Best Financial Advisors in Independence, MO

For many retirees with a pension, maximizing your payout options is vital. Many pension plans use what’s called a Final Average Earnings (FAE) calculation. There are several factors that might affect your retirement pay. You might not be able to control all the variables in your FAE calculation, but certain things, like deciding when to retire, are generally within your control. You don’t want to make the mistake of retiring too early and missing a benefit or working longer with minimal or no benefit to you. Understanding Your Final Average Earnings Calculation Each plan is going to have a different way they arrive at your FAE number. There may even be several different plans with the same employer. For example, we’ve recently been working with clients from Evergy and there are several different pension plan types – all with slightly different FAE calculations. Here are the main metrics you want to consider carefully: 1. What counts toward years of service (credited service)? 2. Does the plan cap credited years of service (e.g., 30, 35, or 40 years)? 3. What wages are counted as earnings? 4. Are there any penalties for drawing early, etc.? There may be some other important variables for your pension plan, like if you were part of a merger or started before or after a certain change in the pension plan. You really want to look at what you can control first and then worry about the rest.