Although you are probably years away from having to select a retirement plan, it doesn’t hurt to have a general understanding of the TRS plans available. No one from TRS can tell you which plan is best for you; however, we can give you some general concepts to consider when it comes time to ponder your selection of a plan.
First, the plans can be broken into two main categories: those that do not provide a monthly benefit to beneficiaries after you pass away, and those plans that do. Plan A Maximum and Plan B Option 1 do not provide any lifetime monthly benefits to beneficiaries. So, if you do not plan to leave a monthly benefit, your choice becomes much easier. About 70% of our members select the Maximum Plan. Options 2 through 4 all provide varying amounts of lifetime benefits to your designated beneficiaries.
Next, you may want to ask yourself a series of questions. For example, “Do you want to maintain your standard of living?” As a general rule, financial planners say you need 80% of your pre-retirement income to maintain your standard of living, but the actual percentage can vary widely depending on your retirement goals. Since your TRS benefit alone will not generally provide the 80% amount, how will you supplement your TRS benefit? Will you be receiving Social Security? If not, you may have to depend more on personal savings to make up the difference.
Another question may be “What are my family needs?” Would anyone suffer a financial hardship if you died first and your TRS pension stopped? If so, you may want to consider a plan that leaves a monthly benefit. Also, are your children gainfully employed? If so, they may not need you to leave them a monthly benefit.
These are things that you can think about as you continue to work and plan for your future.