Arizona State Retirement System (ASRS) Benefits Guide
As an Arizona state employee, the ASRS provides valuable benefits to support you during retirement. However, understanding how your pension works and which options to choose can be complicated. In this guide, we’re going to look at your ASRS pension and the key decisions you'll need to make for a better retirement.
What Is the Arizona State Retirement System (ASRS)?
The ASRS is a defined benefit pension plan, which means you're guaranteed a specific monthly benefit for the rest of your life based on a formula that considers your years of service, salary, and age at retirement. Unlike defined contribution plans (like a 401(k)), where your retirement income depends on how much you save and how your investments perform, ASRS provides predictable income for a lifetime.
Who Is Covered by the ASRS?
ASRS covers most Arizona state employees, including:
State agency employees
Public and charter school teachers
Municipal workers
County employees
Employees of participating political subdivisions
Note: Public safety personnel (police and firefighters) are covered under a separate system called the Public Safety Personnel Retirement System (PSPRS). The cities of Phoenix and Tucson also maintain their own distinct retirement systems.
Your ASRS Contributions
As an ASRS member, you make mandatory contributions from every paycheck. Your contribution rate consists of two parts:
Pension and Health Insurance Benefit Rate: This is deducted pre-tax from your paycheck.
Long Term Disability Income Plan Rate: This is deducted after taxes have already been applied.
For the fiscal year 2025–2026 (July 1, 2025 through June 30, 2026), your total contribution is 12% of your salary. Your employer contributes an equal amount (12%) to your pension on your behalf. ASRS is a cost-sharing model, meaning you and your employer split the cost equally. These combined contributions, along with investment earnings managed by the ASRS, will fund your future retirement benefit.
Vesting: When You Own Your Benefits
You are always 100% vested in your own contributions. There is no waiting period to own your own contributions. For employer contributions, the vesting period depends on when you were hired.
If you were hired before July 1, 2011, employer contributions are partially vested after five years and fully vested after 10 years.
If you were hired on or after July 1, 2011, employer contributions only vest before retirement if you separate due to involuntary reductions in force or position elimination. Otherwise, you must stay on as an employee of Arizona until retirement to receive your employer contributions.
ASRS Retirement Eligibility
When can you retire, and what will your benefit be when you do? Here’s how it works.
Normal Retirement: Full Benefits
Normal retirement is when you can retire with your full, unreduced pension benefit. The requirements depend on when you became an ASRS member.
If you joined ASRS before July 1, 2011, your retirement age is any of the following:
Age 62 with at least 10 years of service
Age 65 with any years of service
Any age when your years of service plus your age equals 80 (the "Rule of 80")
If you joined ASRS on or after July 1, 2011, your retirement age is any of the following:
Age 55 with at least 30 years of service
Age 60 with at least 25 years of service
Age 62 with at least 10 years of service
Age 65 with any years of service
If you meet any of the ages based on when you were hired, you can retire with full benefits.
Early Retirement: Reduced Benefits
You can retire as early as age 50 with just five years of service credit, but your benefit will be permanently reduced. The earlier you retire before reaching normal retirement age, the larger the reduction to account for the longer period you'll receive benefits.
PRO TIP: When selecting your retirement date, it’s wise to work one additional month beyond your target. During retirement processing, ASRS performs a detailed audit of your account to confirm your service credit, salary history, and contributions. That extra month provides a buffer in case any adjustments are needed, helping to ensure your benefits begin smoothly and on time.
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Calculating Your ASRS Pension Benefit
Your ASRS pension is calculated using a formula with three key components:
Average monthly compensation (AMC)
Years of credited service
A graded multiplier
1. Average Monthly Compensation (AMC)
The ASRS looks at the last 10 years of your contribution history and calculates your average based on your compensation. The calculation will depend on when you were hired.
Members who joined on or after July 1, 2011: The average of your highest consecutive 60 months within those 10 years
Members who joined before July 1, 2011: The average of your highest consecutive 36 months within those 10 years
2. Years of Credited Service
The more service credit you accumulate, the higher your monthly pension. Service is credited based on reported contributions from your ASRS-covered employers.
3. Graded Multiplier
The graded multiplier is a percentage (set by state statute) that increases as you accrue more years of service:
Less than 20 years: 2.1% multiplier
20–24.99 years: 2.15% multiplier
25–29.99 years: 2.2% multiplier
30+ years: 2.3% multiplier
Example Calculation
Let’s say you have 25 years of service with an average monthly compensation of $5,000. The calculation for your pension benefit would look like this:
$5,000 × 2.2% = $110 per year of service
$110 × 25 years = $2,750 monthly pension
Choosing How You'll Receive Your Benefit
When you retire, you must choose how you want to receive your lifetime pension benefit. This is one of the most important decisions you'll make. It’s also irrevocable. Once you’ve made your choice, you cannot change it.
Straight Life Annuity (SLA)
This option provides the highest monthly payment for your lifetime. However, it leaves no guaranteed benefits for survivors after your death. Most members deplete their account balance during retirement, meaning there may be nothing left to pass on to beneficiaries.
Best for: Single individuals or those with other assets to leave to heirs.
Joint and Survivor Annuities
This option offers a reduced monthly benefit that covers your lifetime, then continues to your beneficiary for their lifetime. You can choose the rate your beneficiary will receive:
100% joint and survivor: Your beneficiary receives 100% of your benefit.
75% joint and survivor: Your beneficiary receives 75% of your benefit.
66 2/3% joint and survivor: Your beneficiary receives 66.67% of your benefit (beneficiary cannot be more than 24 years younger than you if not your spouse).
50% joint and survivor: Your beneficiary receives 50% of your benefit (no age restriction on beneficiary).
The higher the rate you choose for a beneficiary, the lower your benefits will be during your own life. This requires some balance to determine what rate is ideal for both.
Best for: Married individuals or those wanting to provide lifetime income to a dependent.
Term Certain Annuities
This option gives you a reduced monthly benefit for a specified period (5, 10, or 15 years). If you pass away during this period, your beneficiary will receive the same payment until the term period ends. If you survive through the full term period, your payments will automatically be converted to a Straight Life Annuity with adjusted payments.
Best for: Those wanting to guarantee a specific number of payments to beneficiaries while maximizing their own lifetime income.
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State of Arizona Retiree Health Insurance Benefits
One of the most valuable ASRS benefits is access to group health insurance after retirement, along with a premium subsidy to help offset costs.
Health Insurance Premium Benefit
As part of your benefits, the ASRS provides a health insurance premium benefit to supplement the cost of retiree health insurance. The subsidy ranges based on your years of service and Medicare eligibility status:
For Non-Medicare Eligible Retirees (Under 65):
5 to 5.9 years of service: $75/month (50% of full benefit)
6 to 6.9 years of service: $90/month (60% of full benefit)
7 to 7.9 years of service: $105/month (70% of full benefit)
8 to 8.9 years of service: $120/month (80% of full benefit)
9 to 9.9 years of service: $135/month (90% of full benefit)
10+ years of service: $150/month (100% of full benefit)
For Medicare Eligible Retirees (65 and older):
5 to 5.9 years of service: $50/month (50% of full benefit)
6 to 6.9 years of service: $60/month (60% of full benefit)
7.0 to 7.9 years of service: $70/month (70% of full benefit)
8.0 to 8.9 years of service: $80/month (80% of full benefit)
9.0 to 9.9 years of service: $90/month (90% of full benefit)
10+ years of service: $100/month (100% of full benefit)
To receive the premium benefit, you must enroll in ASRS health insurance within 31 days of your retirement date. Coverage becomes effective on the first day of the month following your retirement.
Coverage Options
For retirees under 65 (not yet Medicare eligible):
UnitedHealthcare offers non-Medicare plans.
Monthly premiums typically range from $700–$1,000 for single coverage at current rates.
For retirees 65 and older (Medicare eligible):
Medicare Advantage HMO plans
Medicare Supplemental plans
Monthly costs typically range from $150–$300 for single coverage (after Medicare).
Note: The premium benefit is not available with private or Federal Marketplace insurance plans. You can only use it with ASRS or employer-sponsored retiree coverage.
Optional Premium Benefit for Survivors
At retirement, you have a one-time opportunity to elect a reduced premium benefit that can continue to your spouse or dependent after your death. This option:
Is only available if you elect a Joint and Survivor or Term Certain annuity
Cannot be elected with a Straight Life Annuity
Provides continued health insurance assistance to your beneficiary
The reduction amount depends on your age and your beneficiary's age.
Supplemental Retirement Savings: Building Beyond Your Pension
While your ASRS pension provides a solid foundation, it's designed to provide less than 100% of your post-retirement income needs. The ASRS does not include automatic cost-of-living adjustments (COLAs), which means your monthly benefit amount will remain the same even as the cost of living increases. This makes supplemental savings crucial.
Consider these realities:
Social Security alone won't replace your full income.
Healthcare costs rise significantly in retirement.
Your ASRS pension won't increase with inflation.
You may want to retire early or work reduced hours before full retirement.
Recommendation: Aim to contribute at least 10%–15% of your salary to supplemental retirement savings, increasing this amount as you get closer to retirement. Arizona state employees have access to excellent voluntary retirement savings plans, such as the 457(b) Deferred Compensation Plan or a 401(a) Supplemental Retirement Savings Plan.
Survivor Benefits: Protecting Your Family
ASRS provides important protections for your beneficiaries if you die before or after retirement.
Before Retirement:
If you die before becoming retirement eligible, your beneficiary receives:
Two times your account balance (your contributions plus employer contributions)
Plus accumulated interest
Plus any service purchase payments you made
This benefit can be paid as a lump sum or as a lifetime monthly annuity if it calculates to at least $100 per month.
Important Spousal Protection Requirements
If you're married, Arizona law requires you to name your spouse as a primary beneficiary for at least 50% of the benefit. Your spouse can waive this right, but must do so with a notarized signature on the official ASRS spousal consent form.
If you divorce, your ex-spouse is automatically removed as your beneficiary. You must actively rename them if you want them to remain a beneficiary after divorce.
After Retirement
Survivor benefits depend on the retirement option you chose:
Straight Life Annuity: Typically, no benefits remain.
Joint and Survivor options: Your beneficiary continues receiving the percentage you elected.
Term Certain options: If you die during the term period, payments continue to your beneficiary until the term ends.
Did you know? 25% of ASRS members have never designated a beneficiary. If you don't name someone, ASRS must follow state statutes to pay benefits in this order:
Your current spouse
Your children (equally divided)
Your parents (equally divided)
Your estate
This process can take months and require extensive paperwork. Take 10 minutes today to designate your beneficiaries, and you can save your family a lot of headaches.
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The Retirement Application Process: What to Expect
Understanding the retirement application timeline helps you plan appropriately and avoid any surprises.
Timeline for Filing
ASRS doesn't mandate a specific advance filing period, but it takes approximately 45 to 90 days to fully process your retirement application. During this time:
ASRS receives and reviews your documents.
Your final contributions are posted.
Your benefit is calculated and finalized.
Health insurance elections are processed.
Estimate Checks: Your Income Bridge
While your application is processing, ASRS provides "estimate checks" to ensure you have income. Your first estimate check arrives within 10 days of your retirement date. This check is typically about 20% lower than your final benefit to ensure you're not overpaid. Up to three total estimate checks may be issued during processing.
If your retirement date is between the 1st and 20th of the month, your first check will be prorated. If it's after the 21st, your first check covers the remainder of that month plus the following month.
New Retiree Check: Your Final Benefit
Once your application is finalized, you receive your "new retiree check," which reflects your actual calculated benefit, accounts for final health insurance premiums, and adjusts for any underpayment or overpayment from estimated checks. After this, you'll receive your finalized benefit on the first day of every month for the rest of your life.
Leaving ASRS Employment Before Retirement
If you leave state employment before retirement, you have several options.
Option 1: Leave Your Account with ASRS
This approach maintains eligibility for all future ASRS benefits. You can still retire as early as age 50 with five years of service, maintain access to ASRS retiree health insurance, keep survivor benefits protection, and face no immediate tax consequences. Your account will continue earning interest, and you remain connected to ASRS if you return to state employment.
Option 2: Request a Refund
If you choose this option, you'll receive your employee contributions plus accrued interest.
If hired before July 1, 2011, you're eligible for a percentage of employer contributions based on years of service (25% at five years, increasing to 100% at 10 years).
If hired on or after July 1, 2011, you typically receive only your contributions (employer contributions don't vest unless separation was due to RIF or position elimination).
Here’s what you lose permanently:
Long-term disability income plan benefits
Survivor benefits for your beneficiary
Future pension eligibility
Retiree health insurance access
Premium benefit subsidy
Potential permanent benefit increases
Refunds are taxable income in the year received unless you roll them over to another qualified retirement account.
Option 3: Roll Over to Another Qualified Plan
You can transfer your ASRS balance to another qualified retirement program, such as an IRA, a new employer's 401(k) or 403(b), or another governmental 457(b) plan. This maintains tax-deferred status and avoids immediate taxes and penalties. Processing generally takes 15 business days (three weeks) once all required information is received.
Critical Retirement Planning Considerations
Coordinate with Social Security
ASRS was designed as one of three income sources for retirement: your ASRS pension, Social Security benefits, and personal savings (457(b), 401(a), IRAs, etc.). Most Arizona state and local government employees (92%) participate in Social Security, meaning you'll have both ASRS and Social Security benefits in retirement.
Healthcare Costs
Healthcare expenses typically increase significantly in retirement. Budget for premiums even with the ASRS premium benefit subsidy, understand Medicare enrollment requirements at age 65, consider supplemental insurance needs, plan for long-term care costs not covered by standard insurance, and remember that dental and vision coverage require separate premiums.
Return to Work Rules
If you want to continue working after retirement, specific rules apply. You can work after retiring without affecting your pension if your post-retirement work doesn't meet ASRS membership requirements, you work fewer than 20 weeks per year, OR you work fewer than 20 hours per week. If your post-retirement work meets membership requirements, your retirement benefits will be suspended, you'll return to active membership, and your benefits will resume when you separate again.
Tax Planning
Your ASRS pension is taxable as ordinary income in retirement because contributions were made pre-tax. Consider setting up appropriate tax withholding through your myASRS account to manage the interaction between ASRS pension, Social Security, and supplemental retirement account withdrawals, and potential strategies for managing your tax bracket in retirement, as well as Arizona state tax treatment of retirement income.
When Professional Financial Planning Makes Sense
The decisions you make about your ASRS retirement benefits will affect your financial security for decades. These choices are complex and often irrevocable. Consider working with a fiduciary financial advisor if you:
Are planning to retire in the near future
Need help planning a distribution strategy that works for you
Need to coordinate ASRS benefits with Social Security claiming strategies
Have significant supplemental retirement accounts requiring distribution planning
Are considering early retirement and need to bridge income until Medicare
Want Help? Get Expert Help with Your Arizona State Retirement Benefits
At TrueWealth Financial Partners, we specialize in helping employees like you transition smoothly into retirement. As fee-only fiduciary advisors, we provide objective guidance on retirement eligibility and timing strategies, pension payment option analysis, integration with Social Security and Medicare, supplemental savings optimization, health insurance strategies, and tax-efficient retirement income planning.
Your ASRS benefits are valuable. Make sure you're maximizing them.
Schedule a free consultation today to discuss your Arizona state retirement benefits and start planning a better future.
ASRS FAQs
Can I collect my ASRS pension if I move out of state?
Yes. You can receive your ASRS pension regardless of where you live, whether in another U.S. state or abroad. However, ASRS cannot make direct deposits to foreign bank accounts, so international retirees will need to arrange alternative payment methods.
Is there a waiting period before ASRS contributions begin?
Yes. New employees have a 183-day (approximately six months) waiting period before ASRS contributions begin, unless you already have an active ASRS account or were hired before July 20, 2011. Contributions start the first day of the pay period following the 183-day waiting period.
Can I opt out of ASRS?
If you're 65 or older when hired, not currently an ASRS member, have no prior ASRS service, and aren't receiving long-term disability benefits, you can opt out of ASRS membership. You must make this election in writing within 30 days of your employment date (not your ASRS eligibility date). This election is irrevocable and waives all ASRS benefits.
Can I combine ASRS with Social Security?
Yes. Most Arizona state and local government employees participate in both ASRS and Social Security. You'll need to apply for Social Security benefits separately from ASRS. The two systems have different eligibility rules and application processes.