10 Things To Know About IPERS

1) IPERS is a defined benefit retirement plan. This is opposed to a defined contribution plan like a 401k, 403b, or 457 plan. Your benefits will be based on a retirement formula at retirement instead of an account balance building up over time.

 

2) Employees of school districts are considered regular members under IPERS.

 

3) Regular members contribute 6.29% of gross income each payroll period. Employers contribute a 9.44% share as well.

 

4) You must work for 7 years (28 quarters) for an IPERS-covered employer to be vested.

 

5) Your retirement benefit is calculated by taking your average salary (of your highest 5 years) times the multiplier. The multiplier is based on the number of years you worked. A reduction is also applied IF you retire before you reach normal retirement age.

 

6) There are three ways to reach normal retirement age - The rule of 88, the rule of 62 and 20, and reaching age 65.

 

7) At retirement, there are 6 benefit options to choose from that determine your exact benefit amount. You can gain advantages (like death benefits or survivor benefits) if willing to give up some dollar amount of monthly benefit.

 

8) It is important to keep beneficiaries up to date.  It is not uncommon for people to have their parents as beneficiaries from when they began working even after getting married and having children.

 

9) It is possible to purchase service credits to increase your multiplier. This can make sense for the right circumstances to increase a monthly benefit or eliminate an early retirement reduction.

 

10) IPERS does NOT have an inflation adjustment. Your benefit will be the same amount as your first check and throughout retirement. Unfortunately, the cost of living will likely increase so your REAL monthly benefit check will decrease and buy less over time. You should prepare for this.

Mike Johnson

Mike Johnson is the Owner of Teacher Wealth, a financial planning firm that focuses on helping teachers and their families.  Because he had a 17-year teaching career himself he has a unique insight into helping his clients.  The mission of Teacher Wealth is to raise the standard of financial advice for educators. 

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