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Planning for Retirement

TRS Before Retiring

Retirement Beyond the Paperwork

Social Security Eligibility

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Planning for Retirement

Pre-retirement Concerns

Retiring can be a simple process if you plan ahead. This section of Retirement Resources provides information to help you decide when the time is right to begin the retirement process and what retirement options are available for you.

  • The online Member Guides for TRS Tier 1 and Tier 2 are available for reference on the TRS of Illinois website.
  • The TRS Retirement Time Line Checklist and Retirement Countdown for both Tier 1 and Tier 2 are available in the Fall Benefit Information Meeting Booklet. This timeline is meant to be a general example of the retirement process. Your specific situation may differ.
  • An informative retirement video covering many aspects of TRS and the retirement timeline is available to view online.
  • What can you keep in retirement and what will you lose? It’s important to fully understand the benefits you may keep when you retire and what benefits you will lose. Review and determine the benefits available that you might have the ability to keep, depending on the type of benefit and the employing district.

Keep

Maybe

  • Life insurance
  • Employer-paid life insurance typically terminates when you leave the employer, but some policies may be “portable” allowing you to pay the premiums and keep the coverage
  • Voluntary insurance plans deducted from your paycheck may have conversion or portability options
  • Supplemental insurance plans
    • Cancer coverage
    • Heart and stroke coverage
    • Hospital indemnity coverage
    • Accident coverage
    • Long term care plans
              •  

Lose

  • Dental and vision insurance
  • Disability Insurance
  • Employer-paid life insurance

Some savings opportunities end when you retire, while others might still be available.

Begin

  • Ongoing pension payments

Maybe

  • Ability to contribute to IRA retirement savings
  • You must have earned income to contribute to an IRA.
    • Earned income includes wages, salaries, commissions, and self-employment income. Earnings from property, interest and dividend income, and pension or annuity payments are not included as earned income.  The IRS list of earned income and excluded items is available in Publication 590-A, updated annually.
    • If you don’t have earned income but your spouse does, may be able to open a spousal IRA.
    • These accounts allow a person with earned income to contribute on behalf of their spouse, who does not have earned income. The spouse with earned income can contribute to the IRAs of both spouses, provided the earning spouse has enough earned income to cover both contributions.
      • This material is for informational purposes only, and is not intended to provide any tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any transaction.
      •  

Lose

  • Ability to contribute to 403b retirement savings
    • Generally speaking, only qualified employers can make contributions to your 403(b) account.
    • These contributions are made through an elective payroll deduction. The term 403(b) plan refers to a retirement account designed for certain employees of public schools and other tax-exempt organizations, so even if you are employed after retirement, you may not be with an employer that qualifies to continue contributions to a 403(b) account.
    • This material is for informational purposes only, and is not intended to provide any tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any transaction.
        •  
  • Ability to contribute to Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA)
    • Contributions to HSAs and FSAs become more complicated in retirement.
    • Factors such as age, earned income, and choice of medical insurance plan, will impact your ability to make HAS or FSA contributions.
          • This material is for informational purposes only, and is not intended to provide any tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any transaction.

Features of TRS to Consider Before Retiring

Retirement is more than just forms and timelines.  There are other aspects of TRS that you need to be aware of as you transition from employment to retirement.  Just as life changed during your working years, life changes in retirement may also bring changes to your TRS benefits. 

  • TRS provides two types of death benefits: a beneficiary refund, which consists of any remaining accumulated contributions, and survivor benefits.Each benefit may be paid to separate beneficiaries or both benefits may be paid to the same beneficiaries.  The type of benefit for which beneficiaries are eligible is determined by their status at the time of your death.
  • Double-check current beneficiaries on your TRS account
    • You may designate beneficiaries to whom death benefits will be distributed by using the Beneficiary Designation form. Periodically review your beneficiary designation and be sure to change it whenever necessary. Some events that may require a beneficiary update include marriage, divorce, births, deaths, or dependents reaching adulthood.   If you are an active member, your TRS Benefits Report contains your designated beneficiaries.
  • While you are receiving a retirement annuity, certain restrictions apply regarding employment you may accept, the types of positions in which you may be employed, and the number of days and hours you may work.
  • Refer to the latest version of the TRS handbook or contact TRS for current information.
  • Tier 1:
    • If you retire between the ages of 55 and 60 with at least 20 but fewer than 35 years of service, your retirement annuity is reduced by 6 percent for each year (half percent per month) that you are under age 60. A reduced annuity is based on your average salary, years of service, and age.
  • Tier 2:
    • Requires teachers and administrators to be 67 years old and have accumulated at least 10 years of service credit in order to qualify for nonreduced benefits that a member has earned.

Retirement – Beyond the TRS Paperwork

Retirement is more than just completing the paperwork and starting the payments.  It’s an ongoing and multifaceted process with both big decisions and small choices.  As you plan for retirement, you’ll also need to consider items such as:

  • TRS benefit recipients who enroll in the Teachers’ Retirement Insurance Program (TRIP) receive health, prescription, and behavioral health coverage.
  • Additional plans and coverages are made available to retirees through the Illinois Retired Teachers Association (IRTA)
    • Dental and vision plans
    • Long term, short term, and home health care
    • Cancer, heart, and stroke plans
    •  
  • What actions are needed, if any, at the time of your separation of service and/or retirement
    • Check with the account agent or company for specific account requirements
    • If you funded retirement accounts such as 403(b)s through payroll deduction, check with the district’s central office on the process and forms required to roll-over or withdraw those funds.
  • Devise a strategy and plan for the use of accumulated retirement savings
  • What do you imagine your daily, weekly, and monthly schedule will look like?
    • Have intentional plans, either daily or weekly.
      • Establish a routine
      • Structure your days
      • Create easy to-do lists
    • What activities will you be involved in?
      • The freedom of retirement will allow you to make many choices that are not regulated by the school bell. You will be able to:
        • Keep up with – or start new – hobbies
        • Maintain your social life with friends and relatives
        • Join – or become more active with – clubs that relate to your interests or hobbies
        • Schedule time for both exercising and for relaxation
  • It’s important to engage, interact, and volunteer in retirement to stay connected and maintain existing and build new networks.
    • The Illinois Retired Teachers Association (IRTA) is the voice of Illinois’s retired educators. IRTA defends retiree pensions and healthcare protections through lobbying efforts and advocating for retirees.
    • IRTA members can enjoy the annual State Convention, local Chapter events across the state, and numerous social and volunteer opportunities throughout the year.
  • The Illinois Retired Teachers Association (IRTA) has been dedicated to maintaining and improving benefits for annuitants of the Teachers’ Retirement System and voicing IRTA members’ concerns over healthcare changes since 1955.
  • IRTA membership provides you with:
    • Advocacy – for retiree concerns in the legislature and with individual issues at the IRTA office
    • Benefits –access to benefits and coverage needed in retirement at group rates, including benefit reviews for members
    • Connections – allowing you to stay in touch and stay active through local chapter events and meetings, member trips, and informational webinars
  • IRTA also provides information on TRS, TRIP, TRAIL, and other important programs and issues relating to your retirement.
  • IRTA Pipeline Memberships
    • An active teacher who has announced their retirement to be effective within the next four years
      • The pipeline membership is free for up to four years.
      • Upon retirement, IRTA dues of $2.50 per month will be deducted from the TRS pension.
    • IRTA New Retiree Memberships
      • A new retiree member is free for the entire calendar year for which the member is retiring when paid through a dues deduction of $2.50 per month from your TRS pension.
        • Deductions will begin in January of the subsequent year.
      • More information on IRTA membership.

Social Security Eligibility

Why it Matters.

Knowing your Social Security eligibility status matters for retirement.  Even if you worked in a state where school districts didn’t pay into the Social Security system, it’s important to know where you stand in terms of Social Security eligibility.  You can then make an informed decision on an action plan to become eligible or understand what Social Security benefits will not be available to you in retirement.

  • Social Security benefits eligibility is based on earning Social Security credits working in a job and paying Social Security taxes.
    • The Social Security Administration cannot pay benefits if individuals have not earned enough credits.
    • Individuals need 40 credits to be eligible for Social Security retirement benefits.
    • Social Security credits are based on the earnings amount of qualifying employment.
  • Check your Social Security eligibility online with a mySocialSecurity
  • After checking your Social Security eligibility online at ssa.gov or with your mySocialSecurity account, do you have less than 40 credits?
  • How many credits do you need to earn to have 40 credits?
    • You can earn credits while you are working in the TRS system and after you retire, with a maximum of 4 credits per year, based on earnings.
    • Social security credits may be earned up to the point an individual applies for Social Security benefits.
  • In 2023, one (1) credit was valued at $1,640 of earnings, up to the maximum of four (4) credits per year.
  • Other important reasons to consider earning the 40 credits needed for Social Security eligibility
    • If you are eligible for a Social Security retirement benefit based on your own credits, you may be eligible for increased benefits because of your current or former spouse’s Social Security benefit
      • The spousal benefit might be as much as half of your current or former spouse’s “primary insurance amount,” depending on their age at retirement
      • Your Medicare Part A and Part B premiums will be impacted based on the number of Social Security credits you’ve earned, as explained below.
  • In general, Medicare Part A (Hospital Insurance) is available premium-free for those with 40 credits because of the FICA tax on their earnings.
  • Those without a qualifying work history may still get Medicare coverage by paying the monthly premiums themselves.
    • These individuals must enroll in both Medicare Part A and Part B (Medical Insurance) and pay premiums for both coverages.
  • Individuals who have earned less than 40 credits may still get Medicare Part A, but on a pro-rated premium based on the number of credits earned.
    • Those able to continue working can accumulate the 40 credits and no longer have to pay the Part A monthly premium.
  • When to apply for benefits
    • Apply for your monthly Social Security retirement benefit any time between age 62 and 70.
    • Payments are calculated based on qualifying life-time earnings.
    • Benefits amounts will be higher the longer you wait to apply, up until age 70.
  • Your benefits in regard to your spouse
    • You may be eligible for increased benefits because of your current or former spouse’s Social Security benefit.
      • The increased benefit amount would be based on your current or former spouse’s earnings if they were the higher Social Security wage earner
      • Your spousal benefit might be as much as half of your current or former spouse’s “primary insurance amount,” depending on their age at retirement
      • Your Social Security retirement benefits may also be reduced by WEP/GPO
    • Your TRS pension and the Windfall Elimination Provision (WEP)
      • WEP can affect how Social Security calculates your retirement benefit if you worked for an employer who didn’t withhold Social Security taxes from your salary.
      • This is a provision implemented by the SSA; it is not a function of your TRS system.
    • Your TRS pension and the Government Pension Offset (GPO)
      • GPO adjusts the Social Security spousal or widow(er) benefits for people who receive “non-covered pensions”, such as a pension paid by an employer that did not withhold Social Security taxes from your salary. GPO reduces the Social Security spousal or widow(er) benefits based on your pension payments.
      • This offset is implemented by the SSA; it is not a function of your TRS system.

Trusted Sources for Advice and Information

Retiring can be a simple process if you take the time to plan ahead.  Beyond knowing the retirement process, the timelines to follow, and the pension plan benefits available, you’re going to have questions and concerns about other aspects of this new stage of your life.  Begin now and build a network to rely on to assist you with these issues. 

  • It is important that retirees have a safe and trusted place to get expert, professional, and unbiased guidance to ensure social and financial well-being.
    • With the rise of the spread of misinformation, there are rumors, myths, and lore that may be circulated about topics important to you – such as retirement issues. It’s important when making impactful life decisions that you are acting on factual information that is correct for you – not what someone else may have been told based on their specific situation.
    • There are organizations and groups that provide education, resources, and tools to help you prevent financial fraud and protect yourself from scams.
  • IRTA can serve as a guide and trusted resource in many issues you might confront in retirement.
    • The Illinois Retired Teachers Association (IRTA) is constantly looking after your largest asset – your retirement pension and health care – and your IRTA membership keeps you informed on the issues so you can focus on enjoying your retirement.
    • The association also partners with organizations that understand your state retirement system, the IRTA member benefits available, and can review your situation annually or at specific retirement milestones.
  • IRTA is constantly protecting and fighting for your retirement pension and health care benefits, as well as
    • Providing individual counseling on the retirement process before, during, and after you complete the retirement process
    • Partnering with other organizations, like AMBA, that provide IRTA members with benefits, services, and discounts needed in retirement
    • Connecting retirees with local units allowing for continued involvement in the schools and community
  • IRTA membership is a small investment that provides great returns on the quality of life for you and other retired teachers.
    • There is strength in numbers – and the more IRTA members there are, the louder the voice representing retirees and their pension and health care benefits.
    • Take a moment and join today:

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