Secure your future

Save early and steadily

PENSION CLINICS

The UFT’s popular pension clinics — a mini-course in pensions and related retirement matters — have been scheduled for the 2011-2012 school year in all the boroughs.

 

We urge all members to participate in these clinics two or three years before retirement. The clinics are only one part of the UFT’s many services devoted to helping members prepare for a financially secure retirement.

This year the Pension Department will hold clinics in Brooklyn and Staten Island in the fall, in Manhattan in the winter and in the Bronx and Queens in the spring. 

To be fully informed, Tier I/II members should attend all of the three-part series, and Tiers III/IV the two-part series.

4:15-6:15 PM

Fall 2011

Brooklyn
335 Adams St., 25th floor
and
Staten Island
4456 Amboy Road

Tiers III/IV
Friday, Oct. 28
Friday, Nov. 4

Winter 2012

UFT headquarters, 6th floor

Tiers I/II
Thursday, Jan. 12
Thursday, Jan. 19
Thursday, Jan. 26

UFT headquarters, Auditorium B

Tiers III/IV
Thursday, Feb. 2
Thursday, Feb. 16

Spring 2012

Bronx
2500 Halsey St.
and
Queens
97-77 Queens Blvd., 5th floor

Tiers I/II
Friday, March 9
Friday, March 23
Friday, March 30

Tiers III/IV
Friday, May 4
Friday, May 11

This year, Congress has declared Oct. 16 through Oct. 22 National Save for Retirement Week. We urge you to supplement your pension, Social Security and retiree health insurance by participating in the Tax Deferred Annuity. If you can set aside even more, you may wish to consider putting additional savings in the city’s Deferred Compensation Plan.

With all of the volatility in the stock market, we would like to remind you of some time-tested retirement savings wisdom. These ideas are always important but especially at times like now.

Dollar-Cost Averaging

By making regular contributions into the TDA through payroll deduction, you are practicing an investment strategy known as “dollar-cost averaging.” 

This practice applies to investments whose values may fluctuate up or down. The variable programs in the TDA are such investments.

“Dollar-cost averaging” is the regular investment of the same dollar amount at regular intervals, regardless of an investment’s price movement. It allows investors to focus on long-term goals, rather than trying to outguess the ups and downs of the market.

Trying to “time the market” — guessing where it will or won’t go is very difficult even for professional investors. Investing a relatively large amount (or “lump sum”) at one time is really a form of market timing and may put that money to work at a less-than-ideal point. Unless you are lucky, you are generally better off investing consistently through payroll deduction and “dollar-cost averaging” into retirement investments.

Since payroll deduction allows you to contribute the same amount at each interval, when unit values are up, you buy fewer shares. When unit values are down, you buy more shares.

Payroll deduction is one of the easiest and most efficient ways to invest consistently — it is automatic and simple.

The Power of Time

The sooner you begin to save for the future, the greater the wealth you can accumulate. This simple idea is called “the power of time” — or compounding. People who begin to save early in life increase the value of their investments dramatically compared to those who start later.

This can be demonstrated by the example of two new teachers — Liza and Ross.

Liza began to invest in the TDA as soon as she started teaching. She contributed $100 per month ($1,200 per year) into the TDA fixed account for the first 10 years of service. The TDA account currently earns 7 percent per annum. She invested $12,000 before stopping her contributions. She left the contributions in the TDA until she retired upon completion of 30 years of service. Her account balance at that point was $68,649 on a $12,000 investment.

Ross did not start investing until he had completed 10 years of service. At that point, he began contributing $100 per month, the same as Liza. He contributed for the rest of his career until he retired at the end of 30 years. He contributed $24,000 over his career into the same fixed dollar account, earning 7 percent per annum as Liza did. His account balance at retirement was $52,638 on a $24,000 investment.

Even though Liza contributed only half as much money as Ross, she accumulated significantly more money by retirement. The fact is the earnings in the early years, when left to grow, also earn returns as time goes on. These earnings upon earnings are known as compounding.

You can see that time is a major factor in determining your future assets. No matter how you choose to invest your funds, the sooner you begin to invest, the more you will accumulate.

Since contributions to the TDA are tax deferred, a contribution to the TDA of $100 per month reduces your take-home pay by only $75 to $80, depending on your tax bracket. 

For information on the TDA program, contact the Teachers’ Retirement System at 1-888-8NYCTRS or online at trsnyc.org

org and request the publication “TDA Program Summary” and “Passport Funds: Fund Profiles.”

In a future column, we will discuss the six TDA investment choices.

Members might wish to look into another voluntary retirement savings vehicle available to them through the city’s Deferred Compensation Plan. Under Section 457 of the Internal Revenue Code, members may also elect to contribute additional voluntary retirement savings. The Deferred Compensation Plan is run by the city’s Office of Labor Relations. Information is available about this program at 1-212-306-7760 (or 1-888-DCP-3113) or at www.nyc.gov/deferredcomp.

Our defined benefit plan is great, but you can make retirement even more financially secure by participating in a voluntary, tax-deferred supplementary savings program.

VARIABLE ANNUITY
The unit value is computed during the latter part of each month. recent values are:
  VARIABLE A VARIABLE B
July 60.624 19.166
August 59.225 19.200
September 55.426 19.239

Where Will Your Money Go?

If you have no designation of beneficiary on file for either the Qualified Pension Plan (QPP) or the TDA (you need a separate one for each), your retirement system death benefit may not go to your intended beneficiaries.

You should file new designation-of-beneficiary forms when you have life changes such as marriage, birth, death or divorce.

Your last Quarterly Account Statement or Annual Benefit Statement includes the  information that the TRS has on the status of your designations.

Forms are available from the UFT or TRS.

Do this today and save your loved ones from a possible future financial crisis.

Identity Theft

You see ads about identity theft on TV regularly. One of the easiest ways to find out if your identity has been stolen is to regularly check your credit status with the three major credit information gathering agencies: Equifax, Experian and Trans-Union. A federal law requires the three agencies to provide you with a free credit report annually. To get this report, go to www.annualcreditreport.com or call 1-877-322-8228.

It’s advisable to contact one of the agencies every four months. For instance, you could contact one of the agencies in September, a second in January and the third in May.

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