Whether you’re new to the system, approaching retirement, or somewhere in between, it’s important you understand how your STRS Ohio benefits fit into your overall financial plan.
The following is some introductory information you should consider if you’re looking to better understand your STRS Ohio benefits. If you’re looking for a financial planner to assist you, I would welcome the opportunity to provide a free, initial consultation to learn more about your situation and help you determine whether my services may be beneficial.
New Members (Less than 5 years of service credit)
As a new member of STRS Ohio, there is a lot you should know! You have access to many resources online and will receive a lot of information regarding plan options, election deadlines, and online registration, amongst other things.
One of the first things to do as a new member of STRS Ohio is register for an online account. The STRS Ohio online account is your portal to access important plan information. While working, you may view accrued benefits, beneficiary designations, important system documents, and upcoming STRS Ohio seminars. Once retired, you may view monthly pension payment details, update tax withholding elections, or review health insurance options. In addition, you may easily update contact information should something change.
As a new member of STRS Ohio, you have 180 days to elect which plan you will participate in. One important note is the election to participate in the defined benefit plan may not be revoked. If you enroll in the defined contribution or combined plan you will have the option to switch plans during your fifth year of membership. Failure to make an election within 180 days will result in automatic enrollment in the defined benefit plan.
Types of Plans
Ohio STRS provides three plans to choose from: Defined Benefit, Defined Contribution, or Combined. There isn’t a “one size fits all” solution when it comes to the plan election that’s best for you. Here are some questions to consider when electing a plan:
- What are your long-term career and/or family goals?
- Do you anticipate remaining in Ohio or desire to move out of state?
- What sources of income might you be eligible for during retirement and how does STRS Ohio impact those future benefits?
- Are you married or do you anticipate getting married in the future?
- How would your family be protected in the event of your death or disability?
- How comfortable are you with investment risk and what previous experience do you have investing?
Only after an evaluation of your unique circumstance should you make a plan election. The majority of STRS Ohio members participate in the Defined Benefit plan, however, that doesn’t mean it’s the best option for you!
Mid-Career Members (5-25 years of service credit)
By now, you should be familiar with your benefits as a member of STRS Ohio. At this stage, the decisions you face regarding STRS Ohio benefits are minimal. However, there are some important things mid-career members should keep in mind.
- Provided you are at least age 60, you may be eligible for reduced retirement benefits once you reach 5 years of service credit
- Provided you are at least age 65, you may be eligible for unreduced retirement benefits once you reach 5 years of service credit
- Defined Contribution plan participants that reach 5 years of service become 100% vested in employer contributions.
- Should a Defined Benefit or Combined plan participant pass away after reaching 5 years of service credit, his or her survivor(s) may be eligible for a stream of income, medical, dental, and/or vision insurance.
- Should a Defined Benefit or Combined plan participant become disabled after earning 10 years of service credit, he or she may be eligible for a stream of income and/or health care coverage.
- Participants in the Defined Benefit or Combined plans that retire before August 1, 2023 must have at least 15 years of service credit to qualify for the medical, dental, and vision plans
- Participants in the Defined Benefit or Combined plans that retire on or after August 1, 2023 must have at least 20 years of service credit to qualify for the medical, dental, and vision plans
Use this time as an opportunity address financial planning areas beyond your STRS Ohio benefits.
- You may be eligible to participate in a retirement plan beyond that which STRS Ohio provides, such as a 403(b), 457(b), or an Individual Retirement Account (IRA). These plans may enable you to set aside funds to supplement the retirement income from STRS Ohio.
- If you participate in the Defined Benefit plan, now may be a good time to consider combining service credit you’ve accrued through another Ohio public pension plan such as OPERS or SERS.
- If you participate in the Defined Benefit plan, now may be a good time to consider purchasing service credit you are eligible for.
- Get your estate plan in order.
- Determine how much life insurance you need or confirm your current coverage is sufficient.
- It’s never too early to start planning for retirement. If you’ve already put together a plan, confirm no course corrections are necessary to put you back on track.
Approaching Retirement (25+ years of service credit)
Retirement planning probably seems challenging regardless of your age or line of work. As a member of STRS Ohio, you will make many important decisions as you approach retirement. Some questions to consider include:
- When should you retire?
- What plan of payment should you elect?
- Is the Partial Lump-Sum Option Payment (PLOP) right for you?
- What are your healthcare options?
- How do your elections affect Social Security benefits?
- What should you do with your 403(b) and/or unused sick time?
Your STRS Ohio benefits will play a large role in helping you maintain financial independence during retirement, but it’s important you understand how they fit into your whole financial picture. Few people take this important step to determine how your pension(s), Social Security, investment income, insurance policies, and overall tax and estate plan all work together to meet your retirement goals.
Learn more about your STRS Ohio benefits by visiting my blog or, if you’re ready to take the next step in planning for your future, let’s talk!