Protecting Your Loved Ones Before You Die
If you are eligible to retire, but you are not ready to retire, you may make a pre-retirement election of an option. This ensures a lifetime monthly benefit for your loved ones if you die before retirement.
You are eligible to make a pre-retirement election of an option if:
- you are 50 years old with at least 30 years of service credit, or
- you are 55 years old with at least five years of service credit.
If you elect a pre-retirement option, generally your retirement benefit will be reduced from the Member-Only Benefit. That’s because rather than a benefit being paid only throughout your lifetime, the benefit will be paid throughout your lifetime and your beneficiaries’ lifetimes. The reduction of your benefit is based on your age and the ages of your beneficiaries either at the time you make the election or when you retire, whichever results in the highest benefit.
Generally, the younger you are when the election is made, the less your retirement benefit is reduced.
Advantages of making a pre-retirement election of an option
If you die before retirement with a preretirement option in place, your beneficiaries receive a lifetime monthly benefit. In most cases, their benefit will be higher if you make that choice before you retire, rather than at the time of retirement.
Disadvantages of making a pre-retirement election of an option
If you cancel or change your pre-retirement option before you retire, your retirement benefit may be reduced for life. If your beneficiary dies before you retire, your retirement benefit may be permanently reduced.
The pre-retirement election of an option is different from the one-time death benefit. Naming a one-time death benefit recipient does not affect your retirement.
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