You Asked...

12/15/2008
	Bob Hastedt, Director of Education at the YMCA Retirement Fund, answers your questions.

How secure is my annuity?

Looking back over the events of 2008, it is only natural that you might feel concerned for the security of your savings or for your annuity. Be assured, however, that the YMCA Retirement Fund is different than those financial institutions making headlines throughout the year.

How Your Annuity Works
When you retire with a YMCA Retirement Fund annuity, you are guaranteed a steady stream of income for life.

You have the option of annuitizing your accounts in the Retirement Plan, the Tax-Deferred Savings Plan, or both Plans together. Once your annuity payments with the Fund start, they are paid to you based on the original calculation. So any drama you see on Wall Street will have no impact on the amount shown on your annuity checks.

The Fund calculates your annuity based on:

Your age at the time you retire
The account balance(s) you choose to annuitize
The annuity option you select

Since it is a church plan, the Fund is allowed to provide annuities directly to our retirees. The Fund also converts account balances into annuities at a better rate and a lower cost than the commercial annuities that you would find at an insurance company or bank.

Let’s look at an example that shows what security means for our annuities versus an annuity for someone outside the YMCA.

A Tale of Two Annuities...
Imagine that a YMCA staff person and his non-YMCA neighbor happen to both be planning for retirement at the same time (July 2009), after dedicating a long working career. By the middle of 2008, each one had the same amount saved—our YMCA staff person had a total of $750,000 in all of his Fund accounts, while his neighbor had $750,000 in his company’s 401(k) plan.

The Fund credited 3% interest to all of his account balances from July 2008 through the end of June 2009. This steady growth brought our YMCA staff person’s account balance up to $772,000. (Whatever contributions he and his YMCA made to his accounts during this time would have made that number even higher.)

Meanwhile, the neighbor’s portfolio in his 401(k) took a huge hit. Markets were ugly and the value of his savings plummeted by 40%. Now he’s left with $450,000. If he does retire when he planned, his benefit will be thousands less than what our YMCA staff person will receive.

Remember that, earlier in the year, these two had identical retirement savings of $750,000. The YMCA staff person chooses an annuity that brings him $5,963 a month, or $71,554 annually. His neighbor finds that the best annuity he can secure with his now shrunken retirement account is $3,062 per month, or $36,744 annually. In this example, the Fund advantage is $2,901 per month.

Security, Integrity and Enduring Value
As long-term players, the Fund is confident in its ability to carry on through this recession, as we have done in the past. Now and always, we are driven by our guiding principles of Security, Integrity and Enduring Value.

Need more information? Go to FAQs, where you'll find an up-to-date list of answers to more than 150 frequently asked questions about the Fund.

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