Think of the equated plan as if you are borrowing against your pension until age 62.
Your pension is reduced at age 62 regardless of when you begin receiving your Social Security and regardless of how much it is.
|Glossary of Terms|
This plan pays you a higher pension until you are age 62, and then your monthly pension is permanently reduced. You might choose the equated plan if you want your overall income to remain relatively even both before and after Social Security begins.
So that your income (pension only) before age 62 is close to your combined income (pension and Social Security) after age 62, the increased pension before age 62 is based on a portion of your projected Social Security benefit. When you apply for your pension, provide us with an estimate of your age 62 Social Security benefit. To obtain your estimate, you'll need to request a statement from the Social Security Administration website, documenting your age 62 benefit amount.
Because calculating your "before and after" pension involves so many variables, it's not possible to provide tables and worksheets here. However, our online pension estimator will do it for you simply and quickly. Obtain your Social Security estimate as noted above and plug in your numbers using the Estimate Pension tool in miAccount.
It's important to have a full understanding of the equated plan, because you can't change your mind after your retirement effective date.
As you can see in the illustration below, under the equated plan your pension amount drops at age 62.
Points to consider with the equated plan
- Your pension payment is permanently reduced the month after your 62nd birthday, regardless of when you begin receiving your Social Security payments and the amount. If your birthday falls on the first or second of the month, your pension is reduced the month in which you turn 62.
- You can’t change your mind after your retirement effective date.
- Your Social Security estimate assumes you will continue working until age 62, so the amount you receive at age 62 could be lower.
- You cannot choose the equated plan if you’re age 61 or older as of your retirement effective date, or if you’re eligible for a disability retirement.
- The equated plan has no bearing on post-retirement increases, so MIP retirees will get the standard 3% increase that is based on the initial pension amount calculated before the advance.
Consider the equated plan if:
- You plan to start collecting Social Security at age 62.
- You prefer to have a relatively even income throughout your retirement.
- You want to receive as much income as you can as soon as you can because your life expectancy is uncertain.
- You prefer to be in a relatively even tax bracket before and after age 62.
Don't choose the equated plan if:
- You don’t want your pension permanently reduced at age 62.
- You don’t plan to collect Social Security at age 62.
- You like the idea of having more monthly income when Social Security begins.
- You expect to live longer than the life expectancy tables say, so you believe the permanent reduction will end up costing you money.
- You don’t want the higher pre-62 income to put you in a higher tax bracket.