Secure Your Future

Make some New Year’s resolutions for retirement security

Jan 19, 2006 3:53 PM

Welcome back. We hope you had a good rest. There is a little less tension as we start the new year because we have a new contract under our belts and we are receiving our new and bigger paychecks. Still, the Department of Education is up to its old tricks of trying to implement the new contract without any input from those who have to work under it, so things are not entirely carefree.

The New Year is a good time to make resolutions. We hope that those who resolved last year to stop smoking are still not smoking, that those who resolved to lose weight are still on a healthy diet and those who resolved to exercise more are still flexing their muscles.

It is also time to make some resolutions in regard to retirement security. It should be our goal to enjoy in retirement a standard of living as good as or better than we had during our working lives. Most of the 49,000-plus retired UFT members do. But they say that a financially secure retirement took thought and planning. They took advantage of the many retirement-related services the UFT offers such as:

• reading the “On Retirement” column in the New York Teacher;
• reading the PensioNews newsletter;
• getting answers to questions in consultation with UFT pension consultants at key times in their career;
• participating in the “Ready-or-Not” pre-retirement planning program;
• participating in the UFT Pension Clinic; and
• meeting, together with a spouse or significant other, with a UFT consultant in the year before retirement.

The last census of the Teachers’ Retirement System shows that more than 70 percent of TRS members have fewer than 15 years of service. More than 76 percent of TRS members are younger than age 55. This is the group that has more time to prepare for a financially secure retirement, a retirement that for many of us will last a third of our lifetimes. Typically, we spend more than 20 years before entering teaching (roughly one-third of our lifetime), 30 years or more of our lifetime educating the students of New York (another one-third), and then we can look forward to 30 or so years in retirement (the last third). It is a good idea to prepare for that last third of our lives and here are some suggested resolutions to do that:

RESOLUTION 1: I will become knowledgeable and involved in the debate about retirement security going on in America today.

Efforts are being made to end the defined benefit (traditional pension) as the key to a secure retirement and replace it with defined contributions (savings plans). The battle to change Social Security from its current social insurance program into another savings plan (private individual accounts) is stalled at this moment but is still a leading domestic issue for the Bush administration. The movement to eliminate or reduce health insurance protection for retirees is ongoing. We must remain vigilant.

RESOLUTION 2: I will focus on my own Social Security benefits by learning what my benefits are and by carefully reviewing the benefits report I will receive from the Social Security System three months before each birthday.

RESOLUTION 3: I will make sure all my retirement forms are up to date.

The 6,742 new UFT members who joined the school system last fall were enrolled in TRS automatically but must nevertheless file the Enrollment Application and related forms they received in their Welcome Kit.

In addition, more than half of the 45,000 members enrolled in TRS over the past five years have not filed Designation of Beneficiary forms and/or proof of date of birth. They put their benefits as well as the benefits for heirs and beneficiaries in jeopardy by not attending to this. Contact TRS or the UFT for the appropriate forms.

RESOLUTION 4: I will learn about my many benefits, such as the tax-deferred annuity program, disability protection, death benefits and loans that are provided by the retirement system.

For most of us the value of our membership in the retirement system is the largest fiscal asset we will have over our careers. The UFT has many services related to retirement. Please take advantage of them. UFT pension services include:

• frequent articles in the New York Teacher;
• a pension newsletter: PensioNews;
• factual pension handbooks;
• speakers for chapter meetings at faculty conferences, during lunch periods or before school starts;
• pension consultants in each borough office available for personal interviews or phone questions;
• timely special boroughwide meetings on current events;
• the Ready-or-Not program of pre-retirement preparation workshops;
• a comprehensive final consultation before retirement; and
• three teacher-members on the Teachers’ Retirement Board to act as advocates for members.

RESOLUTION 5: I will learn where I stand today with regard to my finances: How much am I worth?

We must go through the exercise of adding up all our assets and then subtracting all liabilities. The result is our net worth. Are we getting by? What is our cash flow? We must examine our income and expenses. Do we have large credit card debts? Do we save enough money each pay period? If we are married or in a committed relationship, the assets, liabilities, income and expenses of both partners must be taken into consideration.

RESOLUTION 6: I will learn more about the tax-deferred annuity program so that I can use it to my best advantage.

The TDA has been available since 1970. It allows members to invest pre-tax money in a fund administered and managed by the TRS. There are currently three investment choices available: Fixed-Dollar Annuity, Variable Annuity A and Variable Annuity B. Early in the year this column will present details on each of these investments.

A participant should look into what the characteristics and goals of each investment choice are and how each is different from the other choices. You must know enough about the benefits of Social Security and your pension plan so that you can make educated decisions about your investment in the TDA program.

If you are already participating fully in the TDA program and have additional money available for tax-deferred retirement savings, you may wish to look into the City of New York Deferred Compensation (457) plan. Information is available at 1-212-306-7760 or 1-888-DCP-3113 (outside New York City), or on the Web site, www.nyc.gov/deferredcomp.

If you are not participating fully in the TDA, you should consider increasing the amount you contribute to the program. In 2006, if you are younger than age 50, you may contribute up to $15,000. Those 50 or older may contribute up to an additional $5,000. Members who have contributed less than what they were allowed over their careers may be able to contribute up to an additional $3,000. Your maximum rate for 2006 was listed in your 2005 Annual Benefit Statement.

RESOLUTION 7: I will provide for my beneficiaries and dependents at my death.

A member should review or create estate documents. This review should include a check of the listed beneficiary(ies) for retirement system benefits, Welfare Fund benefits, private insurance policies and other private investments.

Living wills, healthcare proxies, powers-of-attorney and wills or trusts should be created or re-examined for appropriateness, especially if life events like marriage, birth, divorce or death have occurred. Thousands of members have not filed designation of beneficiary forms with TRS.

If you have no trusted experts in these areas, you may wish to contact the Legal Service Plan of the UFT’s state affiliate, NYSUT, by calling the NYSUT Member Benefits department at 1-800-626-8101 weekdays 9 a.m. to 5 p.m.

RESOLUTION 8: I will provide for adequate insurance.

Review your insurance needs; everyone needs insurance for protection. You have health insurance through your employment. Evaluate what you have and determine if you should have more. Investigate NYSUT’s Catastrophic Major Medical Program if you don’t already have such coverage.

You need to have insurance to protect your assets. Do you have homeowners insurance? Do you have insurance to protect you in case you are responsible for injuring someone in an accident? Many experts believe that you should investigate excess liability insurance (frequently called an umbrella policy).

Do you need disability insurance or long-term care insurance? Insurance needs will change as your life circumstances change and the NYSUT Member Benefits department can help meet your needs in this area.

RESOLUTION 9: I will take advantage of the new federal law that helps us keep our debt under control by allowing us to get a free copy of our credit report.

Call 1-877-322-8228 to request a report or do it online at www.annualcreditreport.com. See the Sept. 22 issue of the New York Teacher for more details.

RESOLUTION 10: I will examine my needs to fund dependents’ college fees.

An excellent choice for college savings is the New York State College Savings Program. Review Payroll Administration Memorandum No. 20, 2004-2005 for information on how to contribute by payroll deductions. Review the article below for more details.

RESOLUTION 11: I will look into the possibility of obtaining professional financial assistance.

UFT members have asked the union to develop a financial planning program for its members. After careful research by the UFT and NYSUT, the Financial Counseling Program provided by Ernst and Young has been made available to UFT members through the NYSUT Benefit Trust. The program includes:

• a helpline: toll-free access to independent financial counselors;
• focused financial analyses: customized reports on specific financial issues;
• Understanding Personal Finances — a bimonthly newsletter; and
• referral: personal financial planning consultation at an additional fee.

If you have questions about this program, call NYSUT Member Benefits at the above number.

REMINDERS

• Have you filed your date-of-birth documentation with TRS?
• Have you updated your beneficiary forms for the Qualified Pension Plan and TDA?
• Does TRS have your correct address?

“On retirement” 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).