Secure Your Future
A short (but important) ‘to do’ list for the start of the new year
Jan 18, 2007 11:26 AM
Well, we have been back for more than two weeks and most of us have already forgotten the holiday break. Many of us have already broken the well-intentioned resolutions we made.
However, this is a good time to think about our financial security with special emphasis on retirement.
The UFT has more than 50,100 retired members. Most of them are enjoying in retirement a standard of living that is as high as when they were working — or higher. That is not the case for all retired Americans. As unionized workers have dropped to only 12 percent of the workforce, only 18 percent of private sector workers are offered a traditional defined-benefit pension plan like our Qualified Pension Plan.
The fact that our members have such a secure retirement is due in large part to their union membership. Because of the UFT’s efforts you have a wonderful pension plan, you have Social Security, you have had the opportunity to save in the tax-favored tax-deferred annuity program and you have an outstanding level of health insurance — which together make up the Four Pillars of Retirement Security.
There are a number of matters we should think about at the start of this new year:
1. No matter what your age or the stage of your career in the school system you should appreciatively think about the benefits provided by the Teachers’ Retirement System. While you are working you have:
- Death benefits to protect your loved ones;
- two forms of disability pension protections;
- a source of inexpensive loan availability; and
- a way to save for the future while reducing your current tax liability.
And finally at retirement, a handsome lifetime stream of retirement income that can be structured to provide benefits for beneficiaries or heirs.
2. Many of you do not have complete records at the Teachers’ Retirement System. As we have mentioned in the past, and probably will in the future, there are thousands of members for whom the TRS does not have proof of date of birth or designation of beneficiary forms (one each for the QPP and the TDA) or even up-to-date addresses.
3. Social Security is under attack. Even after President Bush took a “thumpin’” in the 2006 elections, he is still talking about privatizing Social Security for Americans currently under age 50. Look at the report you get from Social Security three months before your birthday. See how much of your pre-retirement income it will replace if you retire at full retirement age. For teachers, this is about 25 percent of pre-retirement income; for paras about 50 percent of pre-retirement income.
4. What is so hard about putting away some money for retirement while deferring taxes on your current income? Nothing. If you are not contributing to the TDA, look into the program and join the vast majority of your colleagues who are saving for an even more secure retirement.
5. Have you provided for your loved ones in case of your death or loss of ability to function? The benefits payable upon your death by the TRS are considerable. For the vast majority of members the benefit is at least three years’ salary. You should consider this benefit as you plan for your life insurance needs.
Are your designation of beneficiary forms at TRS on file and up to date (one for the QPP and one for the TDA)? Is your UFT Welfare Fund designation up to date?
Have you filled out a living will, a health-care proxy, a power-of-attorney, a will or trust (or other estate documents)? This is especially important if you have gone through a life-altering event like marriage, birth, divorce, a death in the family.
If you have no trusted experts in these areas, you may wish to contact NYSUT’s Legal Service Plan; call NYSUT’s Member Service Department at 1-800-626-8101.
6. Have you met your other insurance needs? Additional health insurance is available through NYSUT’s Catastrophic Major Medical Program. You should study it and consider it. Long-term care insurance and disability insurance should be examined and considered.
Not only must you insure your body but you should also insure your property. Auto and homeowners insurance protects your property and protects your finances if you are responsible for an accident. Many members have extra insurance known as excess liability insurance (an umbrella policy) to provide even more protection.
7. How is your credit rating? Now is a good time to take advantage of the federal law that allows us to get three free credit reports a year. Call 1-877-322-8228 to request a report or do it online at www.annualcreditreport.com. Experts suggest that we get one report in January, another in May, a third in September and then start over the following January. By alternating the three credit rating agencies — Trans Union, Equifax and Experian — a third-of-a-year apart we get a continuous check on our credit.
8. Did you start saving for your loved ones’ college expenses? Contact your school secretary for information about automatic contributions to the New York State College Savings Program (529 Plan). Review Payroll Administration Memorandum No-20, 2004-2005.
9. Do you want a last chance to get some impartial financial counseling at reasonable rates? NYSUT’s Financial Counseling service provided by Ernst and Young is winding down. This is the last year of the program. You can join up to the end of the month but after that no new memberships will be accepted. The entire program will end on Dec. 31. For information, contact NYSUT’s Member Benefits Department (at the number above) in time to act by Jan. 31.
