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LIUNA Retiree Financial Issues

When can you afford retirement?

When planning for retirement first figure out whether you can afford to retire when you want to. Research how much money you think you will have access to during retirement and compare that to your estimated spending needs.  (Download a Budget Planning Worksheet Here)

Expenses are usually less for retirees than for active workers; however the difference is not as great as it used to be. Because medical costs have become such a big part of retirees’ budgets, some financial advisors suggest that retirees aim to replace 100% of pre-retirement income to be on the safe side.

Start estimating your retirement income by tallying your income sources. While not entirely comprehensive, the listing below represents the primary sources of retirement income for union members.


As a member of LiUNA you probably are one of the few remaining workers covered by a traditional pension plan. Traditional pensions pay out a fixed dollar amount to the retiree every month. Some (but not all) traditional pensions are periodically adjusted for inflation. In construction, multi-employer plans typically pay retirees an amount that is based on a combination of the following:

  • the number of pension credits earned based on hours worked
  • the contribution or benefit rate in effect contributed at the time the credits are earned
  • age at retirement

Public employees and others who work for single employers usually have benefits that are based on retirement age; the number of years worked and average annual earnings. Almost all plans also have a stated normal retirement age with benefits reduced if the worker retires earlier than that age. You also need to be participating in the plan for a specified number of years to be assured access to the benefits (vesting requirements).

Estimate your benefits at your target retirement date. Many pension plans provide this information on an annual basis. If yours does not do so automatically, you can request this in writing. Note, however, that the further away from retirement you are, the less accurate this estimate will be as circumstances are likely to change over the years.

Your benefits will also be affected if you have Joint and Survivor benefits for your spouse. This benefit option provides income security for spouses when the member dies, before or after the member retires. The trade off, however, is that the member’s benefit is reduced. This is why it is important for you to know these options and how they may impact your benefits well in advance of your planned retirement.

Social Security

Social Security benefits are funded by a payroll tax paid by you and your employers over the years. While many people substantially rely on these benefits in retirement, keep in mind that Social Security only replaces about 40% of workers’ earnings, depending on income levels. Knowing this limitation, prospective retirees need to get a good estimate of their Social Security benefits – and their means for supplementing them with pension and savings income -- well ahead of time.

The Social Security Administration sends annual statements to active workers. The notices include the worker’s earnings history and estimated future benefits. Early (reduced) benefits begin at age 62 with full benefits starting between age 65 and 67, depending on the year you were born. Like a traditional pension plan, the amount you will get is fixed over your life. Survivor benefits may also be available under certain circumstances when a worker dies. Fortunately, Social Security benefits are also adjusted for inflation.

In order to get Social Security benefits you must apply for them. Contact the local Social Security office when you are planning to retire and are age 62 or older.

Retirement Savings Plans

Some LiUNA members may have access to special retirement funds that they have established either by themselves or through their employers. These funds are like savings plans in that they are an accumulation of money that can be used in retirement, usually with some tax advantages. However, unlike a pension or Social Security, they do not provide for an income stream over the life of the retiree. Once the funds are used up, they are gone. Therefore, while these funds are good supplementary savings vehicles, people who may be relying heavily on them in retirement should be aware of their limitations.

Two of the more common of these plans are Individual Retirement Accounts (IRAs) and 401k plans.  IRAs are investments set up by individual workers. Traditional IRAs are tax deductible for some people. 401k plans are individual accounts set up by employers for their workers. There are limits to how much can be contributed to an IRA and 401K in a year. There are also restrictions on when the funds can be withdrawn with penalties imposed if they are taken out early.

Investments and Savings

You should also look at your overall system for saving. This includes a review of any investments (e.g. stocks, bonds mutual funds) and cash savings accounts (including certificates of deposit (CDs) and money market funds). Many financial advisors suggest that the closer you come to retirement or need to access your money, the more you should pursue less risky and more stable investments, even if it means a lower return. You will also need to consider whether, in retirement, you intend to use this money to live off of or keep investing and spend only the interest or investment income.

Other Sources of Income

You may also have other ways of supplementing your income in retirement. These include part-time work, spousal income and insurance settlements. If you plan on work part time, find out whether your work will affect your pension or Social Security benefits.