Necessary Vs Discretionary Spending
Necessary spending is the money used to cover basic or essential needs, such as housing and food. Necessary expenses are living costs that cannot be avoided. The term discretionary spending, on the other hand, is used to describe non-essential costs. These might include recreation, entertainment or other items consumers purchase when they have money leftover after necessary expenses are covered. Discretionary spending could also include luxury goods and travel. Discretionary spending is influenced not only by how much disposable income one has remaining after paying for essential expenses, but also by the overall economic climate. People generally feel more comfortable spending on non-essential items when broader economic conditions are positive.
Work After The 60 Day Period:
TRS retirees have two options when returning to work at a TRS employer after the 60 day break. They can return to work in Non-Contributory Status or Contributory Status.
- Non-Contributory Status: Retirees returning to work in a non-contributory status continue to receive their monthly retirement benefit, but are subject to earning limitations for the first 36 months following their retirement.
- Contributory Status: Retirees returning to work in a contributory status suspend their monthly retirement benefit until employment is terminated and are not subject to any earning limitations. These retirees contribute to TRS on the same terms as non-retirees and accumulate additional service years. These service years may be used to accrue a secondary retirement benefit. This is a second separate retirement these years are not added the members initial retirement calculation.
How Do I Retire
In order to retire, members must first complete the retirement process through TRS. The retirement process takes four months from initial verification of eligibility to retire to receipt of a retirees first benefit check, so we encourage retirees to start the process early. TRS suggests retirees to start this process 6 months before retirement. However, the process cannot start later than 90 days prior to the proposed retirement date.
Read Also: Late Start On Retirement Savings
Pension Indexing Rate For 2022
Pension increases for retired members and their survivors are calculated annually using Consumer Price Index data from Statistics Canada.
At the end of each year, the Treasury Board Secretariat provides the National Association of Federal Retirees with information on the pension indexing increase that is effective Jan. 1 for federal public sector pensions.
The pension indexation rate effective Jan. 1, 2022, is 2.4 per cent.
Information on the calculation of this index can be found on the Government of Canada website.
While inflation has increased rapidly in the last few months the indexation calculation includes the average increase over the past year, including late 2020 when the CPI increased at a slower rate.
To find out when you can expect your pension payments, review the Pension Centres calendar. If you have questions about your pension payments or find that a payment is late according to the calendar, you can reach out to the Pension Centre using your preferred means of communication.
Tax Paid To Another State Tax Credit
If you earned income in another state, you must report that amount on your Oklahoma return. However, you may be eligible for a tax credit worth a percentage of your earned income. If youâve claimed a similar credit in another state, you canât claim this credit on your Oklahoma return.
This credit is nonrefundable and doesnât carry forward.
Also Check: What Type Of Retirement Account Is Best
Can I Change My Option
Your chosen retirement benefit option may not be changed on or after the effective retirement date. However, if your joint annuitant under Option A or B passes away before you do, you must contact OPERS and provide a certified death certificate. At that point, you will begin receiving benefits under the Maximum benefit option. No other person may be substituted.
A members joint annuitant cannot be changed after retirement. However, beneficiaries under Option C can be changed at any time after retirement.
How Your Oklahoma Paycheck Works
You dont receive your full, quoted salary each year because your employer also withholds taxes from your paychecks. Regardless of where you live in the U.S., your employer withholds money to pay FICA and federal income taxes.
Federal income tax is sent to the IRS, where it counts toward your annual income taxes. Instead of paying your taxes in one lump sum during tax season, you pay gradually throughout the year. How much your employer withholds from your paychecks for federal income taxes depends on factors like your salary, marital status and number of dependents. Information about your filing status is on your W-4, and your employer uses it to figure out how much to withhold. This is why you need to fill out a new W-4 whenever you start a new job or experience a big life change, like a marriage. You can also make changes to your W-4 throughout the year if you simply want to adjust the taxes coming out of your paycheck.
The IRS made a few notable changes to the W-4 in recent years. One big change is that the new form doesn’t let you claim allowances anymore. Instead, it utilizes a five-step process that allows filers to indicate any additional income or jobs, income tax credits and more.
Also Check: How Much Will My Retirement Be
How High Are Property Taxes In Oklahoma
Property taxes in Oklahoma are quite low. The median annual property tax payment in Oklahoma is just $1,278, but the median in most counties is less than $1,000. Those taxes are well below the national median payment of $2,578. Low property taxes are partially a result of relatively low home values in Oklahoma, but property tax rates are also fairly low. The average effective rate across the state is 0.87%.
Are Other Forms Of Retirement Income Taxable In Oklahoma
They are, but taxpayers age 65 or older can claim a $10,000 deduction on all retirement income. Deductible income sources include IRAs, 401s, 403s, 457s and public and company pensions. To use the deduction, you must file Oklahomas Schedule 511-A.
The $10,000 retirement income deduction for seniors in Oklahoma applies to the total of all income from any of those sources. If total retirement income exceeds $10,000, the remainder is subject to the Oklahoma income tax. The table below shows brackets and rates for the income tax in Oklahoma.
Also Check: Can You Retire With 400k
How You Can Affect Your Oklahoma Paycheck
The federal income, FICA and state income taxes withheld from your paycheck are mostly beyond your control, in the sense that you are obligated to pay them. However, you can do certain things to help affect how much you have to pay in taxes per paycheck.
If you choose to pay for health or life insurance through a company-sponsored plan, the money you pay for any premiums will be subtracted from your wages. Similarly, if you decide to save for retirement via an employer-sponsored plan like a 401 or 403, your contributions will be subtracted from your wages. Putting money into a 401 or 403 can actually help to lower your taxable income because that money is taken from your paycheck pre-tax . In other words, by taking advantage of a 401 or 403, you are not only saving for your future, youre saving on taxes in the present, too.
You can also opt to contribute some of your income in a health savings account or flexible spending account . You can use the funds you put in an HSA or FSA to pay for certain medical expenses like copays or prescriptions. Just be cautious about how much money you put in an account like this. FSA funds above $500 do not roll over from year to year and so you lose that money if dont use it by the end of the year.
With below-average income taxes and low property taxes, you may be considering a move to Oklahoma. Take a look at our Oklahoma mortgage guide to better understand the ins and outs of getting a mortgage in the Sooner State.
Oklahoma Teachers’ Retirement System
Oklahoma Teacher’s Retirement System is the pension program for public education employees in the State of Oklahoma. As of June 30, 2014, the program had nearly 168,000 members. Public education teachers and administrators are required to be OTRS members support staff can join voluntarily. State law established OTRS in 1943 to manage retirement funds and provide financial security for public education employees. Its first checks to retirees were sent out in 1947. It is administered by a staff and 14-member board of trustees. Its current Executive Director is Tom Spencer who started in that position on November 1, 2014.
Don’t Miss: How To Retire Early With 401k
Legislation To Address The Unfunded Liability
In 2011, Oklahoma lawmakers passed Senate Bill 377 and House Bill 2132, which immediately reduced the unfunded liability of the Teachersâ Retirement System by $2.9 billion of debt. The significant changes in SB 377 and HB 2132 include: raising the retirement age for new members coming into the system and preventing the legislature from granting cost of living adjustments to retirees unless funding is provided. The Oklahoma Legislature still has the ability to grant COLAs but only when it provides the funds to pay for them. This change alone reduces the OTRS’ unfunded liability to $7.5 billion.
% Joint And Survivor Annuity
Under this option, you will receive a reduced retirement benefit for life. After your death, the same reduced monthly gross benefit will be paid to your surviving joint annuitant for his or her lifetime. In this case, the retiree will absorb a larger reduction to their monthly benefit so a joint annuitant can receive the same amount that the retiree once received. The joint annuitant must be a specific person who is no more than 10 years younger than you, unless that person is your spouse.
Example: $1000 normal gross, maximum monthly benefit. The retiree is age 62 and the joint annuitant is two years younger. This produces a reduction factor of 85.46 percent. Applying the reduction factor, the retiree will receive a monthly gross benefit of approximately $855. When the retiree dies, the joint annuitant will begin receiving that same approximate gross amount of $855 for the rest of their lifetime. Reduction factors for specific ages can be found on the Option B Reduction Factors Chart link below.
Don’t Miss: Financial Planning Tools For Retirement
Oklahoma Military And Veterans Benefits
Summary: Oklahoma offers special benefits for Service members, Veterans and their Families including tax exemptions, employment assistance, Veteran’s employment preference, tuition assistance special vehicle license plates, as well as free or reduced prices for hunting and fishing privileges. Eligibility for some benefits may depend on residency, military component and Veteran disability status.
Oklahoma Department of Veterans Affairs, Veteran Service Representatives: The Oklahoma Department of Veterans Affairs has trained Veterans Service Representatives who can assist Veterans, retired Service members and their Families find and apply for Veterans benefits under federal, state and local laws. All their services are provided free of charge.
The new Oklahoma Veterans Registry will be used to verify eligibility for certain Veterans Benefits and to develop a contact network for topics of interest to Veterans, including availability or updates of state or federal benefits. Participation is voluntary but may be required to prove eligibility for some benefits.
Oklahoma State Military and Veterans Benefit Highlights and Eligibility
What are my Oklahoma Military and Veterans State Tax Benefits?
Oklahoma Income Tax Exemption for Military Pay: Oklahoma resident Service members in an active or reserve component of the U.S. Armed Forces do not have to pay income tax on their military pay.
How Do I Calculate Salary To Hourly Wage
Multiply the hourly wage by the number of hours worked per week. Then, multiply that number by the total number of weeks in a year . For example, if an employee makes $25 per hour and works 40 hours per week, the annual salary is 25 x 40 x 52 = $52,000.
Important Note on the Hourly Paycheck Calculator: The calculator on this page is provided through the ADP Employer Resource Center and is designed to provide general guidance and estimates. It should not be relied upon to calculate exact taxes, payroll or other financial data. These calculators are not intended to provide tax or legal advice and do not represent any ADP service or solution. You should refer to a professional advisor or accountant regarding any specific requirements or concerns.
Additional Costs To Consider
Housing, food and lifestyle expenses are merely the tip of the iceberg when it comes to the true cost of living. Health care, childcare, education, transportation and utilities are additional necessities that combine to create the overall cost of living for the average individual or family. Transportation costs are often the second largest cost for most people. Consumers spend about 14 percent of their annual budget on this necessity, which amounts to about $9,826, according to the Consumer Expenditure Survey. Health care is also one of the most significant expenses consumers face, eating up about 7 percent of a consumers annual budget, or about $5,177. Education costs meanwhile amount to about $1,271 annually.
Choosing A Retirement Plan
OSU offers eligible employees a valuable opportunity to build future financial securitya retirement benefit designed to meet the diverse and changing needs of our faculty and staff. Under the OSU Retirement Program, you can choose between two plan options: The Oklahoma Teachers Retirement System or the OSU Alternate Retirement Plan .
Also Check: Kiplingers Best Places To Retire
How High Are Sales Taxes In Oklahoma
Although the statewide sales tax rate is just 4.5%, which is below average, local city and county rates can be as high as 7%. They average about 4.45%, so a typical sales tax rate you will pay in Oklahoma is close to 9%.
Unfortunately, unlike many other states, Oklahomas sales tax applies to groceries – though low-income households can claim a tax credit to offset part of their food sales tax cost. At the same time, exemptions for clothing and prescription drugs should help lower the sales tax cost for retirees in Oklahoma.
What Are The Steps For Retiring
Preparing to Retire: 36 to 12 Months before Retirement
- Prepare a Retirement Projection : At least one year before retirement, you should generate a personalized retirement projection through the MyTRS Member Portal at or contact TRS to request a projection. You should also attend one of TRSs retirement planning seminars.
Step 1: Submit a Pre-Retirement Information Verification 90 Days before Retirement
- TRS must receive your Pre-Retirement Information Verification 90 days prior to your requested retirement date. Members can submit the PIV through the MyTRS Member Portal at or may download a copy of the PIV from the TRS website at . The PIV will ask you to verify your information so that TRS may verify your retirement eligibility. Once TRS verifies you are eligible to retire, staff will send you an Application to Retire.
Step 2: Return your Application to Retire 60 days before Retirement
- TRS must receive your Application to Retire 60 days prior to your retirement date. In your application, you will select your retirement plan. TRS will process your application and mail your final retirement contract.
Step 3: Return your Final Retirement Contract 30 Days before Retirement
- TRS must receive your Final Retirement Contract 30 days prior to your retirement date. This contract must be signed, dated and notarized.
Step 4: Retirement Date
Step 5: First Benefit Payment
The Benefits Of Being An Osu Retiree Include:
We recommend viewing the How To Retire recorded seminar, as well as, reviewing the OSU Retirement Planning Guide. Both resources offer a detailed overview of retiring with OSU, including timelines, checklists, and contact information for various benefit vendors.
What Is The Oklahoma Senior Valuation Freeze
Seniors in Oklahoma can put a freeze on tax valuation increases if they meet certain income requirements. To be eligible, you must own and occupy your home, be at least 65 years old and have a household income of no more than $74,200 for calendar year 2022.
Homeowners who receive the freeze are exempt from any increases in their property value. This can lead to significant savings over time. If, for example, your home value increases by 2% every year, after 10 years your property taxes will be about 22% lower with the freeze than they would be without it.
Another form of property tax relief available to seniors and other homeowners in Oklahoma is the homestead exemption. This exemption knocks $1,000 off the taxable value of any owner-occupied property.
Recommended Reading: Retirement Community West Chester Pa
How Do I Vest In Trs
Members who joined the System prior to November 1, 2017, and have accumulated a minimum of five years of eligible service in the public schools of Oklahoma shall be vested in the System and considered eligible to receive a monthly retirement benefit at some future date.
Members who join the System on or after November 1, 2017, will become vested when they have accumulated seven years of eligible service.