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Tenured Faculty Early Retirement Benefit

Early Retirement

Article XVIII, section 1, Retirement Age   of the current CBA reads “The current rules of eligibility shall be extended by three (3) years to age sixty eight (68).  In addition, a faculty member must have ten (10) years of active service for all early retirement options. ” .  This is a change from previous contracts, which stated “The normal retirement age shall be in accordance with applicable law.  However, normal retirement age for calculating fringe benefits shall be sixty-five (65) (sixty-eight (68) for faculty members enjoying tenure prior to September 1 1973)”.  There has been some degree of confusion regarding this change.
This is NOT a diminution of benefits.

The new language means that all faculty, regardless of date of hire, may receive early retirement benefits up to the age of 68.  There are two options for early retirement:

Option 1:  3 years at half pay or up until the age of 65, plus 1 full years pay contributed to your TIAA-CREF account

Option 2: Maximum of 5 years at half pay, up to age 68.

In both options, the member continues to participate in all fringe benefits programs, including health care insurance and TIAA-CREF, until the final payment of early retirement benefits.

There are several important issues to consider when contemplating early retirement:

    • Early retirement payments are considered deferred compensation under Federal Law.  You are liable for the full tax burden (including FICA) of the entire package (3 or 5 year) during the initial tax year in which you receive the benefit.  After that year, no taxes are due on the early retirement money.  This is especially important when considering when to retire.  If you begin participating in early retirement effective September 1st, you are liable for the taxes for your first nine months salary PLUS the entire tax on the early retirement package.
    • Consult with Social Security at least 3 months before Early Reitrement. You may opt to begin colecting your Social Security Benefits at at 62, or defer collection until a future date.  Defering collection of your Social Security benefits will lead to a higher monthly payement.   65th birthday, you should make an appointment to visit your local Social Security Office.
    • Health Insurance.  Your recieve full benefits, including medical benefits, while on early retirement.  Upon the expiration of your early retirement benefits, you will no longer be covered by Long Island University’s medical insurance,  you will then be eligible for retiree medical benfits, as defined in Article XVII, Section 5 (c) of the Collective Bargaining Agreement.
    • Mecicare.  Provided that you are at least 65 upon the exhaustion of your early retirment benefits, Medicare will become your primary medical insurer.  Notify the Social Security Office at least three months prior to the end of your early retirment benefit. Once Social Security has been notified and you reach 65 years old, you automatically receive Medicare Part A (hospitalization) for free and Medicare PArt B ( Medical Insurance) for a premium which is deducted from your Social Security payment.  If you have further question you can visit the Medicare website.

Consult with TIAA-CREF at least 3 months before Early Retirement. Advisors are periodically on campus, or you may call TIAA-CREF and make an appointment for planning on collecting your TIAA-CREF benefits.

Early retirement is a major decision.  Early retirement payments may have drastic tax implications if not planned for properly.  Also, one must always consider ones position with regards to Medicare, Social Security, TIAA-CREF disbursements, and any other personal holdings such as IRAs.  Anyone considering early retirement is most strongly encouraged to discuss these issues with their own personal financial advisors.

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