2022 | What’s My Carilion Pension Worth?

2022 | What’s My Carilion Pension Worth?

The Carilion pension is a valuable part of your employee benefits. Unfortunately, it’s not easy to understand when and how to qualify, the amount of income you’ll receive, and the optimal time to claim the benefit. Throw in the long formula, Rule of 80, and numerous claiming options, and the pension becomes quite complex.

To solve these complexities, we built a Carilion pension analysis for our clients that helps answer the following questions:

  • How does the Carilion pension work?
  • When should I claim the pension?
  • How should I claim the pension?

The Basics

You become fully eligible for the pension after five years of service. Your benefit is based on the average monthly earnings during your highest consecutive five years of service.  It is important to remember that the plan has an IRS-defined compensation limit to determine benefits.  As of 2022, the limit is $305,000.  So, if you earn far more than this amount, it is unlikely the pension will fully cover your needs in retirement.  

The ‘Normal’ retirement age in the plan is 65, but you can start claiming benefits as early as age 55.  The catch to claiming your pension early is the likelihood of reduced benefits.  Claiming at 55 will likely result in about a 50% reduction from what you would normally collect at 65.  The one exception to a reduction is the Rule of 80. The Rule of 80 = years of service + age.  If you reach the Rule of 80, early claiming of benefits will be unreduced or only slightly reduced. 

When to Take It

When is the best time to claim your benefits? To help answer this question, we built an analysis that models out different retirement and claiming ages.  The one-page comparison allows you to determine the benefit of working additional years or waiting to claim at a future date.

While it is likely you will receive less if you claim early, we believe the decision comes down to mortality.  If you wait to claim, you give up years of reduced benefits you could have been collecting in the interim.  So, the question becomes, how long do I need to live to break even with what I could have collected if I claimed early?  

Following is a preview of our tool:

How to Take It

Once you decide on the age to claim your pension, it’s not over.  Carilion offers ten different claiming options.  Yes, you heard that right – ten!  The best claiming option for you depends on a myriad of factors, including marital status, age of spouse, mortality, claiming age, and more.  There is no one size fits all and we can model out different scenarios to determine which one is best for you.  

The Bottom Line

In the age of 401k’s and other defined-contribution plans, the Carilion pension stands out as a unique and valuable benefit.  While it is not designed to be the sole source of your retirement funds, it can add up to a huge sum over 10-30 years.  The flexibility on claiming age and how to claim the pension makes it a complicated undertaking.  For this, we have built a pension estimator to help you determine the best option.

If you have an interest in a complimentary estimate, please email Ian Hamre at ian.hamre@hcowealth.com.  We will need the year you started employment, your estimated annual income, and the age you anticipate retiring.  We’ll run the analysis and set up a time to discuss your options.  

IMPORTANT DISCLOSURE: This literature has not been endorsed by Carilion Clinic, and HCO Private Wealth is not in any way affiliated with Carilion Clinic. You should contact Carilion Clinic Human Resources for your most accurate projected Carilion Pension. In some cases, our projection may be incorrect because of inaccurate past compensation data or other factors. This information is derived from sources believed to be accurate

Please visit our Warranties and Disclaimer page for Blog Disclosures.

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