having that timeline in there gives us the opportunity. But when that short turn around needs to happen, it is possible.
Jenny
What is generally the busy time for retirements?
Melissa
We have a busy, very busy summer time, usually with school employees and teachers. Those are a big piece of that. September is always very busy for us. I don’t know if it’s true for the processing side, but on the phone side, we tend to have sometimes people in January, they’re like, “you know what? I think I’m just done. And I just would like to be done now.” And it’s like, “oh, okay,” so we work through those too. We get those calls on a regular basis of that short term turnaround. But definitely September is a busy one.
Jenny
Okay, yeah. The new year, new, fresh look on life.
Seth
Yeah. Either new school year or new calendar year. I think those sorts of normal cycles for people to think like, okay, we’re turning a page here and ready to go. Or just yeah, can’t keep doing it again.
Jenny
Well, thank you so much for coming in and providing this information. And we’re obviously here to help for any of those folks that have questions about retirement. Thank you.
Seth
Thanks, Melissa.
Melissa
Thanks.
[music outro]
Disclaimer
Thanks for listening. And now we’d love to hear from you. What topics would you like to hear about? What questions do you have for us? Send an email to drs.podcasts@drs.wa.gov that’s drs.podcasts@drs.wa.gov. The Department of Retirement Systems provides this podcast as a public service, but it’s neither a legal interpretation nor a statement of DRS policy.
References to any specific product or entity do not constitute an endorsement or recommendation. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by DRS employees are those of the employees and do not necessarily reflect the view of DRS or any of its officials.
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