Planning for Retirement. The Basics. This presentation is designed for University of Michigan faculty and staff who are considering retirement from the University of Michigan. If you have downloaded the your benefits and retirement booklet, we encourage you to follow along in your booklet and take notes. We also recommend that you view additional information pertaining to retirement on the benefits website at H Rmhd under Retiring from U of M in the Benefits and Wellness menu. This presentation will cover retirement eligibility benefits and retirement retiree privileges, phased retirement waiving coverage, comparable coverage, Social Security and Medicare, Employer shared responsibility or SR, paying for your benefits. Next steps and additional information. This presentation will not cover financial planning for retirement. Instead, we recommend that you schedule a free appointment with TI Aa or Fidelity to discuss your retirement portfolio investment strategy and what your income options will be when you retire. First, let's talk about retirement eligibility. Retirement means voluntarily terminating your employment at the university. Once you have met certain age and service requirements, eligible University of Michigan retirees can continue certain benefits and maintain mini perks and privileges. For more information, please see page one of the booklet. Your eligibility to retire is determined by a point system. The number of points you have is equal to your age plus your years of continuous eligible service. Service that counts toward retirement includes your continuous years employed in a status that was eligible for both the Basic Retirement Plan and AU of M Health Plan. You can get a quick idea of your estimated retirement eligibility date in Wolverine Access. Simply log into Wolverine Access. Select the Faculty and Staff tab. Click on Employee Self Service. Click on Benefits in the middle. Then select Retirement Self Service on the left hand side. Finally, click on Estimated retirement eligibility date. Please be advised that not all service will count toward retirement. This includes time in a supplemental, adjunct or Leo, one title with less than 50% effort or time as a house officer, research fellow, professional specialist, graduate student, Temporary hourly employment also does not count toward retirement. Also, if you had breaks in service or you worked part time during your career here at U of M, you'll want to read more about how this may affect the amount of service you accrued and when you are eligible to retire. There's more information about eligibility and years of service on the Human Resources website under Retirement Eligibility. If you're enrolled in the following plans and eligible for retiree benefits, these plans will continue as long as you pay the applicable premiums. These include health and prescription drug coverage, your dental plan, vision plan, legal plan, and life insurance. Retirees participate in open enrollment just like active employees. So you can change your benefit elections once a year, like you do now. If you plan to move out of Michigan after you retire, you'll want to be on a health plan that offers national or international coverage. Currently, only the PPO plan and the comprehensive major medical or CMM plans offer coverage outside of Michigan. For more information, please see page two of your booklet. If you are enrolled in the basic level of University life insurance as an active employee, your coverage will convert to retiree coverage upon your retirement. However, the amount of coverage will decrease each year, starting at age 56, for a maximum of $2,000 of coverage. At age 66 and older, certain benefits do not continue in retirement. These include the university's group and optional life insurance, dependent life insurance for your spouse, child or other qualifying adult and the long term disability plan. Your retirement savings plan and business travel accident insurance will also end. The healthcare FSA and dependent care FSA will also end unless they are continue through Cobra. Please see page four for more information. If you retire on the first of the month, your active employee benefits end on the first of the month and your retiree benefits start the same day. If you retire after the first of the month, your active employee benefits end on the first of the following month when your retiree benefits begin. University contribution and retiree health benefits for employees considering retirement. This section will help you determine if you are eligible for the university's contribution to your retiree benefits. The university contribution for retiree health plan benefits is based on the average premium cost of the two least expensive health plans weighted by enrollment. Your service date, age and retirement date determine the maximum university contribution you are eligible to receive. Another important factor is your age at retirement. If you are under the age of 62 and your service date is on or after July 1, 1988, you will pay the full cost of all benefit plans through the month you turn 62. If you are eligible to retire with university contribution to your benefits, the university continues to pay a significant portion of the cost of your benefits. You may be eligible to continue health, prescription drug, dental, vision, legal and life insurance coverage. In retirement, retirees pay the same premiums as employees for most benefits except the U of M health plans. You can view all of the retiree healthcare cost charts on the benefits website. It is important that you select the correct chart based on the year in which you retire. You will also need to select the correct coverage level based on your family configuration. If you are under the age of 65, you are considered regular. If you are 65 or older at the time of retirement, you will select the rates which correspond to Medicare coverage. However, retirees can choose to waive health and dental coverage through the university. If they have access to another plan through their spouse or another job. You can re enroll in university coverage at age 62. As long as you maintain comparable coverage the whole time and contact shared services to re enroll within 30 days of turning 62. Please see pages 5 and 6 for more information. Comparable coverage means your health plan provides coverage for primary and preventative care, hospitalization, surgical services, emergency care services, mental health services, office visits, prescription drugs and diagnostic tests, including x rays and lab work. Comparable dental coverage must include basic coverage for routine exams and cleaning x rays and emergency treatment to control pain, retiree privileges. Retirees can continue to access many university amenities and services. Once you retire, you can trade in your employee Id card for a retiree ID card. You can also request a retiree parking permit for blue lots only Ann Arbor campus after 03:00 P.M. Other privileges include the U of M Retirees Association, temporary employment opportunities, athletics tickets, access to rec sports facilities, and university libraries computing support. Continued use of your Umd U email address and subscription to university publications. A complete list is available on our website and on pages 12 through 14 of the your benefits and retirement booklet. Phased retirement is a great option for anyone who wants to gradually transition into retirement. Under phased retirement, you and your department agree to a plan in advance that lets you reduce your appointment over time. At the end of your phased retirement period, you will be fully retired. Phased retirement is not early retirement. You must have enough points to retire before starting a phase retirement. A phase retirement must be approved by your department and the appropriate Dean, Director or Senior leader based on your units approval process. Phased retirement must be a reduction in effort. It can be as little as a 1% reduction. For example, going from 100% effort to 99% Your phase schedule can include multiple or gradual reductions in effort and must include an end date at which point full retirement occurs. There's no maximum or minimum length to your phased retirement. The end date is determined and agreed upon by your unit prior to approving the phased retirement. Should also know that vacation and sick time accruals are not protected on a phased retirement. If your effort drops below 50% you will no longer accrue vacation or sick time and vacation time will be cashed out. Michigan Medicine and bargain for Employees should contact the Michigan Medicine Solution Center or union representative to determine the implications of reducing your appointment. You should also know that your department or unit can refuse your request for a phased retirement. For a complete explanation of phase retirement, please see the Benefits Administration website or standard practice guide, Social Security and Medicare. The Social Security Administration's website is a great resource for those planning to retire. We encourage faculty and staff who are considering retirement to become familiar with what this site offered. On their website, you can look up your retirement age, estimate your life expectancy, estimate your Social Security benefits, test out scenarios with different retirement ages or future earnings amounts. Find out what happens if you work after you retire or are already a Medicare beneficiary. And learn how certain types of earnings and pensions can affect your benefits. Hi, I'm Barbara from the Social Security Administration here today to talk to you about the retirement tool kit. The tool kit is a collaboration of the Social Security Administration, the Centers for Medicare and Medicaid Services, and the Department of Labor. We created the retirement toolkit because we want you to have the information you need to make the best decisions about your retirement. You will need to make a number of important decisions as you approach retirement. Decisions that concern your Social Security benefits, your Medicare benefits, and your retirement savings accounts such as 401 K plans. Some of these decisions are especially important depending on your age. This is particularly true with Medicare. If you do not make a decision about Medicare at the right age, you may pay a higher monthly premium for your Medicare benefits. The retirement toolkit will help you understand which decisions you need to make and at what age. The tool kit contains a brief description of your Social Security benefits, your Medicare benefits, and the personal retirement savings accounts you may have through your employer. It also contains a list of publications and interactive tools to help you plan for retirement. I think it's most important feature is a timeline that indicates at what ages you need to make decisions about which benefits. Because knowing when to make certain decisions is so important. I am going to focus on the ages at which decisions need to be made about Social Security and Medicare benefits. The timeline shows that age 62 is the earliest age you can claim Social Security benefits. It also shows that if you claim benefits at 62, your monthly benefits will be reduced. In addition, if you continue to work and earn above a certain amount, your monthly benefits will be reduced even further. However, once you reach your full retirement age, your monthly benefits will be increased permanently to account for any months that benefits were reduced because of your earnings from work. The time line makes clear that the full retirement age is either 66 or 67 depending upon your birth year. If you wait to claim benefits until your full retirement age, you will receive your full benefits and will not be subject to an earnings limit if you continue to work. In addition, if you delay claiming Social Security benefits until between ages 66, 70, your monthly benefits will increase for every month that you delay claiming. This means that for every year that you delay claiming, your monthly benefits will increase by 8% These increases in your monthly benefits are called delayed retirement credits. It is also important to know when to claim Medicare benefits. Age 65 is the important age. Medicare Part A, which most workers have, covers hospital insurance and has no premium if you paid Medicare taxes while working. Part B and D, however, are subject to premiums and penalties. Medicare Part B covers medical insurance such as Dr. services, outpatient care, and home health care. You will be charged a monthly premium for Part B based on your income level. If you are already receiving Social Security benefits, when you turn age 65, you are automatically enrolled in Medicare Part B, unless you decline it. If you are not receiving Social Security benefits, you need to enroll during the seven month period that begins three months before the month you turn. 65 includes the month you turn 65 and ends three months after the month you turn 65. If you have group health insurance through your employer, you were able to postpone claiming Medicare until you retire or your coverage ends, whichever comes first. But the decision on when to claim Medicare will also depend on how your insurance works with Medicare. If you do not sign up for Part B when you are first eligible, you may have to pay a late enrollment penalty for as long as you have Part B. Medicare Part D is the component of Medicare that covers prescription drug costs. You can sign up for Part D when you first become eligible for Medicare at age 65 or between October 15 and December 7 each year, or during special enrollment periods. Additionally, you will need to select a drug plan, and most of these plans charge a monthly premium. If you do not sign up when first eligible for Medicare, you may pay a penalty that will increase your premiums for as long as you receive Part D. The only way to avoid the penalty is to show proof that you have drug coverage that is at least as good as Medicare, which is the case for most employer provided health care plans. I hope you have found this brief overview of the retirement toolkit helpful. You can find the toolkit on our website at www.socialsecurity.gov forward slash retire. I encourage you to take a look at the toolkit, the information it provides, and the publications it lists. Most importantly, think about the best retirement decisions for you once you are 65 and retired. Medicare will become your primary insurance. You will enroll in traditional Medicare parts A and B only. We don't recommend enrolling in Medicare Part D prescription drug coverage. Your U of M prescription drug plan provides the same level of coverage automatically with any U of M health plan. The U of M plan will provide secondary or supplementary coverage to Medicare. Your U of M health and prescription plans will behave the same way they did when you were an active employee. This means that all services must go through Medicare first. One very important thing to know is that your U of M Health plan will be changed to supplementary coverage once you are 65 and retired. This means that it will only cover things that Medicare won't cover, whether or not you have already enrolled in Medicare. It's very important to make sure that you enroll in Medicare parts A and B in a timely fashion to avoid claims problems. Here are some basic guidelines about when to enroll in Medicare. This information is provided as a general overview. Please contact Medicare or the Shared Services Center if you have questions about your individual situation. To avoid confusion, sign up for traditional Medicare parts A and B together when you retire. If you retire before age 65, we recommend that you apply for Medicare three months before your 65th birthday. If you are still working when you turn 65, you can wait to apply for Medicare until you retire. We recommend that you do so no later than 30 days after your retirement date. If you cover a dependent spouse on your health plan, they should also apply when you retire, if they are 65 or older. When you retire, if your spouse is under 65, when you retire, they should apply three months before their 65th birthday. If you cover an other qualified adult on your health plan, the rules are a little different. Your other qualified adult must apply three months before their 65th birthday or whenever they first become eligible. No matter how old you are or if you are still working. Employer shared responsibility. If you retire and return to work at the university, you may be eligible for SR health plan rates. You will not be eligible under SR if you retire and work for another employer outside of U of M, for example, Google, Ford or other companies. You should know that under SR retiree health plan rates will stop and SR health plan rates will begin. More information about SR and temporary employment can be found on pages 12 and 13 of the your benefits and retirement booklet under Temporary Employment Next Steps First, if you can increase the amount you put away for retirement, you can sign up for a 43b supplemental retirement account at any time during the year. If you've maxed out your supplemental retirement account, you can also save more with the 457 B deferred compensation plan. Some faculty and staff choose to reduce their life insurance and long term disability coverage as they approach retirement and put the savings from those premiums into an SRA instead. Second, we encourage you to schedule a free consultation with TI Aa or Fidelity to review your investment portfolio and start talking about your retirement options. You can meet on campus by phone or at local Fidelity or TIAA offices. There are also a wide variety of retirement planning tools and calculators on their websites. Lastly, you can get started on applying for Social Security and Medicare, depending on your age. If you plan to retire within the year, we encourage you to review the retirement checklist on the human resources website. Keep in mind that you should use your final open enrollment period as an active employee to set up the benefits you want and the dependents you want to cover in retirement. Since you won't be able to change these until the next open enrollment period, remember you'll need to provide formal written notice to your department so that they can enter your retirement date into the HR data system. Once this date has been entered and you're within 60 days of retirement, you can request your retirement checkout kit from the Shared Services Center. This packet provides a personalized overview of your retirement benefits, as well as forms and information about your retiree ID, parking permit, Medicare Part B, and more. We recommend that you pay for your first month of retiree health benefits by check a week or two before you retire. If you turn in this payment to pay, roll along with the form to begin automatic checking or savings account deductions for your benefit payments. It will simplify the paperwork you have to do later on. If you don't set up automatic payments, you'll receive a monthly billing statement. See page seven of the your Benefits and retirement booklet for more information about setting up automatic payments. Lastly, please make sure that you keep your address up to date with the university. You've completed the planning for retirement class, learned about Social Security and Medicare, and met with Tiaa or Fidelity to set up a plan for your income in retirement. Do you still have questions about retiring from the university? You can now schedule an individual counseling session to meet with a retirement representative in person on the phone or meet with a representative via online video conferencing from your home computer. In order to qualify for the service, you must meet the following criteria. You have already attended or watched the online Planning for Retirement class offered by the benefits office. You are within six months of retirement. You have notified your department of your intent to retire and planned retirement date. If this is the case, send an email to benefits programs at Mid. Keep in mind this is not the service that is currently being offered by the Shared Services Center to review your retirement paperwork in the checkout kit. If you would like to review the paperwork in the checkout kit, you will need to contact the Shared Services Center at 734615 2000. Thank you.
U-M Planning for Retirement (Updated January 2019)
From Matt Snyder May 15, 2023
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This video is intended for faculty and staff that are considering retirement for the University of Michigan. Covered topics include retirement eligibility, benefits in retirement, retiree contributions to health care, and additional retiree privileges.
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