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TUKWILA, Wash. – For a credit union like BECU, which serves a large majority of employees who work for Boeing Co., a strike every three years or so is typically expected with both sides eventually agreeing to a favorable contract. But being on a strike, which can run anywhere from 30 days to three months, means facing not only the lack of a steady paycheck but the temptation of tapping investments such as certificates of deposits and 401(k) plans. At $5.5 billion BECU, more than 16,000 of its members, who belong to the International Association of Machinists and Aerospace Workers union, were on the picket lines for most of the month of September. During that time, BECU activated its Income Interruption Program, which assisted members with more than 4,200 loan deferrals and more than 250 emergency loans for basic need expenses for food, housing and medical care. Members of BECU, many of them long-time Boeing employees, are encouraged to consider other sources before tapping any saved retirement funds should a strike against the company occur, said Carolyn Cereghino, BECU director of investment services. “It means looking at the overall picture when it comes to retirement,” Cereghino said. “What are people doing with their dollars and how diversified are they. We encourage having other options available such as savings, money market accounts and CDs in addition to your long-term savings.” While some members may consider tapping their 401(k)s to get by, it’s usually the last resort, said Steve Vertrees, a financial advisor with Linsco/Private Ledger who meets with BECU members. The first step for many is accessing a “strike fund,” an emergency stash of cash reserves earmarked specifically for when a strike occurs. The union may provide $150 weekly during the strike, “which may not go very far.” “From there, then it may mean tapping a home equity line of credit and then borrowing against a 401(k). That’s the typical order I’ve seen,” Vertrees said. “In the case of the striking machinists, they know it’s coming every four years so most of them prepare ahead of time.” What to tap first may also vary depending on the age of the member. The average age of a BECU member is 50, and half of all Boeing’s employees will retire within the next 10 years, said Todd Pietzsch, BECU public relations director. “These people have been here 20 to 30 years and they’re probably in a better position to absorb a strike,” Pietzsch said. “It’s probably the younger, newer employees that haven’t had enough time to prepare.” Indeed, with between 50 to 75% of new Boeing hires age 26 and under, “there is a changing of the guard,” Pietzsch said, adding “some of them borrowed from their 401(k)” during the recent Boeing strike. Preparation, even for younger members, goes back to diversification, Cereghino reiterated. “There should be diversification in your overall financial picture, which should include an emergency fund along with your longer-term investment planning such as retirement,” she said. Long-time employees used to be able to rely on well-stocked pensions to carry them through retirement but even some of those are on shaky ground, Cereghino said. “Some pensions – those who are fortunate enough to have them – some of them are being questioned,” she said. That’s certainly the case for 5,800 retired Delta Air Lines pilots. On Oct. 17, a bankruptcy judge denied a request from the pilots seeking restoration of pension benefits which the airline ended when it filed for Chapter 11 bankruptcy protection last month. Delta has said retirees’ supplemental benefits cost them about $6.9 million per month and the airline will save about $160 million that would have been paid to the pilots’ pension plan in October. Just weeks after Delta filed for bankruptcy protection, the $2.6 billion Delta Employees Credit Union changed its name to Delta Community Credit Union. A call for comment on the pension benefit denial and its impact on those members’ investments was not immediately available at press time. Meanwhile, it’s unexpected incidents like what happened with Delta that is totally out of the member’s control, Cereghino said. “From 9/11 to Enron and most recently Katrina, many people have been affected not only emotionally but financially. It’s good to not have all your eggs in one basket,” Cereghino said. Credit unions have been doing a better job of providing budgeting and financial planning services to members to brace for emergencies, Cereghino said. “We’re living longer so we need to constantly ask how are we preparing for the long run,” she said. -

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