Published by the New York State Nurses Association Pension Plan
PensionPlanner
The
Volume 18 • Number 1 • Winter 2012
H
Table of
Contents
M
Maximize your
Social Security benefits
ost people think there
are only a few choices
available when they’re
ready to collect Social Security: Take it early at age 62,
wait until full retirement age
(usually around age 66 or 67),
or hold off until age 70 for the
highest benefit.
But married couples have
a bit more flexibility than that
because a spouse can claim his
or her benefit based on his or
her own earnings or choose to
file for 50 percent of the other
spouse’s earnings, whichever
may be higher. And this leads
to several different scenarios:
The 62/70 strategy
In this case, the lower-earning
spouse (let’s say it’s the husband) files for benefits based on
his own earnings as soon as he’s
eligible at age 62. Meanwhile,
his wife claims spousal benefits
based on his earnings when she
reaches her full retirement age.
When the wife reaches age 70,
she switches to benefits based on
her own earnings. Her husband
also switches to spousal benefits
based on her earnings. The result
is the largest possible benefit
based on age 70 while still receiving benefits before then.
The “file and suspend” strategy
In this example, one spouse
didn’t work enough to acquire
a significant earnings history.
Let’s say the higher wageearning spouse is now the
husband. He files for benefits
when he reaches full retirement age but immediately
suspends those benefits. In
the meantime, however, his
Write us:
PO Box 12430
Albany, NY 12212-2430
wife can claim the 50 percent
spousal benefit. The husband’s
benefit continues to grow until he ends the suspension in
several years or at age 70 when
his benefit maximizes.
A variation of the file-andsuspend strategy comes into
play if the couple has comparable incomes. The spouse who
wishes to retire collects on his or
her own earnings history while
the other spouse continues to
work. If the working spouse is
at least 66 years old, he or she
can claim spousal benefits (with
no income-based reduction) until reaching age 70 and switching to his or her own maximum Social Security benefit.
The survivor-protection strategy
Because taking benefits
early can hurt a spouse who’s
much younger or lacks a
strong earnings history, many
a higher-earning husband
should delay taking benefits
until age 70, according to a
study by the Center for Retirement Research at Boston College. If he dies first, which is
likely because he’s older, he
will increase the value of his
survivor’s benefit and future
benefit because Social Security’s cost-of-living adjustments
are based on the value of the
first benefits check.
How can you find out which
strategy is best for you?
More than half of the people
who claimed Social Security
benefits in 2009 did so at age 62.
And while that choice may work
for some of them, it’s certainly
worth the time to explore what
your choice will mean for you.
The AARP launched a free
online calculator in mid-2011
that quite accurately shows
married couples (and singles)
when and how to collect their
benefits. The calculator guides
you through a question-andanswer format and provides
monthly and yearly estimates
for a variety of ages. You can
customize your result by calculating spousal benefits and the
effect of continuing to work
while collecting benefits. In addition, you can compare your
expected benefits to what your
retirement expenses will be.
You begin by inputting your
annual earnings and marital
status. Although it’s best to use
your actual earnings history
(available from previous benefits statements or the SSA Web
site), you do have the option
of using your current salary to
project your future benefit.
The AARP calculator also
gives you two default assumptions: whether you want to
assume the discount rate or the
inflation rate, currently set at 3
percent, and your annual salary raise rate, which is fixed at
2.5 percent.
The calculator is available
at www.aarp.org/work/work_
tools.
*Little known fact: You’re
eligible for annual cost-of-living
increases starting with the year
you turn age 62 whether you
begin collecting your benefits or
not. The COLA increases are then
added to your benefit when you
receive your benefits. •
E-mail us:
[email protected]
[email protected]
Marital status
affects pension
choice
— Page 2
State and
federal statutes
affect same-sex
spouses
— Page 2
Federal tax
withholding notice
— Page 2
Investing primer:
What are ETFs?
— Page 2
Ask the Pension
Plan: What’s the
Preretirement
Survivor Benefit?
— Page 3
A simple way to
budget
— Page 3
Plan office adopts
family for
Christmas for
13th year
— Page 4
New faces at Plan
office in 2011
— Page 4
Call us:
(877) RN BENEFITS
(800) 342-4324
Marital status affects
pension choice
F
ederal laws require that
the Pension Plan know
your marital status in
order to offer you the correct
benefits payment options.
If you’re married, the normal form of payment is the
50 percent Joint and Survivor payment form. If your
spouse waives his or her
right in writing, you can
then choose the Five Year
Certain, Ten Year Certain,
or Contingent Annuitant
options. When you retire,
we need a notarized copy of
your marriage certificate.
If you’re single, the normal form of payment is the
Five Year Certain and Life
payment form. Instead of
receiving the Five Year Certain, you can opt to receive
the Ten Year Certain and
Life, or the Contingent Annuitant at 50 percent, 66 2/3
percent, 75 percent, or 100
percent, if eligible.
If you’re divorced, the Plan
requires a notarized copy of
your divorce decree.
If you’re widowed, you’re
considered single by the
Plan, which must have a
notarized copy of your
spouse’s death certificate. •
Same-sex married couples’
benefits differ for
state and federal statutes
A
lthough same-sex marriage
is legal in New York, couples
who exchange vows will find
that some employment and tax benefits won’t apply to them.
Pension
The federal Defense of Marriage
Act put limits on retirement benefits
that fall under the Employee Retirement and Income Security Act,
which governs the NYSNA
Pension Plan. This means that samesex couples are not eligible for the
automatic 50 percent Joint and Survivor pension payment form, but can,
nevertheless, designate a partner
as beneficiary to the other forms of
pension payment: Contingent Annuitant, Five Year Certain, and Ten
Year Certain. A vested participant in
a same-sex marriage also can
designate his or her partner as beneficiary to the Preretirement Survivor Benefit. (See Page 3 for more
information on the PRSB.)
Taxes
Same-sex married couples can
jointly file state taxes in New
York, but the same does not apply to federal taxes, also due to
restrictions set by the Defense
of Marriage Act. Couples will
remain responsible for paying
federal income taxes on the value
of the spouse’s benefits unless the
spouse is considered a dependent.
Social Security
The Defense of Marriage Act
also prohibits Social Security benefits from going to the same-sex
spouse. •
The Plan office will be closed on Monday, February 20 in honor of
Presidents Day. You can, however, leave a phone message at
(877) RN BENEFITS, an e-mail message at [email protected],
or look on our Web site (www.rnbenefits.org) for information and forms.
2012 federal tax withholding notice
A
can download the 2012 form W-4P from the IRS Web site at www.
irs.gov. If you don’t wish to change your federal withholding election, no action is required.
Because this decision is an important one, you may want to discuss it with a qualified tax advisor. If you have any questions or
don’t have access to the IRS Web site, please call the Plan at (877)
RN BENEFITS from anywhere in the United States or at (518) 8699501 from elsewhere in the world. •
t the beginning of every year, retirees have the opportunity
to change their federal withholding election with the Pension
Plan based on new federal tax withholding tables published
by the Internal Revenue Service. The Plan is required to update its
pension payment system to reflect these new tax tables.
If you already have federal tax withheld from your Pension benefit, you may experience a change in the amount being withheld.
If you’d like to change your federal withholding tax election, you
Investing primer:
What are ETFs, and how do they work?
F
Jones Industrials, and the QQQ covered the Nasdaq. Ten years
ago, Vanguard created Vipers, a set of ETFs that
tracked Vanguard’s own index funds. Eventually,
ETFs were created that tracked less mainstream
benchmarks such as emerging market sovereign
debt and ultrashort currency funds.
Generally, ETFs fees are lower than mutual
funds and their holdings are more transparent.
The average expense ratio for index ETFs is 0.56
percent versus a 0.98 percent expense ratio for
index mutual funds. Mutual funds are required
only to report their holdings monthly or quarterly
while ETFs must report what they own daily. •
or the last several years, exchange-traded funds have
gained in popularity with investors looking
for greater flexibility. These funds, which were
novelties 10 years ago, have moved into the mainstream. In addition to being flexible investments,
ETFs offer low costs, liquidity, and access to markets and strategies that were once available only to
institutional investors.
ETFs are essentially index-tracking mutual funds
that trade like stocks. But whereas a mutual fund
transaction can be processed only once a day, ETFs
can be bought and sold throughout the trading day.
In the 1990s, exchanged-traded funds called SPDRS tracked
the Standard & Poor 500 index, Diamonds followed the Dow
The Pension Planner
•
Winter 2012 • Page 2
U
Four supplements every
senior should take
niversity of California,
Los Angeles nutritionists
and government guidelines agree: There are four supplements essential to healthy
living for older Americans.
Multivitamins:
Everyone over
age 60 should
take a multiple
vitamin/mineral supplement
because their
diets may not be
as balanced as
they should be,
in part because
older adults have slower
metabolic rates, which lead to
dieting in an effort to avoid
weight gain. Seniors also lose
their capacity for absorbing
nutrients.
Vitamin D: Ninety percent
of adults aged 51 to 70 are vitamin D deficient; in particular, post-menopausal women.
As we age, our bodies lack the
ability to make enough vita-
Ask
the
Pension
Plan
min D to protect us from broken bones. Adults in that age
range should take 400 IUs of
vitamin D a day. Those 71 and
older need 600 IUs a day.
Calcium: Not only does
calcium make
bones stronger,
it also helps
muscles properly function
and normalizes
blood pressure.
Twelve hundred milligrams
of calcium is
recommended,
split into two 600 mg doses
for best absorption.
Fish oil: If you don’t eat fish
twice a week, a fish oil concentrate with 300 milligrams
of omega-3, three times a day
will help keep triglyceride
levels where they should be.
And more and more research
shows that fish oil is good for
the brain. •
W
P
hat’s the Preretirement Survivor Benefit, and how do I
qualify for it?
reretirement survivor benefits are available to vested
participants who die before they begin receiving their pension benefit payments.
To qualify, you must be vested and:
•Die while in active employment, or
•Die while receiving a pension disability benefit, or
•Die after you terminate employment and before your
pension benefit payments begin while you’re entitled to a deferred pension benefit.
If you’re an unmarried, vested participant who began covered employment on or after Jan. 1, 2002, you can designate
one beneficiary. It’s vital to note that if you do not designate a beneficiary, no benefit will be paid!
If you’re married, your spouse automatically will be designated as your sole beneficiary. Married participants may, with
their spouse’s consent, name a different beneficiary by completing a Beneficiary Designation Form that is available from
the Plan office and on its Web site. If your spouse predeceases
you and you don’t name a new beneficiary, no benefit is paid.
Much more detailed information about the Preretirement
Survivor Benefit is available on pages 12 to 14 of your Pension
Summary Plan Description. •
Do you really need it?
Tips for saving $20,000 a year
C
onsummate frugalmeister and “The Today
Show” guest correspondent Jeff Yeager thinks our
current economy is a good
time for people to stop asking, “Can I afford it?” and
ask instead, “Do I need it?”
He offers five lifestyle
changes for your consideration. And he expects you
to laugh out loud at some
of them, but firmly believes
that by adopting one or two,
you’ll be better off financially.
Save $1,000 per phone annually by cancelling your
cell phone. Stop and think for
a minute, he asks. Twenty
years ago, cell phones were
practically nonexistent, and
we all got along just fine
without them. Now most
people consider them a necessity, even though they
consistently rank as the most
annoying electronic gadget
around. The average cell
phone plan costs about $80 a
month, yet a study released
by the Utility Consumers’
Action Network found the
real average cost exceeds $3
a minute if you don’t use all
your minutes. Your cost if
1
you use all your minutes? One
dollar a minute.
A prepaid phone generally costs 25 cents to 50 cents
a minute. And you have no
contract.
Save $9,000 a year by selling
your second or third car. That
figure includes depreciation,
insurance, gas, repairs, taxes,
and fees.
Save more than $2,500 annually by preparing more meals
at home. The Bureau of Labor
Statistics reports that the average American family spends
$2,668 dining out every year.
In addition to saving money,
you’ll be helping your family
bond and your children get
better grades, according to an
article in the Archives of Pediatrics & Adolescent Medicine.
Keep $1,800 more in your
pocket each year by wearing your clothes longer. Only
a small amount of clothing
that’s thrown out or donated
is actually worn out.
Save $9,000 per child per
year by having your college
student live at home instead of
on campus. That’s $36,000 less
in student loans over four
years. •
P
ersonal finance columnist
Liz Pullman Weston was
never really satisfied with
her answer to people’s questions about how to budget:
“There’s no one-size fits all
solution.”
Then she came across a
book written by bankruptcy
expert Elizabeth Warren and
her daughter, Amelia Warren
Tyagi, called “All Your Worth:
The Ultimate Lifetime Money
Plan.” (If her name sounds familiar, Ms. Warren was tapped
by President Obama to oversee the Troubled Assets Relief
Program.) Ms. Weston realized
she now had an answer for her
clients that was satisfying and
workable.
It’s the 50/30/20 budget,
and it works like this:
Start with your after-tax
income. That’s your gross pay
minus federal and state income
taxes, Social Security and Medicare taxes. If your employer
takes any other non-tax payroll
deductions such as a 401(k) or
403(b) deduction, add them
back in.
Keep your necessary expens-
2
3
4
5
The Pension Planner
A simple way to budget
•
Winter 2012 • Page 3
es to no more than 50 percent
of the after-tax amount. These
expenses include housing,
food, utilities, transportation,
insurance, child care, loan payment, and tuition. Any expense
that can delayed a few months
doesn’t qualify.
Things you desire can take
the next 30 percent of your
after-tax income. Such perks as
vacations, dining out, gifts, and
clothes fit this category. Some
items in this category may
overlap with the first category;
a cell phone may be necessary,
but unlimited texting isn’t.
Internet service and expanded
cable also fit into the “want”
category unless you require the
Internet for school or work or
you have a cable contract that
doesn’t expire for a while.
The remaining 20 percent is
devoted to savings and paying
off debt. Heed Warren’s expertise in bankruptcy: Too much
debt and too little savings can
devastate a family. Loan payments above your monthly
minimum can go into this category, as well as IRA contributions and an emergency fund. •
The
New York State Nurses Association
N Y S N A
Pension Plan
PO Box 12430
Albany, NY 12212-2430
PRSRT STD
US Postage
PAID
Permit No. 79
Albany, NY
coordinated the efforts
of many to once again
make children feel loved
and happy on Christmas
morning.
We have fun doing it,
as illustrated in the
photos of our
wrapping party
held in the
conference room,
better known
as Santa’s
Workshop for
a day.
Two new faces graced the Plan last year
D
And to all, a good night.
PensionPlanner
CHANGE SERVICE REQUESTED
F
or the 13th year,
Plan and Fund
employees joined
together to buy gifts,
donate food, and wrap
it all up for a family in
need.
Pension analyst
Wanda Krisanda
took over the
reins from
Mickey Jubb,
who moved
to Florida
recently,
and
The Pension Planner is published
four times a year as a service to
participants of the New York
State Nurses Association Pension Plan. The information in
this newsletter is not intended
to be complete Plan information, and is not a substitute for
the Summary Plan Description.
Please address questions about
this newsletter to the Communications Department.
Chief Executive Officer
Michael E. Behan, CEBS
Chief Operating Officer
Ronald F. Lamy, CPA
Pension Department Manager
Timothy M. Antoniak
Senior
Communications Specialist/
The Pension Planner Editor
Mary S. Greene
Communications Specialist
Tricia E. Cupp
Communications Representative
Judy E. Whitley
NYSNA Pension Plan
PO BOX 12430
Albany, NY 12212-2430
(518) 869-9501
(877) RN BENEFITS
(800) 342-4324
www.rnbenefits.org
If you’ll be changing your
address, please notify us so you
won’t miss the next issue of
The Pension Planner.
Many hands make little work
ue to the retirement of pension analyst Donna
Billadeau and the relocation to Florida of analyst
Mickey Jubb,
the Pension Plan
has had the opportunity to add new
people to its staff.
Kalyn Bechle
of Greenville, NY,
joined the Pension Department
last summer, first
as pension clerk
to replace Wanda
Krisanda, who
was promoted to
analyst. Then, with
the departure of
Mickey, Kalyn was
promoted to analyst in October. She
spent the previous
two years workLeft to right: Kalyn Bechle,
ing as a surgeon’s
Alexandra McClure
assistant for Adirondack Oral and
Maxillofacial Surgeons and will start earning her finance
degree this summer.
And to replace Tammy Salorio, who moved from the Accounting Department to the Pension Department last winter, Alexandra McClure was hired as accounting associate.
Alex lives in Delanson, NY, with her husband and three
boys. She holds an associate’s degree in accounting from
Maria College in Albany. •