Secure Your Future

A retirement potpourri

May 21, 2009 3:24 PM

It happened again

Just recently, a young member with a family passed away without a “Designation of Beneficiary” form on file. All members are covered by a death benefit that provides for one or more beneficiaries in the event of your death. In addition, if you die before retiring, your beneficiary may be able to receive any member contributions (with interest) made by you to the Teachers’ Retirement System.

It is extremely important that you have on file at TRS an up-to-date Designation of Beneficiary form. If you participate in the TDA, you need two forms on file: one for the Qualified Pension Plan and one for the TDA. Events such as marriage, divorce and death will change your beneficiary coverage needs, so it is imperative that you review your designation and notify TRS if changes are necessary by filing a new form.

Check your beneficiaries as listed in the Annual Benefit Statement, your Quarterly Account Statement or online at the TRS Web site.

Change your designation if necessary by filing a completed QPP or TDA Designation of Beneficiary form available for the UFT or TRS.

Note that until a new properly completed Designation of Beneficiary form is received by TRS, your last designation remains in effect.

Or as in the case of the member who died with no beneficiary form on file, any benefit that may be payable will be issued to your estate, which will then entail delay in payment and possible unnecessary legal expenses.

Keep saving

Although we will have a pension and Social Security, we need to continue to build our retirement security by contributing to the third leg of the “retirement stool” — the Tax-Deferred Annuity. Almost 75,000 in-service members are contributing to the program.

Which of the six investment choices you make is of course up to you. However, financial experts recommend that your investment choices should allow you to sleep at night while growing at a rate that will provide you with sufficient income in retirement to supplement your pension and Social Security so that you live the lifestyle you have earned with all your good work educating the children of New York City.

Most experts believe that a newer employee should set up an emergency fund of at least six month’s expenses saved up in safe, liquid investments in case you cannot work because of emergencies. So many people are realizing how important this is now during the current economic downturn. After you have this emergency fund set up, retirement savings can be invested in more aggressive, volatile investment instruments. Experts say since a young person has decades and decades ahead of them, they might want to take advantage of the current decline in the stock market.

Recession pushes retirement confidence to a record low

In a survey released by the Employee Benefit Research Institute this month, only 13 percent of workers and retirees said they were very confident they could live well in retirement, the lowest number since tracking began in 1993. Among current retirees included in the study, only 20 percent said they were very confident that they could live comfortably. The Washington Post reported that current retirees were greatly surprised by the high cost of their health care expenses. Workers and retirees also credited inflation, economic uncertainty and the high cost of living as reasons for their lack of confidence. Of those surveyed, more than 80 percent have reduced their expenses, 43 percent have changed their investing behavior and 38 percent are working more hours or have picked up a second job.

Members planning for summer retirement

Have you had a final pension consultation?

Have you reviewed your credited service to ensure that you are eligible to retire and have been credited with all service available to you?

Do you know that this is the last opportunity to take a loan from your QPP funds or for eligible Tier I/II funds to apply for a QPP excess withdrawal?

Have you decided whether to defer distribution of your TDA funds, or withdraw them or receive them as a monthly annuity?

Have you decided on whether to take a maximum retirement allowance that makes no provision for a beneficiary or elect an option to provide a death benefit for your beneficiary?

If you are a Tier I/II member, have you decided on which of the six QPP investment elections you want?

“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.