Younger people may not think much about retirement benefits they are accruing when they are working hard and looking forward to their next paycheck.
However, once a career winds down and retirement age comes around, it is much easier to appreciate what you have built up over the years, especially if you need access to health care or have family members you need to take care of.
“It’s always in the back of your mind but it’s not something you’re focused on daily,” said Jerry Lozupone, a retired former treasurer and member of IBEW Local 26 for 51 years. “When the time comes to retire, you’ll find you have a pretty good set of benefits that you didn’t realize you had.”
IBEW Local 26 represents electrical workers in D.C., Maryland and Virginia.
“The union is going to take of you,” said Lozupone. “They’re always looking toward your future.”
Employees build up their benefits through contributions made to the union.
Those contributions – an amount for each hour worked – do not come straight out of paychecks. They are made by contractors on behalf of the employees.
Health benefits after retirement
According to Lozupone, health benefits have been a major source of help and security for him and his family in recent years.
Getting access to those benefits has been a simple process.
Lozupone said after he turned 65-years-old and social security became his primary health benefit, the union simply took $70 out of his pension plan each month to help with costs such as out-of-pocket copayments or deductible expenses.
“I essentially have had no doctor bills in the past seven years since I’ve been retired,” Lozupone said. “I don’t know any place where you can buy that type of insurance for 70 dollars a month.”
Workers with IBEW Local 26 who are not retired are covered under the union’s health plan, which pays for 80% of the plan allowance for doctor visits, preventive services and wellness benefits for children and emergency medical care expenses among other things.
Not just one pension
When someone says they have a “pension plan,” they are not necessarily talking about one single check they get every month.
For example, workers who retire from IBEW Local 26 actually receive three pensions and an annuity plan, which are all negotiated by union officers and are paid over and above hourly wages.
Three checks arrive monthly from the local union’s pension fund, the International Brotherhood of Electrical Workers and the National Electrical Benefit Fund, which provides benefits to employees in the electrical industry around the country.
To retire with full benefits from the local union, you must meet the “85 rule.” That means your age plus the number of years you have been a member of the union must add up to the number 85.
The international union is slightly different as you just need to be 65-years-old to retire with full benefits.
The money simply comes in each month and you can get it through direct deposit, meaning you don’t even have to deal with paper checks.
There is also a survivor benefit option, which allows a benefit to be paid to your surviving spouse or other designated beneficiary if you pass away.
“You don’t realize until you get older how you are able to take care of your spouse,” said Lozupone. “That’s a nice bit of security that not many people think about.”
As for the annuity plan given to retirees, it is a retirement plan, not a savings plan or an account that can be used to supplement current income or meet financial needs during your working lifetime.
Consequently, there are several conditions that must be met in order for you to qualify for withdrawal of the funds in that account.
You choose how your money is invested by electing from the plan’s investment options and your account is valued daily, allowing you to change your investment options at any time.
While Lozupone acknowledged that the annuity plan helped him broaden his retirement portfolio, he said the three checks that arrive in his bank account every month have truly helped him feel secure and relaxed now that his career has ended.
“You can live very comfortably under that budget,” Lozupone said. “You can have dignity for the rest of your life.”