Educators are challenged every day. Why would you want to make your retirement transition challenging? You have worked for 30 years educating individuals that have changed the world through your guidance. Mrs. Smith, my first-grade teacher, was the first motivational speaker I heard in my life. At six years of age, Mrs. Smith instilled in me, or perhaps I should say endowed in my mind, the mantra and belief that “I could be anything I wanted to be if I worked hard enough”. This wonderful lady may have known, but I certainly did not, that she was bestowing to me a lifetime adventure of learning and dreaming that would reward me in tremendous ways throughout my life.
Teachers are the influencers, supporters, and cheerleaders for their students. What does this information have to do with retirement planning? Everything! At a time in the professional life of a teacher when he or she is making lifetime decisions, inadequacy rears its ugly head. As specialists in retirement planning, we focus on a variety of pension platforms and one of the most comprehensive is the Oklahoma Teachers Retirement System (OTRS). This system is the pension plan that provides support for teachers, administrators and support staff in the field of education in Oklahoma.
Many people become confused and simply disregard provisions of the pension plan that would help them live a better life. The OTRS requires certain decisions for the participants to retire that are lifetime elections. Once the decision is made, even when life may go strangely awry, you cannot change your initial plan for retirement. How can you mitigate this risk? First, ask questions of the plan administrators, read the plan manual and familiarize yourself with the information and terms of the plan.
Second, seek out an expert to help you coordinate retirement, estate and income tax planning to equip you with the capability to enjoy your retirement years with potentially less worry. The OTRS provides a monthly benefit to qualified participants once the election to retire is filed. However, you may not wish to give total control of your future cashflow to the plan. What will you do if your health were to suddenly worsen immediately after retiring? The plan contains a provision that allows participants with 30 or more years of service to elect a Partial Lump Sum Option (PLSO) which allows the participant to rollover, or transfer tax-free, a sum representing 12-, 24- or 36-months of benefits to an Individual Retirement Account. Why would you wish to do this? You are in control of the distribution of the funds should an unexpected event occur!
Third, the timing of your notification filed with the plan of your planned retirement date is critical for the receipt of your first retirement benefit payment. For example, if you wish to receive continuity in your family’s income, and you plan to retire on July 1, 2021, you must file your Pre-Retirement Information Verification (Form 3) on or before April 1, 2021. This date is non-negotiable. To help you understand the strict interpretation of this required date, if April 1, 2021, was a weekend or holiday, you would not be extended any grace period to meet this deadline. Additional subsequent dates must be met to experience a smooth transition to retirement.
Each person’s retirement is unique. Do not rely on others’ comments or experiences to make important decisions for your future. A horror story from the past comes to mind. One of the educators I know came to me after filing his initial documents with OTRS. After we discussed it for a few minutes, he realized he had made a horrible mistake on his paperwork. Certain elections were not heeded, and life was not going to be as he had planned. However, we were able to resolve the issues for him in time to meet his statutory deadlines. His first retirement trip was exciting, and his cash flow was on time.
To enjoy your future years, and experience uninterrupted cashflow, the OTRS filing process requires attention and proper timing. Seek out a Certified Financial Planner™ or other retirement planning expert to help you through this tedious process. You should be planning your next trip to celebrate retirement, not worrying about your lifetime income source. Go ahead, book your trip and do not forget the sunscreen!