Welcome to the December 2024 issue of your Proactive newsletter.   

This is the time of year that revolves around the people we cherish and the things we like to do.  

In many ways, this mirrors what life in retirement can be like, whether that’s around the corner or down the road for you.  

As you embrace all the season’s fellowship and cheer, consider ways you can include some of this in your planning and saving for retirement. Strengthen your relationships, give to others and yourself, and set goals. 

Retirement planning takes preparation, readiness, and adaptation. It’s about crafting clear plans, staying connected, mindfulness, flexibility, understanding risks, and bracing to rebuild or begin anew. 

Our focus at the Michigan Office of Retirement Services is to empower you in navigating your retirement journey in secure and successful ways. You and your well-being matter to us.   

Have a safe, healthy, and peaceful holiday season.   

Anthony Estell, executive director 
Michigan Office of Retirement Services   

There are two public acts that directly affect the 3% healthcare contributions for active members with the premium subsidy healthcare benefit: Public Act (PA) 127 of 2024 and PA 120 of 2024.  

On Oct. 3, Gov. Whitmer signed PA 127 of 2024. This law eliminates the 3% healthcare contribution for active members of the Michigan Public School Employees’ Retirement System with the premium subsidy healthcare benefit. Because the law was not granted immediate effect, the law takes effect 90 days after the Legislature adjourns (sine die). 

As a result, active members of the retirement system who have the premium subsidy benefit will continue to have 3% healthcare contributions deducted from their pay, through Sept. 30, 2025. Beginning Oct. 1, 2025, they will no longer be required to contribute 3% toward future healthcare benefits. 

PA 120 of 2024 allocates funds for distribution to schools for the reimbursement of eligible employees who make the 3% healthcare contribution during the 2024-25 fiscal year. The reimbursement does not apply to employees working at a university, those with the Personal Healthcare Fund, or retirees who have returned to work. It is not yet known when the funds will be provided to the schools for distribution. 

Did you receive a Small Steps flier in the mail around Dec. 9?  

If so, you should be aware that if you are currently contributing less than 15 percent of your gross pay to your State of Michigan 401(k) plan and are not signed up for an active Rate Escalator, you will see your contribution rate increase by 1% effective with the first available pay in March 2025.  

One percent is only $1 for every $100 you make. When you factor in the tax savings (your contributions are pre-tax, lowering your taxable gross), the impact to your take-home pay is less than you may think. This small adjustment to your take-home pay can bring significant long-term benefits.  

Here’s a hypothetical example of how participating in the Small Steps program could benefit you. (This is for illustrative purposes only. It’s based on pretax contributions, 26 pay periods per year and a 6% annual rate of return with no pay raises.) 

A new hire starts with a $50,000 salary and a contribution rate of 5% of their gross wages. Their contribution rate goes up 1% each year with Small Steps until it reaches the target rate of 15% and stays there until they retire after 30 years. This employee will have saved $479,907 toward their retirement – $276,618 more than an employee with the same start date, starting salary and a contribution rate that remained at 5% throughout their 30-year career. Add to that an employer match and salary increases, and the results could be even better. 

Use myOrangeMoney and other tools available in your State of Michigan 401(k) and 457 Plans account to see how you can impact your estimated monthly retirement income.  

Is your New Year’s resolution to retire in 2025? Here’s your countdown to retirement. 

12 months to retirement 

• Log in to miAccount and run pension estimates.
• Get your Social Security estimate.
• If you have a State of Michigan 401(k) or 457 account, contact Voya Financial at 800-748-6128 about your payment options.
• Read the Planning Your Retirement workbook and watch the online presentation.
• Consider how you’ll spend your time in retirement. 

• Read through the retiree insurance plan information.
• If you plan to work after retirement, make sure you understand how post-retirement earnings affect your pension and Social Security.
• Gather any proofs and supporting documents you’ll need to apply for retirement. 

• If you or your spouse will be eligible for Medicare when you retire, you must enroll in parts A and B three months before your retirement effective date. 
• Decide which pension payment option is best for you.
• Decide on an insurance plan.
• Tell your personnel office you’re retiring.
• Verify all service credit purchases are paid before your last day of work.
• Apply for retirement online in miAccount. Mail your insurance enrollment and required proofs. 

Last fall, ORS began creating short Ask our Experts videos to provide quick bites of information on issues we regularly receive questions. In February 2024, we added videos for those actively employed. These videos live on our YouTube page and have appeared in our social media posts. The three latest videos are featured in this edition.