The North Jersey Retirement Checklist

Five years to one year

Five years out

These items need the most lead time, so they come first.

• Get your service credit in writing from your retirement system. Not an estimate you assembled yourself. PERS and TPAF vest at 10 years and open early retirement at 25 (30 in Tier 5); PFRS pays its special retirement at 25; FERS pays 1.1% instead of 1% at 62 with 20 years. Being a few months short is permanent.
• Identify your tier and what it actually entitles you to. Your PERS or TPAF tier was fixed the day you enrolled, and it sets your retirement age (60, 62 or 65), your divisor (55 or 60) and your early retirement reduction.
• Do not let your membership expire. A PERS account expires two years after your last contribution, a TPAF account after 10 years (15 if vested); returning after that re-enrolls you under the tier in force at the time, which today means age 65 and a divisor of 60.
• Find out where your salary stops counting. For anyone enrolled on or after July 1, 2007 (PFRS after May 21, 2010), pensionable salary is capped at the Social Security wage base, $184,500 for 2026; the excess goes to the Defined Contribution Retirement Program. Only Tier 1 escapes the cap, up to the federal $360,000 limit.
• Claim purchasable service credit. Prior public service and military service can carry you over a threshold. The cost rises with delay.
• Track down pensions from former employers, including companies that no longer exist. Search Form 5500 filings and the PBGC unclaimed pension database.
• Do not drop your employer medical coverage. Retiree coverage in the State plans depends on years of service and the June 28, 2011 line. Federal coverage needs FEHB enrollment for the five years before retirement (or since your first chance to enroll), so a lapse can cost it.
• Open a Social Security account at ssa.gov and check your earnings record for errors. They are far easier to correct now, with old W-2s, than later.
• Find out whether your employer offers a 457(b) in addition to a 403(b) or 401(k). The limits are separate ($24,500 each in 2026, plus $8,000 at 50, or $11,250 in the years you are 60 through 63) and you can fund both. County employees are not in the State’s deferred compensation plan; ask which plan your county sponsors.
• If you have a non-governmental 457(b) or a 409A deferred compensation plan, read the distribution election now. It is a promise by your employer, it cannot be rolled over, and the default schedule can put the whole balance into one tax year.

An avoidable mistake with a large cost

Retiring weeks short of a service credit milestone, or leaving without a bona fide severance. New Jersey requires a complete break of at least 180 days (90 for PFRS) with no pre-arranged agreement to return; returning to a covered full-time job re-enrolls you and suspends the allowance. Confirm your service credit and your severance date with the Division, in writing, before you commit to anything.

Two years out

• Request benefit estimates under several payment options and at more than one retirement date. Compare them side by side rather than reading them one at a time.
• Model the survivor decision jointly with your spouse. When one of you dies, the household keeps the larger Social Security benefit, not both. Two pensions in one household need two elections made together.
• Check the income on the tax return you are filing now. Medicare premiums use a two-year lookback, so this year’s income sets your premium later. The Medicare example further on puts a number on it.
• Map the final working year before you choose a retirement date. Severance, an unused leave payout, a deferred compensation distribution, a final bonus and a partial year of salary can all land in the same twelve months as the first pension payment. That year sets your Medicare premium two years later, and a conversion or a large sale in the same year adds to it. If you hold options or restricted stock, the exercise and sale schedule belongs on the same calendar as the retirement date.
• Map your income sources by New Jersey tax treatment. New Jersey does not tax Social Security or Railroad Retirement. It taxes public and private pensions, IRA and 401(k) withdrawals; from 62, the exclusion on a joint return is up to $100,000 at $100,000 or less of total income, 50% to $125,000, 25% to $150,000 and none above. Your own pension, 403(b), 457 and Thrift Savings Plan contributions were taxed by New Jersey when made and come back tax-free; keep the totals.

One year out

• Confirm retiree health coverage eligibility in writing, including the years of service, the Chapter 78 contribution percentage that applies to you, and any resolution your employer filed with the Division.
• Note your Medicare Initial Enrollment Period if you turn 65 in this window. It starts three months before your birthday month, and the Part B late penalty is permanent.
• If you are still working past 65, confirm in writing that your coverage is based on current employment. Retiree coverage and COBRA do not protect you from the penalty.
• Stop HSA contributions before enrolling in any part of Medicare, including premium-free Part A, which can be applied retroactively.
• Review beneficiary designations on every account. They override your will, and an old form naming a former spouse can still pay the former spouse.
• Get a durable power of attorney and health care proxy in current New Jersey form, if you do not have them.
• If your estate will pass to anyone other than a spouse, child, grandchild or parent, New Jersey’s inheritance tax reaches Class C beneficiaries (siblings and children-in-law) above a $25,000 exemption and Class D beneficiaries (everyone else) from the first dollar, at 11% to 16%. The year before retirement is when a change of beneficiary or ownership still has time to work.
• If you are married, do not assume federal portability happens on its own. The unused federal exclusion passes to the surviving spouse only if an estate tax return is filed and the election is made on it, even when the estate owes nothing and would not otherwise file. Under Revenue Procedure 2022-32 an estate that was not required to file has until the fifth anniversary of the death to make the election through a simplified late filing. Missing that window can cost the survivor an exclusion worth more than everything else on this list.

What the milestones are worth: three worked examples

These use the systems’ published formulas and 2026 figures. They are illustrations of how the rules work, not projections, and your own numbers will differ.

Retiring at 60 instead of 65 with 30 years, TPAF or PERS Tier 5

Final average salary held to the $184,500 cap. The Tier 5 formula is years divided by 60: 30 years is 50%, or $92,250 a year at 65. Retiring at 60 costs 3% for each year under 65, a 15% reduction: $78,413 a year, permanently. Over a 25-year retirement that is $345,900 before any cost-of-living adjustment, and New Jersey’s adjustments have been suspended since 2011. A Tier 3 member with the same service divides by 55 instead and retires at 62: $100,636 a year.

PFRS special retirement at 25 years, and one year short

A Tier 1 sheriff’s officer with a final year at $165,000. At 25 years the special retirement pays 65% of final compensation at any age: $107,250 a year. At 24 years and 11 months there is no special retirement; the officer is left with the service retirement at 55, or a deferred benefit. Each year beyond 25 adds 1%, to 70% at 30 years: $115,500. One month of service is the difference between a pension at 47 and a pension at 55.

A $100,000 Roth conversion, seen from Medicare two years later

A married couple with $300,000 of modified adjusted gross income pays the 2026 Part B premium of $405.80 a month each, plus a $37.50 Part D adjustment, because they sit in the $274,001 to $342,000 bracket. Convert $100,000 in the same year and the income becomes $400,000, which lands in the $342,001 to $410,000 bracket: $527.50 for Part B and $60.40 for Part D, each. The difference is $144.60 a month per person, $3,470 for the couple over the year, billed two years after the conversion. New Jersey adds its own cost: the conversion counts as income in the year it is made, and at $400,000 of total income the retirement income exclusion is zero. That is not a reason to skip the conversion; it is a cost to put on the same page as the tax it saves.