When to Retire

Retirement is a big decision, and there are many factors to consider – practical, personal and, of course, financial – as you plan for a secure retirement. Just because you have met the eligibility requirements does not mean you must retire. Your decision should be based on your individual circumstances.


As you weigh your options, we suggest that you consider not only your ERB pension but also any Social Security benefits and other sources of income you are entitled to, as well as factors like inflation, health care costs, and other expenses you may face.


Social Security includes retirement, disability and survivor benefits. In order to receive Social Security benefits, you must file an application with the Social Security Administration at www.ssa.gov, by telephone at (800) 772-1213, or by making an appointment to visit any Social Security office.

 

Retirement Eligibility: Age and Benefits

When am I vested?
Vesting means you have earned five or more years of service credit with the ERB. Service credit with the Public Employees Retirement Association (PERA) does not count toward vesting in the ERB plan. If you are vested, but terminate employment before qualifying for retirement, you may leave your accumulated member contributions with ERB and receive a pension
when you satisfy retirement eligibility requirements. Retirement eligibility is determined by your start date.


TIER 1: Membership Prior to July 1, 2010
If your ERB membership began before July 1, 2010, and you have not withdrawn all of your contributions, you are eligible to retire on the earliest date you meet any of the following criteria:


1. “25 and Out” – Earned service credits + allowed service credits = 25 or more years. There is no minimum age requirement.


2. “Rule of 75”
– Your age + earned service credits = 75 or more. Under the Rule of 75, allowed service credits are used to calculate your retirement benefit but do not count toward eligibility. If you retire under this rule, are under age 60, and have less than 25 years of earned service credit, your retirement benefit will be reduced by:

• 0.6% for each ¼ year, or portion thereof, that retirement occurs prior to age 60 but after the 55th birthday (equal to 2.4% per year), plus
• 1.8% for each ¼ year, or portion thereof, that retirement occurs prior to age 55 (equal to 7.2% for each year under age 55). For example, if you are six months past your 59th birthday, the reduction in benefits is 1.2%.


3. “65 and 5” – If you are at least 65 years old and have five or more years of earned service credit, you are eligible for retirement.


4. COLA begins at age 65.


TIER 2: Membership on or after July 1, 2010, but prior to July 1, 2013
If your ERB membership began on or after July 1, 2010, but prior to July 1, 2013, or you were employed before July 1, 2010, terminated your employment and subsequently withdrew all of your contributions and returned to work for an ERB employer on or after July 1, 2010, you must meet one of the following requirements to be eligible for retirement:


1. “30 and Out” – Earned service credits = 30 or more years. There is no minimum age required. Under Tier 2 “30 and Out,” allowed service credit is not used to determine eligibility for retirement but is used to calculate retirement benefits.

2. “Rule of 80” – Your age + earned service credits = 80 or more. As in the Rule of 75, allowed service credits are used to calculate your retirement benefit but do not count toward eligibility. If retire under this rule, are under age 65, and have less than 30 years of earned service credit, your retirement benefit will be reduced by:
• 0.6% for each ¼ year, or portion thereof, that retirement occurs prior to age 65 but after the 60th birthday (equal to 2.4% per year), plus
• 1.8% for each ¼ year, or portion thereof, that the retirement occurs prior to age 60 (equal to 7.2% per year).


3. “67 and 5” – If you are at least 67 years old and have five or more
years of earned service credit, you are eligible for retirement.

4. COLA begins at age 65.


TIER 3: Membership Beginning on or after July 1, 2013
If your ERB membership began on or after July 1, 2013, or you were employed before July 1, 2013, terminated your employment and subsequently withdrew all of your contributions and returned to work for an ERB employer on or after July 1, 2013, you must meet one of the following requirements to be eligible for retirement:


1. “30 and Out” – Earned service credits = 30 or more years. Soft minimum retirement age of 55: those who retire younger than age 55 with 30 years of service credit will have a reduction in benefits to the actuarial equivalent of the member retiring at age 55. Under Tier 3 “30 and Out,” allowed service credit is not used to determine eligibility for retirement but is used to calculate retirement benefits.


2. “Rule of 80” – Your age + earned service credits = 80 or more. As in the Rule of 75, allowed service credits are used to calculate your retirement benefit but do not count toward eligibility. If you retire under this rule, are under age 65, and have less than 30 years of earned service credit, your retirement benefit will be reduced by:
• 0.6% for each ¼ year, or portion thereof, that retirement occurs prior to the member’s 65th birthday but after the 60th birthday (equal to 2.4% per year), plus
• 1.8% for each ¼ year, or portion thereof, that retirement occurs prior to the member’s 60th birthday (equal to 7.2% per year).


3. “67 and 5” – If you are at least 67 years old and have five or more years of earned service credit, you are eligible for retirement.


4. COLA begins at age 67.

When you have met the eligibility requirements and are ready to retire, complete the Retirement Application found at www.nmerb.org. We recommend that you begin this process 60-90 days prior to your planned retirement date in order to avoid any interruption in your income. If you plan to retire in July, ERB suggests you start the process six months prior to your
retirement date. If you are still employed by an ERB employer, your employer must submit your Retirement Application to ERB along with the Employer Certification. If you have not worked for an ERB employer within the last six months, you only need to complete the Member Information page of the Retirement Application.

 

Calculating Retirement Benefits

Benefits are based on three components – your average annual salary (sometimes referred to as your final average salary or “FAS”) annualized by fiscal year, your earned and allowed service credit, and a 2.35% factor.
Average Annual Salary x service credit x .0235 = annual benefit

Your average annual salary is the higher of:
1. Your average annual earnings for the last 20 calendar quarters (60 months) prior to retirement, or
2. Your highest average fiscal annual earnings for any 20 consecutive calendar quarters.


The ERB Benefits Calculator – available on the ERB website at www. nmerb.org – may be used to calculate an “unofficial” estimate of your annual and monthly retirement benefits. Note that the online calculator does not annualize earnings; it only provides an “unofficial” estimate of your retirement benefit. For an official estimate, including annualizedearnings, please contact ERB. We recommend that members contact ERB two years prior to your expected retirement date to make sure that your
accumulated service credit information and salary history are accurate.


Remember, the age at which you retire can affect the benefits that you will receive. See “Retirement Eligibility: Age and Benefits.”
Under New Mexico law, benefits earned under the Educational Retirement Act are community property. As such, benefits may be subject to a division due to a legal separation or a divorce. See the section entitled “Community Property Rights.”