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If the member is eligible to retire, there is no advantage in deferring retirement beyond age 60, as the benefit does not increase beyond that age when the member is on deferred status. The member who is on deferred status, and becomes eligible for benefits, forfeits all benefits from the date of eligibility to the date application is made for retirement.
Here is an example of deferring a retirement benefit: Mary has 20 years of earned service and qualifies for retirement at age 55. She will be terminating her employment by age 55. Her monthly benefit of $1,000 is decreased by the age penalty of 12% (2.4% per year for each year under 60 for the “Rule of 75” option). Her retirement benefit would be $880 until cost of Living Allowances begin at age 65. Deferring her benefit to age 60 would increase her benefit to $1,000 (no age penalty) but cost her $52,800 ($880 x 12 months x 5 years) in lost pension income. Mary would begin her admittedly larger pension $52,800 in the hole. She would break even on this option just before her 87th birthday.
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