Retirement brings a new financial rhythm, and your monthly VRS benefit gives you a lifelong foundation to build on. With planning, you can stay ahead of the unexpected and feel confident about your finances.
Find Flexibility in the Full Picture
Start by listing your monthly income, including:
- Your VRS benefit.
- Social Security if you receive it.
- Any deferred compensation distributions.
- Personal savings.
- Investment or other income.
Then separate your expenses into two categories:
- Fixed costs arrive every month. Think mortgage or rent, utilities, insurance premiums and prescriptions. These are your budgeting priorities.
- Variable costs, such as groceries, dining, travel and entertainment, are more flexible and easier to adjust.
If fixed costs are consuming most of your income, look at variable spending first. Evaluate your online subscriptions, memberships and other recurring charges. The myVRS Financial Wellness platform includes budgeting calculators and guidance on balancing costs in retirement. Log in to your myVRS account and select “Financial Wellness” to get started.
Plan for the Unexpected …
… because you know it will happen. Medical bills, car repairs and appliance replacements may not fit neatly into a monthly budget. Setting aside a fixed amount each month in a separate savings account helps you absorb these costs without disrupting your regular expenses.
Make the Most of Your Benefits
You may qualify for benefits that help stretch your income and guard against big expenses:
- Health insurance credit: If you retired with at least 15 years of service from a VRS-participating employer, you may qualify for a monthly tax-free credit to offset part of your health insurance premiums. Log in to myVRS and check your Benefit Payment Summary to see whether it’s already being applied. If not, apply on the spot.
- Long-term care insurance: Most health insurance plans don’t cover services such as nursing home care or care at home to assist with bathing, eating or other activities of daily living. The cost of these services can quickly deplete savings or retirement income. Retirees age 75 or under may be eligible to apply for coverage through the Commonwealth of Virginia Voluntary Group Long Term Care Insurance Program, which pays a monthly benefit toward covered expenses.
Keep an Eye on Tax Withholding
Your VRS benefit is subject to state (if you live in Virginia) and federal income tax. Review your tax withholding annually, especially after a COLA or change in household finances. Use the income tax calculator in myVRS to model different amounts before making a change.
If you retired as a law enforcement officer, firefighter or emergency medical professional, you may qualify for a federal tax benefit under the Healthcare Enhancement for Local Public Safety Retirees Act. Those eligible can exclude up to $3,000 each year from taxable income for qualified health or long-term care premiums deducted from a VRS benefit. Contact your tax advisor for details.
Build a Plan That Works for You
Want help creating a personalized action plan? Every VRS retiree is eligible for a free 30-minute coaching session through Voya Financial, covering budgeting, retirement income planning, healthcare costs and more. Comprehensive financial planning is also available at a cost.
