Our educators are an essential resource for our members. They offer valuable knowledge and guidance to members regarding their MOSERS benefits and are committed to educating our members at all career stages through seminars and webinars statewide.

Meet Molly Stern, who started with MOSERS as a benefit counselor before becoming an educator. Having worked with active members for the last few years, she knows what information they need to know, whether they are new to MOSERS, mid-career, or ready to retire.

Molly’s tips for active members

New to MOSERS

Value Your Employee Contributions

If you’re an MSEP 2011 or Judicial Plan 2011 member, you contribute 4% of your pay to MOSERS to fund your future pension benefit. Here’s how your contributions compare to self-investing at the same rate over a 20-year period.

• Self-Investing Example: For simplicity’s sake, let’s say you work for 20 years at a steady $40,000 per year salary ($3,333 per month), and you set aside 4% of your pay each month ($133 per month or approximately $32,000 in total) into an investment that earns a net 5% interest annually. You will have approximately $55,000 saved 20 years later. That is a finite amount, so when it is gone, it is gone.
• MOSERS Pension Example: Let’s compare that to your defined benefit pension through MOSERS. You contribute the same 4% contribution over 20 years, but in return, you are entitled to lifetime monthly benefits based on the benefit formula:

Final Average Pay (FAP) x 1.7% (Multiplier) x Credited Service = Monthly Base Benefit

So, let’s plug in the numbers: $3,333 x 1.7% x 20 years = $1,133

That is approximately $14,000 per year. With that monthly payment, you will have your $32,000 investment returned in just over two years, and in just over four years of retirement, you will have already reached that $55,000 payout (what you may have saved on your own with a 5% interest gain).

If you are retired and have been collecting for 15 years, your MOSERS pension will total over $200,000 in payments. That does not even include annual COLA increases, which means you could collect even more than that!

Save Your Sick Leave

Consider taking annual leave to cover time away due to illness or medical appointments instead of using sick leave if you can. Most employees earn 10 hours per month in sick leave credit, and after 17 months, that translates to a month of service credit (168 hours = 1 month of service credit).

When we calculate your total credited service, we include your unused sick leave and convert each block of 168 hours into additional service credit. That extra credit is the gift that keeps on giving, month after month, in retirement! That means more money in your pension benefit each month in retirement!

Invest in Your Future

Don’t turn away free money; take advantage of the monthly $75 state match with MO Deferred Comp! You may consider increasing your voluntary investment contributions to MO Deferred Comp so you can save as much as possible early on.

If you have private investments in traditional IRAs, watch those carefully and compare their returns to those in MO Deferred Comp. Also, note the fees you pay for those private investments. Do some comparison shopping and take advantage of our award-winning investment service, available only to state of Missouri employees!

Mid-Career

Bank Your Annual Leave

If you can refrain from using all your vacation days each year and bank some of your annual leave (up to the allowable maximum), it could come in handy later when you retire. You can use that payout to prepay (with tax-free dollars) your MCHCP medical premiums for the calendar year in which you retire. However, not all agencies (Conservation and state universities) have MCHCP medical coverage.

Another option is to roll over that taxable cash payout for annual leave into a tax-deferred account with MO Deferred Comp, which will give you a nest egg for emergencies and allow you to avoid paying taxes on that money until you use it.

Remember, if you take the cash when you retire, you will need to pay taxes on all of it. Additionally, it will increase your income for that tax year, potentially moving you into a higher tax bracket.

Ready to Retire

Consider Your Retirement Date

As you seriously consider your future retirement date, you may look at the 12 options (first day of each calendar month) and see them as equal. They are not.

February is shorter than every other calendar month, and state employees receive two state-paid holidays in February. Essentially, in February, you work about 85% of the time that you work in the other months but for the same amount of pay and benefits.

If you think you may retire in January, consider waiting until March. Grab that additional month of February service to increase your lifetime pension benefit!

Make Sick Leave Count

When you are about four to six months away from your retirement date, make sure to request your current unused sick leave total from your human resources representative. Add any projected sick leave hours you will earn and divide the total by 168 (168 hours = 1 month of service credit).

The whole number before the decimal is the number of months that MOSERS will convert to service. Now, look at the decimal and calculate your remaining hours. If you have a remainder of 158 to 167 hours, you can move your retirement date forward by one month and earn two months of service credit by gaining those additional sick leave hours!

Increase Your Life Insurance

Make increases to your life insurance if you need it before you retire. If you take advantage of the October Annual Life Insurance Review period but plan to retire in January, remember those increases you opted for in October do not take effect until January. You must be an active employee for one month at that level of insurance to retain that coverage in retirement.

Consult a Tax Advisor

Keep in mind that when you retire, your income sources and levels will likely change affecting your taxes in retirement. Only a tax professional can review your entire financial portfolio for all income sources (Social Security, part-time work, investments, etc.) and guide you to that estimate.

MOSERS staff does not provide tax advice and cannot advise you on how to fill out tax forms or your tax liability as it pertains to your MOSERS pension. We suggest you contact the IRS and/or a qualified tax advisor to determine your tax liability and withholding amounts.

A MOSERS benefit counselor can certainly assist you with completing and submitting a new tax withholding form after your tax advisor has provided your withholding amounts. Retirees often adjust those amounts in subsequent years when income changes take place.