Can You Retire From OPERS Without 30 Years?

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Ray is 65, and he's put 20 years in at a county job here in central Ohio. He has a retirement date picked out, and his wife Carol already has a list of projects waiting for him at home.

So at lunch one day Ray mentions the date, and Denise from two desks over stops him.

"You can't retire yet. You don't have 30 years."

"That's the date my advisor and I came up with," Ray says.

"Then your advisor's wrong."

Ray laughs it off, but it bugs him the rest of the afternoon. Is she right? She's probably right. She's been there 27 years, longer than anybody at that table, and she talks about OPERS like she reads the statements for fun. Nobody ever mentioned a 30-year rule to him, but maybe that's one of those things you're supposed to just know. By the time he gets home he's not sure if he's retiring in March or sometime after that.

So he calls us.

Denise is right about her own plan. Ray is in a different one.

OPERS gives you two plans to choose from

If you work for a county, a city, a state agency or a lot of Ohio's public libraries and universities, you pay into OPERS on that job instead of Social Security. You put in 10% of every paycheck and your employer adds 14%.

When you're hired, you get 180 days to decide where that money goes. OPERS calls the two choices the Traditional Pension Plan and the Member-Directed Plan, but for the rest of this post we'll call them the pension plan and the account plan.

The pension plan pays you a check every month for the rest of your life. OPERS invests the money, takes the market risk, and works out your check with a formula that uses your salary and your years of service credit. A year of service credit is basically a year you worked and paid in.

The account plan works like a 401(k). The money goes into an account with your name on it, you pick the investments, and what's in there when you leave is yours. You carry the market risk, and in exchange the money can go with you, or to your kids. Your years still get counted, but they only decide how much of your employer's money you keep.

If you never pick, OPERS puts you in the pension plan. (Some longtime members are in a third option, the Combined Plan, which closed to new hires in 2022.)

Think about when this choice gets made. You're new, you're filling out a stack of forms, and the one that decides how you'll retire is sitting somewhere between direct deposit and the parking pass. Plenty of people pick in five minutes, at 26, and never think about it again... until somebody at lunch tells them they can't retire.

Where the 30-year rule comes from

The 30 years are rungs on a ladder.

In the pension plan, each year of service (or rung you climb) adds 2.2% of your final average salary (an average of your highest-paid years) to your check. Climb 30 rungs and your pension is about 66% of what you were making, every month, for life.

As long as you are also old enough. If you step off the ladder at 52, OPERS could be sending you checks for 35 years or more, so it wants a lot of years of contributions behind that check before it lets you leave early with all of it. For a long time that number was 30 years of contributions. In January 2013, Ohio raised it to 32 to help keep the system funded, and went easier on the people who were already close to retiring. OPERS sorted everyone into three groups based on how close they were back then:

• Group A was within about five years of retiring. They kept the 30-year rule.
• Group B had 20 years in, or was within about ten years of retiring. They need 32 years to retire at any age (or 31 at age 52).
• Group C is everyone else, plus everyone hired since. They need 32 years and age 55.

Your group is printed on your OPERS statement. Denise had about 14 years in back in 2013, which was a long way from retiring, so she's in Group C.

The second thing to know is that years and age work together. To step off the ladder, you need enough rungs and you need to be old enough, and the fewer rungs you've climbed, the older you have to be. In Group C it looks like this:

Either way, the size of your check comes from the formula. Five years at 67 means no cut, but it's still only 5 years' worth of pension, about 11% of your pay.

So say you're in the pension plan, you're 60, and you've got 15 years in. You don't have to work another 17 years to get to 32. You can retire at 62 with a cut, or wait until 67 and take it with no cut. Your check would be 15 years of the formula, about 33% of your pay. If you keep working, the check keeps growing, but you don't have to get to 32 first.

Hello? Are you still there?

Stick with me. We're still only talking about the pension plan. OPERS is on the hook for a monthly check to every retiree for as long as they live, so it has to set rules like these to make sure there's enough money to pay all of them.

Denise is 58 with 27 years. She's past 25 years and past 57, so she could retire today with a reduced pension. If she stays five more years, she hits 32 at 63 and her check has no cut. So when Denise tells Ray he needs 30 years, she's talking about her own next five years.

Whenever she goes, she can also take part of her pension as a one-time lump sum (OPERS calls it a partial lump sum option payment), and her monthly check gets smaller to make up for it.

None of this applies to Ray. Ray was never on the ladder.

How Ray retires from the account plan

Ray can retire from the account plan at 55 or older, and OPERS doesn't need any number of years from him.

His years only matter for vesting. Everything Ray put in from his own paycheck has always been his. His employer's money vests 20% a year, so after five years all of it was his. Ray has 20.

So the question for Ray is how to take the money out. He can turn the whole account into a monthly check for life, which gets a small raise each year for cost of living. Basically, it's something similar to the pension plan, but the size of the check comes from what's in his account instead of a formula. He can turn part of it into a monthly check and take the rest as a lump sum or roll it into an IRA. Or he can take all of it as a refund and roll it over.

That's the choice that deserves Ray's time. It shapes his and Carol's income for the next 25 years or so, and his service credit has nothing to do with it.

For Ray and Carol, the plan we put together rolls his account into an IRA. Ray waits two years to start Social Security (he earned it at jobs before the county), they live off the IRA in the meantime, and we use those two lower-tax years to move some of the IRA into a Roth with Roth conversions. His medical account is separate, and we'll get to that next.

How does health care work with all this?

Health care is the reason a lot of public employees keep working. Hell, it's the main reason everyone keeps working. So it's worth knowing how each plan handles it before you pick a date.

In the pension plan, OPERS helps retirees pay for health coverage once they have enough years, generally 20 years of service and age 60. That help isn't guaranteed. OPERS's board can change it, and it has before.

In the account plan, you get your own health care money instead. Part of your employer's 14%, an amount equal to 4% of your pay, goes into a separate Retiree Medical Account. When you leave your OPERS job, you can spend it on medical bills and health insurance premiums.

Ray started in 2006, so that medical account is all his. (Anyone who started after mid-2015 waits longer. It takes 15 years to keep all of it.) Ray also just turned 65, so he can go on Medicare, and the medical account can help pay those premiums.

That's a big part of why 65 works for Ray.

Before you take retirement advice at lunch

Nobody at that table was trying to steer Ray wrong. Each of them knows their own plan, more or less, and figures everyone's is the same. Denise's 30 years is a rule about a ladder Ray was never on. And retiring is one of the biggest money calls you'll ever make, so advice from people who have never seen your statement can cost you years of work you didn't need to do, or a payout choice that doesn't fit your life.

Taking retirement advice in the break room is a little like taking tax advice from your brother-in-law at Thanksgiving. He means well, and he is very sure.

So before you believe anybody (us included), do this:

• Log in to your OPERS online account or pull up your annual statement. It shows which plan you're in, your service credit, and either your retirement group (pension plan) or your vested balance and medical account (account plan).
• Call OPERS at 1-800-222-7377 with questions about your own account. They're the final word on your plan's rules.
• Talk to a planner before you choose how to take the money, because that's the decision you'll live with.

Ray's still deciding whether to tell Denise.

If you're an Ohio public employee and want us to look at your plan with you, you can get in touch here. Our page for Ohio public employees has more on how we work with OPERS, STRS and SERS members here in Columbus.

Common questions

Can you retire from OPERS without 30 years of service?

Yes. In the Member-Directed Plan you can retire at 55 or older with no service requirement. In the Traditional Pension Plan, only Group A can retire at any age with 30 years. Groups B and C need 32 years for that, or they can retire with no early-retirement cut with 5 years at 66 (Group B) or 67 (Group C).

How do I find out which OPERS plan I'm in?

Your OPERS annual statement and your online account both show your plan. If you're in the Traditional Pension Plan, they also show your retirement group (A, B or C), which sets your age and service requirements.

Can I take a lump sum from the OPERS Traditional Pension Plan?

You can take part of it. When you retire, the partial lump sum option payment lets you take some of your pension up front in exchange for a smaller monthly check. If you leave before retiring, you can take a refund of your own contributions plus interest (and an extra amount if you have 5 or more years), but then you give up the pension.

Can I switch from the Member-Directed Plan to the Traditional Pension Plan?

Most active members get one plan change during their career, and it's permanent. Moving to the Traditional plan can mean buying your past service with your vested balance, which gives up your Retiree Medical Account. OPERS suggests meeting with one of its counselors before you change.

Do OPERS members get Social Security?

Your OPERS job doesn't pay into Social Security, but you may have earned Social Security from other work. The Social Security Fairness Act ended the rules that used to cut those benefits for public employees. We cover it in what the Fairness Act changed for OPERS, STRS and SERS members.

Written byNick GeorgeCFP®, ChFC®, CLU®, IWA™FounderView bio →

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