INDIANA (21ALIVE) --- A race to beat the clock for better retirement benefits.
Thousands of public employees in Indiana are taking early retirement before the end of this month, to cash in on a higher interest rate with life-long implications.
It's something that's impacting workplaces around the state.
The Indiana General Assembly was worried about an increasing number of baby boomers retiring, possibly bankrupting the system, so it took action to lower the interest rate those public employees could get if they chose to annuitize some of their retirement benefits.
Those pulling the trigger on retirement before August 31st get to keep the higher rate, which can mean on average about $1,000 more per year in interest income.
A big side-effect is offices losing more experienced people in a condensed window of time, institutional knowledge that's hard to replace.
Fort Wayne Community Schools is in hiring mode to replace retiring teachers, who also have endured frozen wages and new demands in the teaching profession.
“They’re mentors to our younger teachers, we need them here. Many of them probably would have continued to teach, if all of this had not hit...perfect storm hit at once, that's going to take such a chunk from them," said Ft. Wayne Education Association President Julie Hyndman.
The interest rate for these benefits is currently above 7 percent, but it will eventually fall to 4.5 percent, still a very good rate compared to the return on other popular investment options.
The pension funds for public employees in states like Illinois, Michigan and California are a mess.
Indiana's situation is as stable as anywhere in the country.
Fort Wayne financial planner Todd Larson says the prospects for it staying that way improve with the lower interest rate.
" The alternative is, either you get your rates lower today and your return is sustainable for the rest of your life, or they lie to you, guarantee you a rate of return that they can't deliver on, and at some point cut your benefits,” said Larson.
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