NEW UPDATE: How the New Tax Bill Will Impact You

6 Retirement Myths Every Public Service Enterprise Group Employee Should Not Fall For!

During our 30+ years helping retirees, the majority have been very excited to start the planning process. However, some have been surprised to find out our recommendations differ from what they have heard elsewhere.

This is because there’s a lot of misinformation swirling around. As a fiduciary, we are legally obligated to serve your best interests at all times. So, we can tell you achieving the retirement you desire is not going to happen if you’re sidetracked by myths and false information.
That's why we aim to debunk the top six retirement myths that Public Service Enterprise Group employees may have heard. Our goal is to help you start building the retirement of your dreams today.

Myth #1: If I receive a pension, I do not have to make any decisions regarding my pension.

If Public Service Enterprise Group offers you a defined-benefit plan, your pension is primarily the responsibility of the company. However, that doesn’t mean you just wait for a check in the mail once you retire. You have major decisions to make.

If offered a pension, employees can potentially elect to receive a monthly payout like a traditional pension or they could convert their pension into a one-time lump-sum benefit, which can be subsequently rolled over into an Individual Retirement Account (IRA) and then controlled by the retiree.

So, monthly or lump-sum pension?

Each payout has its own set of pros and cons. Deciding which option is most appropriate for you involves many factors. Deciding which option is most appropriate for you involves many factors. It is best done with the help of a professional, who can incorporate all aspects of your financial life – Social Security, 401(k), real estate, and inheritance into your decision.

Further, married Public Service Enterprise Group employees may have survivor benefit options to consider. At retirement, it is possible that you have multiple survivor options to choose from for the monthly pension, but these are only available for a qualified spouse.

Myth #2: If I receive a pension from Public Service Enterprise Group , Social Security becomes less important.

Social Security will likely be one of your primary sources of retirement income. And just like your pension, you should carefully consider how best to use it based on your personal needs.

The size of your Social Security benefit is greatly determined by your age when you claim. You can receive your full Social Security retirement benefit upon reaching your Full Retirement Age, which is age 66 or 67, depending on your date of birth. But you can claim a permanently reduced benefit as early as age 62. Delaying Social Security until age 70 entitles you to a higher benefit of up to 8% per year. A benefit at age 70 will be 76-77% higher than the payout if you start at age 62.

Ultimately, factors such as your other income sources, marital status and health should guide your decision, not just when you can get the biggest Social Security paycheck.

Myth #3: When I retire from Public Service Enterprise Group doesn’t matter

No, no, no. When you retire has a major effect on the quality of your retirement.

For one, years of service is one of the primary factors in your pension calculation. Generally, the longer you work at Public Service Enterprise Group, the higher your pension. Your pension is also impacted by interest rates, which fluctuate. When rates are lowered, lump-sum pension payouts are increased, and vice versa.

Plus, Public Service Enterprise Group retirement benefits are not set in stone. They are subject to change. For example, the significant changes made to Public Service Enterprise Group’s pension calculation, health care subsidies and retiree health insurance.

You may find that it is more financially advantageous to retire sooner or later than your desired retirement date.

Myth #4: Public Service Enterprise Group stock is a good investment

Articles you may find interesting:

Something Public Service Enterprise Group employees should be aware of is that we commonly see employees invest an excessive amount of their 401(k) in their company’s stock. While it can be rewarding to own a piece of a respected company, it may be risky from a retirement planning perspective.

Firstly, most of your financial life becomes dependent on the performance of one company. That includes your current income and retirement income from the Public Service Enterprise Group pension and 401(k) plan (if Public Service Enterprise Group offers these to you). Such a high concentration of your financial well-being in a single company is risky. Secondly, a single stock can be riskier and more volatile than a mutual fund or the broader stock market. Therefore, the greater amount of Public Service Enterprise Group stock you have in your 401(k), the more you can expect your investment return to fluctuate.

It’s more appropriate to diversify the investment choices in your Public Service Enterprise Group 401(k) account (If Public Service Enterprise Group offers you a 401K). That means selling your company stock and investing in mutual funds. The right mix of funds depends on your specific needs, goals and level of risk you’re comfortable with.

Myth #5: It’s better to leave my 401(k) with my company.

Upon leaving Public Service Enterprise Group, you may leave some or all of your savings in your Public Service Enterprise Group 401(k) account (If this is offered to you). However, there are a variety of benefits to rolling over your 401(k) to an Individual Retirement Account (IRA). These include greater investment choices, greater withdrawal flexibility, more withholding options, and professional management by an advisor of your choosing.

When done properly, no tax applies to the rollover. One area of your 401(k) that provides no flexibility is tax withholdings.Every withdrawal is subject to a mandatory 20% federal tax plus applicable state taxes.

Myth #6: Medicare will cover my medical expenses

One of the biggest expenses for most people in retirement is health care. Taking the time to review your options can help you plan accordingly and avoid large out-of-pocket costs that could derail your retirement.

Once you turn 65 you are Medicare-eligible You and your Medicare-eligible dependents are required to enroll in Medicare Part A (hospital benefits) and Part B (doctor benefits). These two parts cover about 80% of health care benefits for individuals, so it’s important to consider your supplemental coverage options.

In the context of the Public Service Enterprise Group (PSEG), how do the changes to the pension plans effective July 1, 2019, specifically under the new Pension Plan II, affect the retirement benefits of long-term employees? It is essential to analyze the implications of the pension plan structure for employees who have served under the traditional pension plans. Describe how the transition to a new structure influences retirement security for those planning to retire soon.

The changes to PSEG's pension plans effective July 1, 2019, with the introduction of Pension Plan II, primarily impacted the retirement benefits for long-term employees by maintaining the same benefits structure as under the original plans but splitting assets and liabilities between the new and old plans. Pension Plan II is for active participants, while the original Pension Plan is now predominantly for retired and terminated vested participants. For long-term employees, the retirement security is preserved, with no changes in the benefits themselves; however, the split aimed to reduce pension expense variability(Public_Service_Enterpri…).

Given the evolving nature of retirement plans, what are the key distinctions between the Final Average Pay Component and the Cash Balance Component of PSEG's Pension Plan II? Employees may find it crucial to understand these differences in determining their retirement strategies. Discuss how these components work and the potential advantages and disadvantages each offers to future retirees within PSEG.

The key distinctions between the Final Average Pay Component and the Cash Balance Component of PSEG’s Pension Plan II lie in how retirement benefits are calculated. The Final Average Pay Component is based on a formula that considers the employee's highest years of earnings and years of service, while the Cash Balance Component accumulates benefits in a hypothetical account with company contributions and interest credits. The Final Average Pay Component offers more predictability based on salary and tenure, while the Cash Balance Component provides flexibility but may lead to less predictable retirement income(Public_Service_Enterpri…).

How does the pension benefit formula in the Final Average Pay Component affect employees at PSEG, particularly in relation to their years of service and highest earning years? Understanding this formula is vital for employees approaching retirement. Analyze how the changes implemented on January 1, 2012, altered the benefit calculations and what impacts this may have for current employees nearing their retirement age.

The pension benefit formula in the Final Average Pay Component at PSEG is based on a percentage of the employee's average compensation during their highest earning years and years of service. Before January 1, 2012, the calculation was based on the average of the five highest years, but after this date, it switched to the average of the seven highest years, slightly reducing projected pension benefits. Employees with long service nearing retirement will be affected by this change, potentially seeing lower pension benefits due to the broader earnings period(Public_Service_Enterpri…).

With regard to the additional benefits outlined for retirees from the PSEG pension plans, how do these supplements influence the overall retirement income of employees? It is important to consider not only the base pension benefit but also how additional payments, such as those based on credited service, contribute to financial well-being in retirement. Discuss the significance of these additional benefits and how they fit into broader retirement planning.

Additional benefits for retirees from the PSEG pension plans, such as monthly supplements based on years of credited service, enhance overall retirement income. These supplements, including the $4 to $5 per month benefit for each year of credited service, help retirees manage their financial needs better, particularly in the early years of retirement before other benefits (such as Social Security) may become available. These supplements add an important layer of security and stability to retirement planning(Public_Service_Enterpri…).

In what ways does Public Service Enterprise Group ensure that employees understand their options under the new Pension Plan II regarding participation and benefits? This understanding is crucial for employees making informed decisions about their retirements. Explore the methods and resources PSEG provides to assist employees in navigating their pension plan options and the potential consequences of their choices.

PSEG ensures employees understand their options under Pension Plan II by providing resources such as detailed plan summaries, educational sessions, and retirement calculators. These tools help employees navigate complex decisions about participation and benefit choices. The company also offers access to pension counselors who can assist employees in evaluating the long-term consequences of their retirement decisions(Public_Service_Enterpri…).

How do the eligibility criteria for retirement benefits under PSEGâ€™s pension plans promote long-term retention and career stability among employees? Discuss how these criteria influence employee commitment and motivation, as well as the overall work culture within PSEG. Highlight the link between pension plan structures and employee satisfaction and retention.

The eligibility criteria for retirement benefits under PSEG’s pension plans are designed to promote long-term retention by providing attractive benefits based on years of service and age. Employees become fully vested after completing five years of service, and the availability of unreduced benefits at age 65, or earlier for those meeting specific age and service combinations, encourages career stability and loyalty to the company(Public_Service_Enterpri…).

How can employees at Public Service Enterprise Group plan their retirement effectively given the various pension options available, and what strategies can they employ to maximize their benefits? Retirement planning is a critical aspect of financial security for employees. Delve into the specific strategies that employees can utilize to take full advantage of their pension options at PSEG, including investment options, service credits, and benefit selection.

PSEG employees can plan their retirement effectively by leveraging the company's pension plans and service credits. Key strategies include maximizing service years to increase benefit accruals, understanding the impact of early retirement, and choosing the optimal benefit structure between the Final Average Pay and Cash Balance Components. Employees can also take advantage of investment options within their pension plans to enhance long-term financial security(Public_Service_Enterpri…).

As employees at PSEG look towards retirement, what are the most common misconceptions about pension benefits that they should be aware of? Misinformation can lead to poor decision-making regarding retirement planning. Analyze these misconceptions and provide clarity on the actual benefits, eligibility, and features of the PSEG pension plans, ensuring employees have accurate information to guide their choices.

Common misconceptions about PSEG’s pension benefits include the belief that all benefits stop at retirement or that there is no flexibility in retirement age. In fact, employees can choose early retirement with reduced benefits or continue working past 65 to accrue more service credits. Another misconception is that the Cash Balance Component is always inferior to the Final Average Pay Component, which may not be true depending on individual financial goals and work history(Public_Service_Enterpri…).

Given the changes in pension plan structures, what advice would you give to employees at PSEG regarding when to start planning their retirement, and how can they utilize the information available in the companyâ€™s retirement resources? Discuss the importance of timing in retirement planning and how employees can best leverage the resources provided by PSEG to prepare for retirement effectively.

Employees at PSEG should start planning their retirement as early as possible, ideally at least ten years before their planned retirement date. The company provides various resources, including financial planning tools, benefit calculators, and pension counseling, which help employees make informed decisions. Timing is crucial, especially when determining early retirement options and how different components of the pension plan will affect final benefits(Public_Service_Enterpri…).

How can employees at Public Service Enterprise Group contact the company to learn more about the benefits and features of their pension plans and retirement options? Understanding the communication pathways available for obtaining information is key for employees considering their retirement plans. Discuss the channels through which employees can reach out to PSEG for assistance and the types of inquiries they can make-related to their pension benefits.

Employees at PSEG can contact the company to learn more about their pension plans and retirement options through HR support, pension plan counselors, and official resources such as plan documents and summaries available on the company's intranet. Inquiries can cover topics such as benefit calculations, retirement age options, service credits, and plan changes, ensuring employees have all the necessary information to make informed retirement decisions(Public_Service_Enterpri…).