65 has always been the age to qualify for full Social Security retirement income. Beginning in 2019, the age became 66. You can still take reduced income at 62, but the longtime 25-percent benefit reduction has risen to 27.5 percent.

Q.: I am a 65-year-old retiree. I receive about $80,000 annually (Social Security and NYCERS pension). I have roughly $900,000 in Deferred Comp. I am thinking of annuitizing half of it. What is your opinion? P.A.

The Metropolitan Life Insurance Company, as a proxy, will gladly take your $450,000 and in return guarantee you $28,000 annually for life with no provision for a beneficiary. The $28,000 payment stops when you die.

This is a single life annuity income rate of 0.0624. This rate is substantially lower than the 0.1065 rate used by the NYCERS. If the law allowed you to annuitize your $450,000 with the NYCERS, your $450,000 would generate $47,900 annually for life.

Why the massive difference? The Met is in business to generate profits while the NYCERS, as a governmental agency, is not.

I would advise you not to annuitize until such time as the NYCERS is allowed to annuitize your Deferred Comp balance.

Of Note: Participants in the 403(b) Plan of the Teachers’ Retirement System have always had the opportunity to annuitize their TRS 403(b) balances with the TRS.

Q.: I’m in my third year as a teacher. I’m 28. Except for belonging to the TRS, I have no other retirement accounts. What are your thoughts?

A.: The Roth IRA is the foundation upon which to build a sound retirement. Make 2019 the year you open up your NYCE Roth IRA. Those younger than age 50 may contribute up to $6,000 per year. Those older than age 50 may contribute up to $7,000 per year.

Additionally, I implore you to contribute all you can to the Roth feature of the Deferred Compensation 457(b) Plan of the City of New York. The maximum contribution is $19,000 for those younger than age 50 and $25,000 for those older than age 50.

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

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