Tag Archives: Post-retirement

Spending Budgets Change in Retirement

What are some of the changes you can expect in retirement? Sleeping in past 8 a.m.? Shopping during regular business hours? Retirement can bring many changes, but one you should be aware of is how your spending could change.

According to an Employee Benefit Research Institute (EBRI) study, average spending goes down in retirement, but not for everyone. Some households’ expenses stayed the same while others increased. In the first two years of retirement, almost 46 percent of households spent more than what they had spent just before retirement. EBRI offered a suggestion for this trend – people may want to splurge on hobbies or vacations during the first few years of retirement.

Keep in mind, the EBRI study is meant to understand trends in retiree spending, but it brings up a good question. Have you thought about how you’ll spend money in retirement?

Prepare a Post-Retirement Budget

As you get closer to retirement, you may be saving and investing more to meet your financial goals. Making the switch from saving to spending in retirement can be easy if you plan ahead. By looking at how you spend your money now, you can get an idea of how to spend your money in retirement.

When you set a post-retirement budget, look at what your expenses currently are. Don’t forget to include periodic expenses, like car insurance payments or property/school taxes. Track how you spend your money over a month or two. Then, consider your current monthly income and your post-retirement income. Your current monthly income should cover your current expenses, so estimate what your post-retirement income will be. If your post-retirement income is less than your current income, you might want to adjust your expenses or even your retirement plans.

These worksheets can help you prepare a budget and list out your post-retirement income sources. Print them out and start planning ahead for post-retirement spending.

Monthly budgeting worksheets (PDF)

Monthly Worksheets (PDF)

Retirees: Know Your Post-Retirement Earnings Limit

forjuly1As a New York State and Local Retirement System (NYSLRS) retiree, it’s possible to work a public job after retirement and receive your pension, but there are limits to your post-retirement earnings. If you’re self-employed, work for a private employer, work for another state, or work for the federal government, you don’t have to worry about post-retirement earnings. You can earn as much as you want in your new job and still collect your full NYSLRS benefit.

But if you collect a NYSLRS pension and want to return to work in the public sector, there are two sections of the Retirement & Social Security Law (RSSL) you have to comply with that deal with post-retirement earnings.

Section 212

Under Section 212 of the RSSL, you may earn up to the annual amount set by law. The limit for 2015 is $30,000. Typically, your earnings are not limited in the year you reach age 65.

However, if you are under the age of 65 and earn more than the Section 212 limit during a calendar year, you may:

  • Pay back NYSLRS an amount equal to the retirement benefit you received after you reached the mandated limit. If you continue to work, your retirement benefit will be suspended.

OR

  • Rejoin NYSLRS, in which case your retirement benefit will stop.

Section 211

If you return to work and earn more than the Section 212 limit, your pension will be suspended unless your public employer requests a Section 211 approval for you. This will allow you to continue receiving your retirement benefit without reduction.

Section 211 approvals are given for a fixed period of time, normally up to two years.

If you earn more than the Section 212 limit and do not get Section 211 approval, your benefit will be reduced or suspended.

If you have questions about working after retirement, please read our publication, What If I Work After Retirement? (VO1648).