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Supplement Your Retirement

three aspects of retirement savings

What You Will Need to Retire

The ASRS Defined Benefit Plan provides for a guaranteed lifelong monthly benefit to retirees.

There are, however, no provisions in the plan for automatic benefit increases, such as a Cost of Living Adjustment, after retirement.

By statute, the purpose of the ASRS is to “Provide a base retirement benefit that is less than 100 percent of a member’s post-retirement income requirements” (A.R.S. § 38-712). Separate post-retirement income from Social Security, individual retirement plans such as a 401(k), and personal savings are vital for members to build a more complete and diverse retirement portfolio.

Think of your retirement plan as a three-legged stool. How sturdy is yours?

Your ASRS Benefit

The average ASRS benefit payment for a retiree who contributed to the ASRS for 20 or more years is approximately $1,630 a month, or about $19,500 per year.

Based on recent ASRS demographics, the average retiree’s benefit provides about 40 percent of what they were earning before retirement. Again, there is no provision in statute to provide for annual cost of living adjustments to your base benefit.

Social Security

Most all ASRS members also participate in the federal Social Security plan. The average Social Security benefit is approximately $1,269 per month, or about $15,200 per year. Social Security does have provisions for providing cost of living increases, predicated upon Congressional approval.

Personal Savings

A supplemental retirement savings plan is an excellent opportunity for members to save during their working careers for their post-retirement years. The ASRS offers several supplemental saving plans for employers to participate in and offer to their employees.

Additionally, anyone may set up a tax-deferred savings plan though a bank or qualified financial institution.

The ASRS encourages members to consult a trusted tax advisor or financial planner for information.

ASRS Supplemental Savings Plans

SPECIAL NOTICE:

CARES ACT & Supplemental Plans During COVID-19

Flexibilty may help participants in time of need.

With the recent passage of the federal Coronavirus Aid, Relief and Economic Security Act (CARES Act) comes provisions that allow for greater access to funds members may have in their defined contribution accounts, including the two plans offered through the ASRS.

Active members participating through their employer in either the ASRS Supplemental Retirement Savings Plan (SRSP), or the ASRS Supplemental Salary Deferral Plan (SSDP) may wish to explore these new provisions.

NOTE: This does not apply to members’ primary ASRS defined benefit pension account. State law prohibits borrowing from your ASRS pension account.

The CARES Act, however, does provide for increased access to retirement plan loans and in-service withdrawals in response participants’ need for cash in this time of economic uncertainty created by the COVID-19 pandemic. This includes:

      •       Tax-favored coronavirus-related distributions (CRDs) of up to $100,000 until Dec. 31, 2020.
      •       Expanded access to loans with increased limits for new loans and loan repayment deferrals for new and existing loans.
      •       Waiver of 2020 Required Minimum Distributions. It should be noted that the age for taking Required Minimum Distributions from retirement accounts has been increased from 70 ½ to 72

The ASRS supplemental plans are managed by Nationwide Retirement Solutions. Any loans or withdrawals could impact your retirement nest egg. Members should weigh all available options to address your immediate financial needs while still being thoughtful about your financial future.

There are a number of provisions, deadlines and declarations contained in the CARES Act. To learn more about your options under the CARES Act and your supplemental plan savings:

CARES Act Summary

ASRS Supplemental Savings Plans

Nationwide ASRS SRSP & SSDP Website

IRS: COVID-19 Relief for Retirements Plans, Q&A

General Information

Opening a secondary but separate retirement account from your ASRS benefit is an effective way to help provide for a more secure retirement. Even if you can only contribute a small amount now, opening such a plan early in your career will help set a more solid foundation for a well-diversified retirement portfolio.

The ASRS offers several separate, voluntary plans to participating employers, who may then offer the option to their employees. Members may wish to explore these separate defined contribution plans.

ASRS Supplemental Retirement Savings Plan (SRSP)

The ASRS SRSP is qualified under Section 401(a) of the Internal Revenue Code. The SRSP allows eligible members to contribute tax-deferred money into an account that can be drawn upon in retirement. ASRS members are eligible to participate in this plan only if their employer signs up for the plan. This plan is not available to employees of the State of Arizona and the state universities, which have access to similar programs through the Arizona Department of Administration.

Due to the distinctive features and benefits of the SRSP, the Internal Revenue Service requires restrictions that are unique to other tax-deferred plans. These restrictions include an irrevocable election to participate, and an irrevocable election to contribute a percentage of pay, flat dollar amount or a scheduled contribution over time. The ASRS SRSP is administered by Nationwide Retirement Solutions, an independent financial services company.

Nationwide SRSP Enrollment Guide Nationwide SRSP Enrollment Guide

For additional information, contact your employer or Nationwide:  (602) 266-2733, (888) 224-1001, azsrsp.com

ASRS Supplemental Salary Deferral Plan (SSDP)

The ASRS SSDP is qualified under Section 403(b) and 457 of the Internal Revenue Code. The SSDP allows eligible members to contribute tax-deferred money into an account that can be drawn upon in retirement. ASRS members are eligible to participate in this plan only if their employer signs up for the plan. This plan is not available to employees of the State of Arizona and the state universities, which have access to similar programs through the Arizona Department of Administration. The ASRS SSDP is administered by Nationwide Retirement Solutions. SSDP participants will have access to a high-quality, low-fee plan that allows individual management of accounts along with professional customer service.

 Nationwide SSDP Plan Highlights

For additional information, contact your employer or Nationwide:  (602) 266-2733, (888) 224-1001, azssdp.com 

ADOA Deferred Compensation Plan

State of Arizona and university employees are eligible to participate in a separate retirement savings plan offered through the Department of Administration. Plan choices include a traditional 457(b) Deferred Compensation Plan, and a 457(b) Roth DC Plan. The plans are administered by Nationwide Retirement Solutions. For more information, contact Nationwide:  (602) 266-2733, (800) 796-9753, State of Arizona Deferred Compensation Plan

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