Gnu has some good suggestions. Consider what your income and living expenses will be. IF you can afford it, take the money and run. If you have time, find a labor lawyer and have him/her go over any retirement agreements with you thoroughly. Maybe your union can provide the name of someone who specializes in that area of the law. I look at it this way, the City is already screwing you, you don't need to screw yourself. You have little control over this situation, but take what little you have and use it to your advantage.

I know this will be hard, making up a budget of expenses and income, but it will be worth it knowing you have a plan.

Also, have you thought about moving to a less expensive area?