Jump-start your retirement NOW!

November 22, 2004

With a little luck, and after a lifetime of hard work, most UTU members, whether employed by the rail, bus or airline industry, should be able to look forward with optimism to their retirement.

Healthy and secure in the knowledge that their savings, benefits and investments will allow for a comfortable lifestyle, they should be able to stop setting an alarm clock, kick back, and enjoy their golden years without a care.

In an ideal world, it would be that simple. In the real world, this won’t happen without some careful planning and attention to details, preferably well before retirement.

The information that follows can’t anticipate every individual’s specific circumstances, but it can serve as a guide to pave the way for members and help them avoid some nasty surprises.

Money and health

In some ways, retirement represents a new way of life. But at its core, that new life is remarkably similar to the one preceding it. Topping the list of retirement concerns are money and health.

As a rule of thumb, between 70 and 80 percent of pre-retirement income is needed to enjoy a comfortable retirement, according to Public Affairs Specialist William Jarrett of the Social Security Administration (SSA). At the same time, in the opinion of Don Heffernan, a retired member of Local 1252 in Fresno, Calif., “the biggest pitfall to retirement is medical care.”

Medicare and more

For most UTU members, health care in retirement is addressed by their contracts, or options have been negotiated by the UTU International that can carry them over until they are eligible for Medicare.

While a lot of what you read and hear about health care may seem confusing, three underlying points should be noted. First, most such contractual benefits are only available until age 65 when the employee must enroll for Medicare Parts A, B and D. Second, there are limits to what Medicare covers, and many retirees opt to purchase so-called “medigap” policies to cover most of what Medicare doesn’t. And third, help in understanding this information is only a phone call away.

Whether employed in the rail, bus or airline industry, the first stop for explanations and to learn about available health care options is your general chairperson.

Rail employees still baffled can call the UTU Membership Services Department; yardmasters can call the UTU Yardmaster Department, and those in the bus or airline industry can call the UTU Bus Department. These departments can be reached at (216) 228-9400. In addition, information is available on the UTU website at www.utu.org by clicking on “Health care” in the blue area on the left on the home page.

Information about Medicare and medigap policies for bus and airline industry members is available directly from Medicare itself at (800) 633-4227 or from the Social Security Administration at (800) 772-1213; or from the U.S. Railroad Retirement Board (RRB) for rail members. To find the RRB office nearest you, call the RRB Help Line at (800) 808-0772. Rail employees should contact Palmetto GBA at (800) 833-4455 with questions about this Medicare coverage.

Additionally, information about Medicare’s scope and limits can be obtained from the Medicare website (www.medicare.gov), the RRB website (www.rrb.gov) and the Social Security website (www.socialsecurity.gov) and the Palmetto GBA website (www.palmettogba.com).

Don’t leave health care to chance! Learn about coverage options well before retirement! Sources of income

“Social Security benefits, on average, only replace about 40 percent of pre-retirement income,” said SSA’s William Jarrett. “The system was never intended to be your sole source of retirement income. Social Security should be part of a three-legged stool of retirement security. The other two legs should include pension benefits, such as those from a 401(k) plan or company-sponsored pension, and investments.”

Jarrett’s statements about Social Security also apply to benefits received from other agencies, such as the RRB. Simply stated, responsible planning for retirement calls on you to be informed about the pension plan, or plans, available to you. To live a secure lifestyle, you’ll also need to learn something about making investments.

Pension plans

Most UTU members participate in a pension plan, whether it’s a defined benefit plan or a defined contribution plan.

A defined benefit plan usually promises the participant a specific monthly benefit at retirement and may even state this as an exact dollar amount. Monthly benefits could also be calculated through a formula that considers a participant’s salary and service. A participant is generally not required to make contributions in a private-sector fund, but most public-sector funds require employee contributions. Unlike most defined contribution plans, the participant is not required to make investment decisions.

A defined contribution plan provides an individual account for each participant, and benefits are based on the amount contributed. A defined contribution plan, such as an employee stock ownership plan, a profit sharing plan or a 401(k), can be affected by income, expenses, gains and losses.

On some properties, such as the Los Angeles County Metropolitan Transportation Authority (MTA), UTU-represented members can participate in a 457, a 401(k) and a defined benefit plan. In addition, there are a variety of options that come into play.

Again, the general rule of thumb is that you can always call your general chairperson for information about pension options. UTU-represented MTA employees can contact their local chairpersons or members of the general committee sitting on the pension board, such as General Chairperson James A. Williams at (626) 962-9980, or they can call the MTA’s Pensions and Benefits Department at (213) 922-7184.

Investment income

While there are many places to make investments, the United Transportation Union Insurance Association offers some of the best options. Three products in particular are specifically designed with retirement in mind, said Director of Insurance Administration and Marketing Tony Martella.

“The Roth IRA (individual retirement account), the Traditional IRA and the Flexible Premium Annuity are all products our members should consider putting to work for themselves and their families,” Martella said. “All three products have a guaranteed interest rate, and unlike the risk you take gambling on the stock market, you’ll never lose your principal.” Martella cites one of the basics of building wealth and security: “Pay yourself first!”

To learn how the UTUIA can help ensure a smooth retirement, click here, or call toll-free (800) 558-8842.

Monthly benefits

Most UTU members will receive monthly benefit checks from the RRB or from Social Security. But some, such as those in transit operations in Santa Cruz and Santa Monica, Calif., participate in neither program. Instead, they participate in the California Public Employees Retirement System (CalPERS).

For information about CalPERS and the benefits it administers, call the agency at (888) 225-7377, Monday through Friday, from 8 a.m. to 5 p.m., or visit its website at www.calpers.ca.gov.

But whether its the RRB, CalPERS, SSA, or some other entity, the important element is to be aware of which system will be sending you a monthly check so estimates of monthly benefits can be obtained, eligibility requirements can be determined, and an accurate accounting of your earnings can be verified.

In all cases, the accuracy of the earnings record is especial
ly important, as benefit amounts will be based on this record.

Those covered by the RRB should receive a statement of earnings each year called a BA-6. If the earnings information on the BA-6 is incorrect, your monthly benefit payment will not be correct. Geraldine Clark, assistant to the RRB labor member, said UTU members should check their BA-6 closely each year to ensure there are no discrepancies. This is especially important because, as a general rule, those covered by Railroad Retirement can only protest a discrepancy going back four years, she said.

Likewise, the SSA is now sending out an annual statement about three months before an individual’s birthday that includes a record of earnings throughout an individual’s career. “You want to check those figures for accuracy,” said SSA’s Jarrett. “If the record is inaccurate, call us and be ready to supply W-2s or self-employment papers that show the correct figures. No matter how far back the discrepancy appears, if you have proof of the earnings, the record can be fixed.”

The annual mailing from SSA also includes an estimate of reduced benefits that will be payable if early retirement is taken, an estimate of unreduced benefits, an estimate of survivors’ benefits and an estimate of disability benefits, making it easier than ever to be aware of the monthly payment likely to come your way.

For those looking to receive an estimate of their monthly retirement benefits from the RRB, visit or phone your nearest RRB field office, or check out the agency’s Mainline Services page on its website. Once you establish a password, you can check your service and compensation history (earnings record) and get an annuity (benefit) estimate via the Internet.

Time to retire

The RRB and SSA both indicated UTU members should file for benefits with the applicable agency at least three months before they plan to actually stop working.

Both agencies are beginning to change their operations in response to changing lifestyles and technology. SSA will now take retirement applications over the phone or via the Internet. And the RRB can keep the various proofs you’ll need on file well in advance of your retirement.


Regardless of the agency involved, you’ll need to produce various proofs before the correct benefits can begin. These include:

  • Proof of age. Generally, this is an original birth certificate or a certified copy — not simply a photocopy. In cases where a birth certificate is not available, contact the applicable agency well in advance to find out what you’ll need to prove your age.
  • Proof of marriage. If you have a spouse, you’ll need to produce an original or a certified copy of the marriage certificate. Again, a simple photocopy won’t do.
  • Proof of military service. Depending on the situation, you may be eligible for military credits that can add to your compensation history. You’ll need your discharge papers (Form DD-214).

In addition, other proofs may be needed to expedite your retirement. The SSA asks that you bring your most recent W-2 or self-employment tax papers so that your benefit amount can be calculated most accurately. Depending on your situation, the RRB or other such agency may also need to see these documents. Also, if there are children who are potentially eligible for benefits, there are proofs that will be needed, such as original or certified copies of birth certificates.

For these and other reasons, the wise individual will contact the applicable retirement agency well in advance of the date he or she intends to retire. A claims representative will conduct a thorough interview and review of your work history to help determine which benefits you and your family may be entitled to, and will explain the eligibility requirements.

During the give-and-take of this interview, you may discover there’s an advantage to waiting a little longer to retire, or you may find that you and your spouse should both file for benefits immediately — or maybe several years apart. You may also find out more about Medicare, the RRB’s “current connection” concept, or something else you may have failed to adequately explore.

With some advance planning and attention to detail, the transition from employment to retirement should be smooth sailing. And the best time to begin the process is now!