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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 (14 years before 2000, 11 years after 1999):

Final Average Earnings x Formula Factors x Years of Service x Actuarial Reduction Factor = TOTAL
$3,250 x .01765 x 14 years pre-2000 x .936 = $751.67
$3,250 x .016 x 11 years post-1999 x .936 = + 535.39
  [25 years of service total]   $1,287.06
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 .00578
= $1,271.60 per month

This participant would receive the higher formula annuity of $1,287.06 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.


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