Your LAGERS Benefit Will Not Be Enough

Dock, Water, Fog, Edge

 

The income you will receive from your LAGERS retirement benefit will not be enough.  Yes, it will be a stable, dependable, lifetime source of income, but it will not be enough to make you retirement dreams come true.

Now that I have your attention, here is a little story that proves my point.

Consider a LAGERS member named Frank.  Frank is a 60 year-old, hard-working public works employee for a medium sized city in Missouri.  He has dedicated most of his working life to his community and is considering retirement after 30 years of service.  His employer has the L-3, 1.25% LAGERS multiplier and Frank’s final average monthly salary is $3,500.  This will produce a LAGERS benefit of $1,313 per month or $15,750 per year.  Frank has not saved any additional funds for his retirement.

Will Frank be able to survive living only off his LAGERS benefit?  Probably so.  Will Frank find happiness and be able to have the retirement he has dreamed of?  Probably not.  If Frank decides to retire now, he will be forced to eventually return to work or substantially reduce his standard of living to near hermit levels.

It seems that Frank’s only option is to delay his retirement until at least age 62 when he can begin collecting a reduced monthly Social Security benefit.  But even delaying Social Security a few more years could help increase retirement income, not to mention staying longer with his employer will also raise his LAGERS benefit.

The point to take away from this example is that even though Frank had dedicated his career to one employer and that employer has provided him with a great benefit, Frank must begin to take responsibility for his future at a young age if he hopes to reach his goal of retiring at age 60. And by the way, because of his years of service, Frank’s monthly retirement benefit amount is above the norm.  The current monthly LAGERS benefit for an average retiree is $899 per month or $10,788 per year.

So where do you stand?  What are your plans?

February 23-28 is America Saves Week.  It is a great time to start putting away money for your retirement nest egg or to renew your commitment to your future self.  As a LAGERS member, you have a pension that will provide a guaranteed stream of payments in retirement, and that is a wonderful thing!  But you still must take initiative to ensure you will be able not only to survive, but thrive in the retirement lifestyle you have chosen.  LAGERS is designed to provide a secure base for your financial future and intended to be combined with Social Security and your own personal savings to create the retirement you have envisioned.

What to do now?

Pay attention to your LAGERS annual statements and maybe even run a benefit estimate using the myLAGERS online web tool.  Try an online retirement savings calculator, like this one from AARP that allows you to include income from your LAGERS pension.  Envision your future self and the life that you are creating for that person.  Is it a life you would want?

Frank must work longer than he planned to make his retirement dreams come true.  Are your dreams on track?

 

Jeff Kempker, RPA, CRC

Jeff Kempker
Manager of Member Services

4 thoughts on “Your LAGERS Benefit Will Not Be Enough

  1. […] is a great way to help keep your retirement planning on track.  After all, your LAGERS benefit is not going to be enough to fully fund your retirement.  So the annual statement helps you know what your base monthly […]

  2. […] We kicked off with sessions covering LAGERS basics as well as the Disability and Survivors benefits that all members are covered under. Attendees learned about how LAGERS benefits are calculated using a benefit formula, and also how to ballpark a benefit by calculating a replacement ratio.  For example, a member who believes he is going to work for 20 years for his employer and who is covered at the L-6, 2.0% plan, could ballpark a future benefit by taking 20 years x .02 = 40%.  This quick and simple calculation can tell you how much of your pre-retirement salary will be replaced by your LAGERS benefit at retirement (40% in this example) and can be an important tool to use when determining how much personal savings an individual should be accumulating.  After all, your LAGERS benefit was never designed to be your sole source of income! […]

  3. […] need in retirement has already been earned and protected with my LAGERS benefit.  Of course I know it’s not going to be enough, but it gives me great comfort knowing that if I continue to work hard and put in the time, my […]

  4. […] Your LAGERS Benefit Will Not Be Enough […]

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