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PERSI Retirement Rules: How to Plan for a Secure and Comfortable Retirement

Admin • January 5, 2024

The Public Employee Retirement System of Idaho (PERSI) is a retirement plan for public employees of Idaho, made up of members from over 850 employer organizations across the state. The $22 billion plan offers retirement, disability, and death benefit programs to over 177,000 members. In 2022, over $1 billion in benefits were paid to PERSI retirees living in Idaho, with an average monthly benefit of $1,800. 

Whether you’re a new public employee just entering PERSI, or you’re nearing retirement and thinking about your future, understanding PERSI’s retirement rules can help you in your retirement planning. Having a comprehensive plan that includes your PERSI benefits can lay the foundation for a secure and comfortable retirement in your golden years. 

Understanding PERSI Basics

PERSI was founded in 1963 as a defined benefit retirement plan to offer a measure of retirement security for Idaho’s public employees. Through the plan, retirees receive a fixed monthly pension based on factors including years of service and salary. 

During its first 35 years, PERSI’s plan was a traditional defined benefit plan, now known as the PERSI Base Plan ; in 2001, PERSI added a defined contribution plan, called the PERSI Choice 401(k) Plan , to supplement the Base Plan. 

  • Base Plan : Enrollment in the defined benefit Base Plan is automatic, and once vested, you’ll receive a lifetime benefit at retirement. Both you and your employer make contributions to the Base Plan, which are invested and grow over time. Your contributions go into your personal account, while employer contributions are pooled in a trust fund to cover future benefits for all members. 

For 2023, as a general member, you contribute 6.71% of your annual salary to the Base Plan, and your employer contributes 11.18%. This percentage varies if you are a public safety member or a school employee member, and it will increase for all members in 2024. Retiring as a vested member means you’ll receive a fixed monthly payment for the rest of your life.

  • Choice 401(k) Plan : Participation in the defined contribution Choice 401(k) Plan is voluntary, unlike the Base Plan. The Choice 401(k) Plan allows you to contribute a portion of your salary, pre-tax, via payroll deductions. You can direct your investments among several investment options. The amount available in your Choice 401(k) at retirement is dependent on your contributions and the performance of your investments.

The combination of these two plans from PERSI offers an optimal blend – the security of the Base Plan, and the opportunity for self-directed investments and voluntary contributions in the Choice 401(k) Plan.

PERSI Eligibility and Retirement Rules

Understanding how to join PERSI and what it means for your retirement is paramount for utilizing this helpful benefit and resource. 

Joining PERSI

When you work in an eligible position for one of over 850 PERSI employers, you become a PERSI member. As an eligible employee, you accrue service credit for each month you work; the credited service is used to calculate your PERSI benefit at retirement. You’ll earn one month of service for each calendar month worked, with at least 20 hours worked during a week. You won’t earn additional service credit by working overtime.

Once you’ve earned 60 months of service credit, you’ll be considered vested and receive a lifetime benefit at retirement. The five-month vesting period doesn’t need to be with the same PERSI employer – you can change public service jobs without impacting your PERSI membership.

Planning for Retirement

To receive your full PERSI retirement benefits, you must reach your service retirement age; or, you must meet the minimum age requirement when you retire, have at least 60 months of credited service, and you also must meet the Rule of 80/90 . These requirements differ if you are a general member, or public safety member – police officer or firefighter.

The Rule of 80/90 = your age + your years of service = 80/90 (or more)

For general members, you must be at least 55 years old and meet the Rule of 90. For police officers or firefighters, you must be 50 years old and meet the Rule of 80. For members with mixed service, your requirements depend on your ratio of general and police-firefighter service –  you’ll have to be between 50-55 years old and meet a Rule of 80 or 90, with both depending on your ratio.

If you retire before reaching your service retirement age (65 years old for general members, 60 years old for police and firefighters), or before reaching the Rule of 80/90, your retirement benefit will be reduced.

If you decide to work beyond your service retirement age or the Rule of 80/90, your retirement benefit will continue to increase.

Calculating Your PERSI Retirement Benefits

Determining the amount of your PERSI retirement benefits and how much income you’ll receive can help you better plan for retirement. PERSI benefits are calculated using a straightforward formula involving your average monthly salary during a Base Period (currently 42 months), a multiplier of 2% for general members or 2.3% for police officers and firefighters, and your months of service.

Average Monthly Salary during Base Period  x Multiplier x Months of Service

For example, if you’re a general member, your average monthly salary is $3,000, and you have 360 months of service:

$3000 x 2% x 360 months = $21,600 

÷ 12 months = 

Monthly benefit of $1,800

The value of your PERSI benefits typically far exceeds your contributions – within the first 3-5 years of retirement, most PERSI members have received a return greater than the money they contributed while working. And you’ll continue to receive your benefits payment for the rest of your life. PERSI also considers cost-of-living adjustments (COLAs) to Base Plan benefit payments annually. Your PERSI benefits are a guaranteed, long-term source of retirement income – something very difficult to find in another investment.

Planning for Retirement with PERSI

There are several retirement distribution options available for PERSI members to choose from. The Regular Retirement option provides the largest benefit, with full payment throughout your life, but it has no Contingent Annuitant (CA) protection for your spouse or dependents. PERSI offers two CA Allowance retirement distribution options with either 100% or 50% CA allowances, as well as a Social Security Adjustment option and two options that are a CA/Social Security blend.

If you’re planning on retiring in the next few years, or even if you’re years away from retirement, knowing how the PERSI retirement process works can help make it more efficient and seamless. PERSI provides a helpful retirement checklist to follow throughout your career as a guide.

Comprehensive Retirement Planning

A comprehensive retirement plan that includes income and investments beyond your PERSI Base Plan and Choice 401(k) Plan will offer you more opportunities to save for retirement and reach your financial objectives. Your goals for retirement are based on your unique situation, and working with a financial advisor can help you create a retirement plan that is customized to your individual circumstances, risk tolerance, timeline, and objectives.  

At Five Pine Wealth Management , we work with you to develop a financial plan and retirement plan that is tailored to your specific needs. As fiduciary financial advisors , we have your best interests in mind as we help you reach your retirement goals and realize your vision of retirement. To find out more about how we can help you supplement your PERSI retirement plan with other retirement strategies, send us an email or give us a call at: 877.333.1015.

Preparing for Retirement Without Compromising Today: Savings Strategies for Your 50s

February 21, 2025
Somewhere in adulthood, the old question of “What do you want to be when you grow up?” morphs into “ What do you want to do when you retire?” Some people dream about their retirement for decades, while others barely give it a thought. Either way, by the time you reach your 50s, you’ll benefit from building a retirement plan that doesn’t force you to sacrifice all of life’s joys today. Retirement planning in your 50s is less about radical changes and more about making intelligent, intentional decisions. Let’s dive in. By your 50s, you’ve likely hit your peak earning years. That’s the good news. The not-so-great news? The clock is ticking on the years left to build your nest egg. Don’t panic. With a strategic approach, you can set yourself up for a secure retirement without feeling like you’re putting life on pause. Your 50s are also a time to reassess priorities. Kids might be leaving the house (goodbye, endless grocery bills!), and you might have more flexibility in allocating your income. This decade is the perfect opportunity to course-correct and make up for any lost time. 4 Retirement Savings Strategies for Your 50s This decade is the perfect time to implement strategies that will help you coast right into your golden years. 1. Max Out Retirement Accounts The IRS gives a little extra love to folks 50 and over in the form of catch-up contributions. For 2024, you can contribute up to $30,500 to your 401(k) ($23,000 plus a $7,500 catch-up contribution). Don’t have a 401(k)? No problem. With an IRA, you can add an extra $1,000 to the usual $7000 contribution limit. These boosts may seem small, but they add up fast, especially with compounding returns working their magic. 2. Automate Your Savings Automating contributions ensures you’re consistently saving without even thinking about it. Set up direct deposits into your retirement accounts so saving becomes as effortless as your morning coffee routine. If you get a raise, consider earmarking most of it for your savings—future you will thank you. 3. Diversify Investments By now, you’ve likely heard that “diversification” is key, but what does it mean for you? In your 50s, you’re likely transitioning from a more aggressive portfolio to a slightly more conservative one. That doesn’t mean selling all your stocks and parking your money in bonds, but rather finding a balance that aligns with your risk tolerance and timeline. 4. Pay Down High-Interest Debt Interest rates on credit cards or other high-interest loans can drain funds that could otherwise be growing in retirement accounts. Paying these off first will free up cash flow for savings. Catching Up on Retirement Savings If you’re behind on retirement savings, don’t stress. There are plenty of ways to catch up while still enjoying life today: Reevaluate Your Budget : Start by taking a close look at where your money is going. Are there subscriptions you’ve forgotten about? Could dining out be scaled back slightly? You don’t have to eliminate all your “wants”—just trim the fat. Even reallocating $200 a month can lead to significant savings over time. Downsize Strategically : Empty nesters, this one’s for you. If your current home has more space than you need, downsizing could free up substantial equity for retirement savings. Smaller homes also mean lower utility bills, maintenance costs, and property taxes. Leverage Catch-Up Contributions : As mentioned earlier, these higher contribution limits for people over 50 are a game-changer. Pair this with any employer-matching contributions, and you’ve got a recipe for rapid savings growth. Delay Social Security : While Social Security might feel like a safety net, waiting to claim it can significantly increase your benefits. Your benefits grow every year you delay claiming beyond your full retirement age (up to 70). If you can, let those checks wait while your investments continue to work. Explore Additional Income Streams : Retirement doesn’t have to mean quitting work entirely. Many people in their 50s find side hustles or part-time work that aligns with their interests. Whether it’s consulting, teaching, or turning a hobby into income, these earnings can supplement savings without feeling like a burden. Balancing Retirement Planning with Enjoying Today Now for the part everyone cares about: How do you plan for tomorrow without ruining today? Here’s how to strike the balance: Set Clear Goals What does retirement look like for you? Is it traveling the world, spending more time with family, or pursuing hobbies you love? Knowing your “why” helps make the sacrifices feel worthwhile. It also gives you a clearer target to aim for. Embrace Experiences Over Things Research shows that spending on experiences—like vacations, concerts, or classes—provides longer-lasting happiness than material goods. Plus, experiences don’t have to break the bank. Look for ways to create memories without overspending. Plan for Mini-Retirements Who says you have to wait until you’re 65 to enjoy some of that freedom? Consider taking shorter breaks or extended vacations now to recharge and enjoy life. With careful planning, these “mini-retirements” won’t derail your long-term goals. Prioritize Health One of the best investments you can make in your future is in your health. Regular exercise, a balanced diet, and preventive healthcare can reduce medical expenses down the road and ensure you can fully enjoy your retirement. Celebrate Small Wins Saving for retirement is a marathon, not a sprint. Celebrate progress along the way—whether it’s maxing out your 401(k) for the first time or finally paying off that lingering debt. 3 Practical Action Steps to Get Started Calculate Your Retirement Needs : Estimate how much you’ll need to maintain your desired lifestyle. Don’t forget to factor in healthcare costs, home maintenance, inflation, and leisure activities. Review Insurance Coverage : Make sure you’re adequately covered with health, life, and long-term care insurance. These policies can protect your savings from unexpected expenses. Adjust Your Asset Allocation : As you approach retirement, consider shifting some of your investments into more stable options. This will minimize the risk of major losses as you approach the time when you will need the money. How Five Pine Wealth Management Can Help We can help you create a tailored plan, taking into account your current savings, goals, and timeline. With our experience, we can advise you on maximizing tax-advantaged accounts and minimizing unnecessary risks. Preparing for retirement in your 50s doesn’t mean sacrificing today’s joys. With thoughtful planning, strategic savings, and a focus on balance, you can enjoy the present while setting yourself up for a comfortable future. Start today, by scheduling a meeting with us. Email info@fivepinewealth.com or call us at: 877.333.1015 to take it one step at a time, and remember: It’s never too late to build the retirement you deserve.

Robo Advisor vs Financial Advisor: Why Automation Can’t Beat the Human Touch

February 14, 2025
In today's fast-paced and tech-driven world, convenience is a hot commodity. Businesses across industries have had to pivot to meet the demands of consumers who crave efficiency and ease. Think about how brick-and-mortar retailers have transformed into online shopping havens with a greatly increased selection of products, the ease of shopping at all hours from home, or how delivery services have boomed as an effortless solution to mealtime dilemmas, to name a few. If businesses don't prioritize easy accessibility and simplicity, many risk losing consumers. The finance industry is no exception — in fact, it's a prime example of an industry constantly innovating to simplify highly sought-after services like investing. Case in point? Robo-advisors. What Is a Robo-Advisor? If you're unfamiliar with the term, you could likely guess its meaning from the name alone. More officially, it refers to a software application that provides automated, algorithm-driven investment management with minimal human intervention. These platforms leverage technology to streamline and optimize the investment process. They typically offer a curated selection of investment options tailored to an investor's goals, risk tolerance, and time horizon. An automated solution for building wealth? Sounds promising! But while it might seem like an all-good, no-bad, very-welcomed shift in the industry, it's important to remember that with the positives may come some serious drawbacks. Let's explore both sides: robo advisor pros and cons. Robo-Advisor Pros First off, let's highlight the positives. A big one is that many individuals who had never even considered investing before might still be in the same position today if it weren't for accessible solutions like robo-advisors. They have opened doors for countless people to enter the world of investing, which is exciting! But let's look at a few other benefits that have fueled their increasing popularity: Accessibility and Convenience: These are two key factors that influence consumer satisfaction, and robo-advisors deliver precisely that. They are easily accessible online or through mobile apps. Their user-friendly interfaces make it easy for investors to open an account and set up automated contributions within minutes, monitor their investments, and make adjustments — all without the need for face-to-face meetings or phone calls with a financial advisor. Automatic Diversification: If you're new to investing or have limited knowledge, robo-advisors alleviate the stress of deciding how to invest. Using sophisticated algorithms, they offer diversified investment portfolios based on your risk tolerance, investment goals, and how soon you may need to access your invested money. This approach can effectively mitigate risk and minimize the impact of market volatility on investment returns. Low Cost: Robo-advisors usually come with lower fees than traditional financial advisors who actively manage your portfolio. Through automation and technology, these platforms can offer their services at a lower cost, making investment management more accessible to a broader range of investors, including those with smaller portfolios. These benefits are precisely what many investors are seeking as they begin their investing journey, positioning robo-advisors as a solution for some. Robo-Advisor Cons While robo-advisors have gained popularity for their evident and understandable benefits, it's essential to acknowledge that every innovation or advancement often has accompanying drawbacks. Let's explore some of them: No Human Touch: Finances are deeply personal. Beyond mere math, financial decisions are often emotionally driven. While a robo-advisor can efficiently manage your investments using algorithms and automation, it can't engage in comforting conversations or provide reassurance during turbulent market conditions to prevent impulse decisions driven by fear or uncertainty. Nor can it offer encouragement to keep going or remind you of your progress in your financial journey when times get tough. Sometimes, human interaction and guidance are indispensable. Limited Customization: Robo-advisors typically offer a selection of pre-built portfolios made up of ETFs (exchange-traded funds) or mutual funds. While these portfolios provide diversification that suits many investors, they're not a perfect fit for everyone. Take, for example, an investor with specific preferences, like avoiding certain companies or industries or desiring to invest in individual stocks. In such cases, robo-advisors might be too restrictive. Additionally, robo-advisors might not have the capacity to deal with more complex financial situations, such as tax optimization or retirement income planning for high-net-worth individuals. Limited Area of Focus: While the allure of robo-advisors partially lies in their simplicity, that can equally be a drawback. Because robo-advisors primarily focus on investment management, you might miss out on the holistic approach of a human financial advisor who considers various aspects of your financial situation. A robo-advisor doesn't consider factors like high-interest debt you may have, for example, which might be wiser to pay down before aggressively investing. Nor does it account for the possibility of not having an adequate emergency fund or other pressing financial obligations that take priority. When it comes to investing, having a financial advisor looking at your entire financial landscape can provide valuable insights into the most suitable account types to open, ideal contribution amounts, and the target rate of return to aim for. These drawbacks highlight the importance of understanding the limitations of a robo advisor vs. a financial advisor and considering them in the context of your financial goals, preferences, and circumstances. Robo Advisors vs. Financial Advisors: How Five Pine Wealth Management Can Add a Personal Touch to Your Finances  The balance between the positive and negative aspects is a common challenge of many new technologies, robo-advisors included. As with any financial decision, investors should thoughtfully evaluate their individual needs and preferences before opting for these platforms. As you might be able to guess, we here at Five Pine Wealth Management place immense value on the personal touch and genuine passion of a human financial advisor. It's the driving force behind everything we do. We believe in understanding your circumstances, empathizing with your concerns, building a long-lasting relationship, and providing personalized guidance for each client. While we can recognize the advantages of robo-advisors, we can't ignore the fact that they can't replicate the human element in financial planning. The relationship with a financial advisor goes beyond mere numbers. And if that's what you're looking for, we'd love to chat! Contact us at info@fivepinewealth.com or 877.333.1015 to schedule a meeting.
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