Projecting Your Monthly Retirement Benefit
There are two methods of calculating your Wisconsin Retirement
System (WRS) retirement benefit; the formula and money purchase
methods. When the Department calculates your retirement estimates
and the final calculation of your retirement benefit, we will always
calculate your benefit by both methods and pay the higher of the
two amounts.
The formula method is based on your three highest years of earnings,
a formula factor based on your employment category, your years of
creditable WRS service and any applicable age reduction factor for
early retirement. The money purchase method is based on your Money
Purchase balance, which is shown on your annual Statement of Benefits,
and a "money purchase factor" based on your age when your
retirement benefit begins. Which benefit calculation will provide
the higher benefit for you will depend on many factors, such as
your age when you begin your retirement benefit, your years of WRS
service, annual earnings while you are employed under the WRS and
the interest credited to your account.
Sample formula annuity calculation for a teacher age 57, with
final average monthly earnings of $3,250 and 25 years of WRS service
(21 years before 2000, 4 years after 1999):
| Final Average Earnings |
x |
Formula Factors |
x |
Years of Service |
x |
Actuarial Reduction Factor |
= |
TOTAL |
| $3,250 |
x |
.01765 |
x |
16 years pre-2000 |
x |
.936 |
= |
$859.02 |
| $3,250 |
x |
.016 |
x |
9 years post-1999 |
x |
.936 |
= |
+ 438.05 |
| |
[25 years of service total] |
|
$1,297.07
per month |
Sample money purchase annuity calculation for the same age
57 teacher, who has a money purchase balance of $220,000:
| Money Purchase Balance |
x |
Age 57 Money Purchase Factor |
= |
TOTAL |
| $220,000 |
x |
.00584
|
= |
$1,284.80 per month |
This participant would receive the higher formula annuity of $1,297.07
per month.
Upon request, the Department will calculate your retirement benefit
estimates up to one year in advance of your anticipated retirement
date. If you wish to project your benefits at different ages, the
Calculating Your Retirement
Benefits brochure (ET-4107) provides step-by-step instructions
for projecting your benefits. To get the most accurate projection
of your future benefits we recommend that you calculate your benefits
by both methods.
|
