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The Potential Value of Additional Service Credits
| Age Of Retiree |
Final Avg. Salary |
Years Before Purchase |
Number of Years Purchased |
Original Option 1 Income |
Increase in Option 1 Income |
Total Gain at Life Expectancy |
| 50 |
$50,000 |
23 |
0 |
Not Elig. |
$0 |
$0 |
| 50 |
$50,000 |
23 |
1 |
Not Elig. |
$0 |
$0 |
| 50 |
$50,000 |
23 |
3 |
$27,500 |
$1,750 |
$99,000 |
| 50 |
$50,000 |
23 |
5 |
$27,500 |
$5,400 |
$190,000 |
| |
| 55 |
$50,000 |
23 |
0 |
$18,100 |
$0 |
$0 |
| 55 |
$50,000 |
23 |
1 |
$18,100 |
$800 |
$20,000 |
| 55 |
$50,000 |
23 |
3 |
$18,100 |
$14,400 |
$360,000 |
| 55 |
$50,000 |
23 |
5 |
$18,100 |
$16,900 |
$422,000 |
| |
| 58 |
$75,000 |
28 |
0 |
$52,500 |
$0 |
$0 |
| 58 |
$75,000 |
28 |
1 |
$52,500 |
$1,900 |
$43,700 |
| 58 |
$75,000 |
28 |
3 |
$52,500 |
$6,800 |
$156,400 |
| 58 |
$75,000 |
28 |
5 |
$52,500 |
$10,600 |
$243,800 |
| |
| 60 |
$100,000 |
30 |
0 |
$75,000 |
$0 |
$0 |
| 60 |
$100,000 |
30 |
1 |
$75,000 |
$4,000 |
$84,000 |
| 60 |
$100,000 |
30 |
3 |
$75,000 |
$6,600 |
$138,600 |
| 60 |
$100,000 |
30 |
5 |
$75,000 |
$14,200 |
$298,300 |
| An Actual Case |
| Final Aver. Salary |
Credited Years At Retire. |
Present Age |
Retire. Age |
Option 1 Income |
Years To Reinstate** |
Cost* |
Option 1 Income |
% Increase |
|
| $70,000 |
22.92 |
49.4 |
54.6 |
Not Elig. |
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| $70,000 |
23.92 |
49.4 |
55.6 |
$30,700 |
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1 |
$9,800 |
$48,100 |
57% |
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2 |
$19,700 |
$50,100 |
63% |
| $70,000 |
24.92 |
49.4 |
56.6 |
$49,100 |
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1 |
$9,800 |
$51,100 |
4% |
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2 |
$19,700 |
$53,100 |
8% |
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The impact and trade-off of working longer and/or reinstating previous service credits is dynamic. For
instance, if retirement is strongly desired, working one more year (or purchasing one year) takes the
retiree from being ineligible to $30,700 of first year income. At a cost of $9,800. Purchasing a second
year increases the retiree's income to $48,100.
The first reinstatement examples show the great impact even a modest purchase can make. And while
the second example is less dramatic in terms of percentage increase, the guaranteed increase in income
(by the PSRS) is more than 20% per year of the purchase price! Who else provides that kind of return?
Conclusion: Knowing how the Retirement System works is very important to your financial
health!
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