Nearly half of all families in this nation have not saved for retirement. That’s according to a 2016 report from the Economic Policy Institute, a nonpartisan Washington think tank.

The report shows how the nation’s increased reliance on 401(k)s has “exacerbated inequality, benefitting only the very rich and leaving the vast majority unprepared for retirement,” says the institute.

Financial security in retirement remains one of labor’s top priorities. The UFT leadership has always believed that workers should have a worry-free retirement. We’re proud that members can focus on educating the children of New York City without worrying about retirement. 

UFT members have a defined-benefit pension and are also fortunate to have a way to save even more for retirement through a Tax-Deferred Annuity. This type of plan, an IRS 403(b) plan, is available to employees of educational institutions, hospitals and a few other not-for-profit organizations. The TDA has been administered by the Teachers’ Retirement System for almost 47 years with low fees and a variety of investment options.

More than 75 percent of UFT members participate. You set your own contribution rate, and you do not pay taxes on contributions or earnings until you withdraw funds. 

Remember: Banking even a small portion of your salary in the TDA can make a huge difference over the course of your work years because of compound interest. The earlier you begin saving, the better.

Six investment funds

Fixed Return Fund: Offers a guaranteed rate set by the state at 7 percent annually. Ten-year rate of rate through June 30, 2016: 7.43 percent.

Diversified Equity Fund: Invests primarily in U.S. stocks with a portion of the fund invested in stocks of non-U.S. companies and other types of investments. Ten-year rate of return through June 30, 2016: 6.07 percent.

Bond Fund: Invests primarily in a portfolio or portfolios of high-quality bonds that provide for participant transactions at market value. Three-year rate of return through June 30, 2016: 1.84 percent.

International Equity Fund: Primarily invests in non-U.S. companies in developed and emerging markets that are traded on a variety of stock exchanges and sold in a variety of currencies. Five-year rate of return through June 30, 2016: 2.23 percent. 

Inflation Protection Fund: Invests in multiple asset classes and markets, which may include floating debt rate, commodities, inflation protection debt (including Treasury inflation-protected securities) and real estate debt and equity securities. Five-year rate of return through June 30, 2016: 2.23 percent.

Socially Responsive Equity Fund: Invests primarily in U.S. equities that meet certain financial and social criteria. It attempts to avoid companies that receive a significant portion of revenue from alcohol, tobacco, nuclear power or weapons and/or that have poor labor-management relations, endanger the environment or create public health problems. Five-year rate of return through June 30, 2016: 9.50 percent.

Download TRS publications, such as “Passport Fund Profiles” with complete descriptions at trsnyc.org.

How to make investment changes

Members may change how money is allocated in the Passport Funds on a quarterly basis. You may submit change forms any time but the change will begin at the next quarter, if the application is filed in a timely manner. If not, the change will occur at the start of the following quarter. 

The TDA is intended for retirement — the IRS has strict rules about withdrawals before retirement that might incur penalties. To handle emergencies, experts recommend you save at least six to eight months of living expenses in a nonvolatile fund such, as a savings account or a money market fund, before investing in a TDA. 

Before investing in any funds: Never invest in anything you do not understand. That said, TRS carefully selects and monitors its funds. While the Fixed Income Return guarantees a rate of return, the other funds do not and past performance does not predict future performance. Be sure to make choices based on your investment philosophy, and your tolerance for risk and volatility in a fund.