Secure Your Future
Now is time to consider changes in your TRS investments
Apr 10, 2008 2:08 PM
Both in-service and retired members in Tiers I and II have the right to invest their Annuity Savings Fund (ASF) and Increased-Take-Home pay (ITHP) accounts in the three existing and three new investment choices (that we detailed in the last issue). All members have the right to invest their Tax-Deferred Annuity (TDA) account in the same six choices. The first chance members have to invest in the new funds is July 1.
April is the month to make changes in the ASF and ITHP for Tiers I/II retirees, and for the almost 4,000 retirees who get a TDA check each month in addition to their Qualified Pension Plan (QPP) check.
May is the month to make changes for in-service members of Tiers I/II, all participants of the TDA program and retirees with deferred TDA status. Any changes requested will begin in July and can be completed over a three-, six-, nine- or 12-month period, based on the selection you make.
The question is, of course, should a member make a change at all. Some things to think about in deciding are:
- Am I satisfied with the investment election I have made?
- Do I believe the financial experts who state that a stock market investment, despite its volatility, is the best investment for growth over the long term?
- Can I stand the current unusual volatility in the investment markets?
- Do I want a guaranteed rate of return on my investments?
- Do I understand the new choices that the UFT and the Teachers’ Retirement System have written about?
- Are my total assets — in the retirement system and outside the retirement system — well diversified?
Financial experts tell us that there is no way to successfully time the direction of the financial markets. Making investment election changes should be done for sound financial reasons, not to try to guess the direction of the financial markets. Since you now have the opportunity to make changes quarterly, you may want to take some time to fully understand the new choices.
The accompanying chart shows the returns for in-service members’ ASF, ITHP, and TDA accounts, as well as deferred TDA returns for retirees. QPP and annuitized TDA returns for retirees depend on their retirement date and the annuity factor used to calculate the benefit.
To change the investment election for retiree QPP accounts and annuitized TDA accounts, TRS must receive the application to change by May 1. For ASF and ITHP accounts of Tiers I/II in-service members, in-service participants in the TDA program and retiree deferred TDA accounts, the election change application must be received by June 1.
Planning to retire at the end of the term?
July 1 is the most common retirement date of the year. New 55/25 plan members may retire as early as June 30 (You must opt-in before you retire). If you plan to retire at the end of this school year or at the end of your summer job, call the Pension Department at 1-212-598-6866/7 for a once-in-a-career final consultation. You will be given the next available appointment with a consultant at your local UFT borough office.
Do not delay in making your appointment. You may risk not being able to get one if you wait too long. We do not want you to retire without this valuable UFT service. But do not call for a final consultation unless you are sure you are retiring. If you have a final consultation now and do not retire, we will not be able to give you a second final consultation in the future.
Reminder: The opt-in period for 55/25 ends on Aug. 25. Members who might be eligible should have received materials from their retirement system, TRS or BERS, informing them of the law. If you need further information, go to 55/25 Update on uft.org.
Health care cost for retired couple: $225,000
In a study released by Fidelity Investments, it was estimated that a couple retiring in 2008 will need about $225,000 in savings to cover medical costs in retirement. The figure calculated for a couple age 65 is up from the $215,000 estimate in 2007.
The study assumes that the couple does not have employer-sponsored retiree health coverage. Of course we do. It includes expenses associated with Medicare premium payments (we get these reimbursed) as well as co-payments and deductibles, plus out-of-pocket prescription costs. We, of course, get a Medicare supplement plan and a prescription drug plan — for which the Welfare Fund reimburses most of the premiums.
This is a huge expense that UFT retirees do not incur because the UFT is so involved in seeing to it that you “Secure Your Future.”
“Secure your future” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877), www.trs.nyc.ny.us.
