City's Contrary Stance On Disabilities Unjust

A week does not go by without me talking to at least one person (non-emergency) who is collecting Social Security Disability while being denied a disability pension from the public-sector retirement system of this state. In essence these people, many in their 50s with more than 20 years of service, are told by the city's medical board: "if your doctors think you should not work then don't—simply vest your pension until 62 when you can collect." What arrogance! The unions need to stop the city's blatant disregard of the rules that qualify a worker for disability retirement. When will the Municipal Labor Committee take the cotton out of its ears? Write to the MLC and express your outrage. This abuse could not be going on for decades without a wink-and-anod from the MLC.

 

Q.: Over the years I have been asked by Tiers 1-2 members of the five city retirement systems if it is better to pay the full certified rate into the Annuity Savings account or reduce it by the rate for the Social Security Payroll tax and the rate for Increase-Take-Home- Pay (ITHP).

A.: It is always better to save at the full certified rate for the following reasons:

1. Increased pre-retirement death benefit;

2. Increased pre-retirement loan values;

3. Increased pre-retirement excess/surplus withdrawal/ rollover values.

If you have never taken out a loan or excess amount during your career and elect to annuitize your entire Annuity Savings account balance in conjunction with your retirement, you will simply be amazed at how much more the annuity portion of your retirement allowance is by contributing the full rate for your entire career rather than reducing it by the Social Security rate and the rate for ITHP. Remember, your contributions to your Annuity Savings account is Federally tax-deferred under Section 414(h) of the Internal Revenue Code. Moreover, you are earning 8.25 percent in guaranteed interest which cannot go below 7.0 percent. It doesn't get much better than this. You should contribute your full certified amount to your Annuity Savings account before contributing a dime to a pre-tax retirement program like 457(b), 403(b), 401(k) or an IRA.

 

Q.: I am 61 and my wife of 35 years is 58. I am a Tier 1 member of the Teachers' Retirement System of the City of New York. We live in our mortgage-free home, which has a value of $275,000. Our only savings is $200,000 with the Tax-Deferred Annuity Plan. Should I take an option for my wife? P.Z.

A.: I would be doing you and your wife a terrible disservice if I answered your question without knowing much more about the two of you. What is the condition of your health and that of your wife? How old were your parents and grandparents upon their deaths? Do you have children that you are still responsible for? Are you responsible for an older person(s)? What are your plans for retirement life, which may be quite long? Travel? Where to and for how long and often? Do you plan on working? What is the balance of your Annuity Savings account (see above discussion)? What is your salary? What is your total years of credited service with the TRS? What is your wife's work history? Can she expect a pension? Do you have life insurance? How much? Do you have long-term care insurance? Do you expect an inheritance of a significant amount? These are some, but by no means all, of the issues covered in a properly conducted retirement planning consultation.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net