Financial wellness is the knowledge of personal finance which enables healthier financial decisions to achieve one's goals, and to enhance the overall quality of life. OPERS wants to partner with you throughout your career to help you gain a better understanding of your financial wellness so you can build a secure retirement.
When it comes to improving your overall finances and economic well-being it's important to know how you are spending your money. Creating a personal budget allows you to plan for how you will spend and save your money each month and keep track of your spending patterns. Though making a budget may sound like an intimidating task, it's vital to keeping your finances in order.
How Are You Spending Your Money?
An easy way to organize and track your expenses is by using the 50-20-30 budgeting rule. This budgeting method divides your paycheck into three categories:
- Your Needs: 50% of your paycheck should be set aside for the essentials, the core things you need to live.
- Debt Reduction and Savings: 20% of your paycheck is for debt repayments and savings. In other words, paying off the past and investing in the future.
- Your Wants: 30% should be spent on things that you want but could live without. This allows for flexible spending and, perhaps, a happier life.
Apply the 50-20-30 rule to your budget
The OPERS online budgeting tool can help you apply this method to your personal budget. This online tool can help you track your expenses and create a budget. You can also use this tool to adjust your budget and see the impact of those changes.
Attend a Webinar to Learn More
The Personal Budgeting webinar will review how personal budgeting can help you meet your short and long-term goals. Topics include:
- Myths and rules associated with personal budgeting
- Ways to recognize if your expenses exceed your income
- The 50/20/30 rule and how to use it with our online tool
Bridging the Gap to Retirement
As Personal Budgeting focuses more on your current financial well-being, Bridging the Gap to Retirement will focus more on your long-term goals. A retirement "gap" is the difference between the amount of income you will have in retirement and the amount you will need. Identifying your gap and having a plan in place to close that gap are part of building a secure retirement.
Ways to Close Your Retirement Gap
You can close the gap between how much you'll have in retirement and how much you'll need in a number of ways.
- Working a Few Years Longer
Working longer – even just three to five years longer – can increase your monthly retirement benefit.
To see just how much, check out the front page of your annual statement. You'll be able to see how much more you can earn if you work beyond your earliest eligibility for both a reduced and unreduced benefit.
Or, just take a look at the following example:
- Jane, a group C member with a final average salary of $50,000 wants to replace 80% of her FAS, or $3,333.
- If Jane works until she reaches the minimum requirement for a reduced benefit (age 57, 25 years) her monthly benefit will be $1,079 or 26% of her FAS and her gap would be $2,254.
- If Jane works until she reaches the minimum requirements for an unreduced benefit (55, 32 years) her monthly benefit will be $2,938 or 70% of her FAS and her gap would shrink to $395.
- Taking Advantage of Ohio Deferred Compensation
As an OPERS member you have a unique opportunity to contribute to Ohio Deferred Compensation, a 457(b) retirement plan specifically for Ohio public employees. This plan is an easy way to supplement your pension.
Ohio Deferred Compensation provides you with educational tools, a diverse set of investment options, flexible savings and withdrawal options, as well as portability when changing jobs within the public sector.
OPERS and Ohio Deferred Compensation even share the same Board members, so the same people looking out for your retirement are looking out for your savings.
Enroll in Ohio Deferred Compensation
Enrolling in Ohio Deferred Compensation is easy. You can choose a no-hassle target date fund with the EZ Enrollment Form, or you can choose from any of the program's investment options.
- Contributing to Other Retirement Savings Plans
Individual Retirement Account (IRAs) are retirement accounts owned and funded by you, the individual, not your employer.
Two common types of IRAs are traditional IRAs and Roth IRAs. You may qualify for one or both types, but it's important to speak with a financial advisor or your bank to see which one is the best option for you.
Learn More about IRAs
To learn more about IRAs and other retirement savings plans, visit IRS.gov.
- Considering Additional Retirement Income
Your work history could determine if you'll receive any additional retirement income that could help close your gap.
For instance, if you worked for a private employer you may have an old 401(k) or you may qualify for a Social Security benefit. This is something you should consider when assessing your retirement income and ways to close your gap.
A 401(k) is a defined contribution plan usually sponsored by a private sector employer, intended for long-term retirement saving. Typically, you would contribute pre-tax money each payday into an account set up for you by the 401(k) plan, and invest that money so that it can grow tax-deferred. When you withdraw money from the plan, it's taxed as ordinary income.
If you have a 401(k) from a previous employer. It's a good idea to contact your previous employer and find out if you are vested in your old 401(k), or speak with a financial advisor to see if you could benefit from rolling over your 401(k) into another retirement savings account.
If you worked for a private employer, you likely paid into Social Security. Your Social Security benefit could provide additional retirement income, but that amount will vary from person to person and will be impacted by a number of factors.
The length of time you worked in the private sector could determine the amount of your Social Security benefit; however, your Social Security benefit could also be impacted by the amount of time you worked for the public sector. Your OPERS retirement benefit could reduce the amount of your Social Security benefit due to two provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
The WEP affects how your Social Security benefit is calculated by taking into account your OPERS benefits. Your OPERS benefits may also reduce the amount of Social Security benefits you may be eligible to receive on your spouse's Social Security participation. This type of benefit reduction is called Government Pension Offset (GPO).
The Social Security Administration provides online calculators to help you estimate your Social Security benefit with the WEP and GPO reductions.
Determine Your Gap
The retirement gap calculator will help you review your current spending habits and estimate your retirement income so you can identify your gap*.
*Member-Directed and Combined Plan members: do not use this calculator as formulas are being updated.
Attend a Webinar to Learn More
The Bridging the Gap to Retirement webinar will help you assess your current spending habits and estimate your retirement income so you can identify the "gap" between what you will have in retirement and what you will need. We'll also show you ways you can begin closing your gap today. Topics include:
- Identifying your retirement gap
- Learning how to close your gap
- How to use the retirement gap calculator
Health Care: The Hidden Cost in Retirement
Nowadays, health care is no longer something you just have in retirement, it's something you need to plan for. Health care costs have become very expensive and if overlooked, can have a devastating financial impact on your retirement.
Identify Health Care Trends
Identifying health care trends, such as, rising health care inflation and coverage for an aging population will help you better understand why planning ahead is so important. These two trends will most likely never change, at least no time soon, which means that health care costs will only become more expensive over time.
Start Your Planning Today
Begin planning for health care in retirement now so that you can set realistic expectations for yourself.
- Understand that individual coverage in retirement will look very different from your current employer's plan.
- Begin researching the types of plans that will be available to you.
- Become familiar with basic terms and coverage, so you can compare the deductibles, coinsurance, and out-of-pocket limits of one plan to another.
- Understand that when you retire is now equally important for health care as it is for your pension.
Attend a Webinar to Learn More
The Health Care: The Hidden Cost in Retirement webinar will review the long-term cost of health care and better prepare you for retirement. Topics include:
- The rising cost of health care coverage.
- How different health care in retirement is compared to your employer's coverage.
- How saving for health care costs in retirement may factor into when you can retire.
- How retiring later in age may be more beneficial to you financially.
- If eligible, you may receive a health care allowance from OPERS.