In many states public school teachers do NOT pay into the SS system. Only those who have paid into the system as a result of other employment can collect SS, albeit it much reduced due to WEP/GPO. I believe WEP/GPS affects teachers in 17 states.
Only if your school pension system includes paying into SS can you collect a full SS benefit. Prior to public school employment, I worked several years in a private (Catholic school) system, and that’s how their pension plan was constructed—part SS, and part pension benefit.
And it does affect your spouse, even if he/she never worked under a school pension system.
You are right, MADad, but youdon’tsay said her H’s school district DOES contribute to Social Security and he has paid in throughout his career.
I’m familiar with the issues, as my sister and niece-in-law are both educators in the same school system in KY. Niece teaches HS and doesn’t pay into Social Security. Sister is a kindergarten instructional assistant and does pay in. They’re under different contracts and pension plans.
My background is in pension and employee benefits, so I encouraged my sister to chase down whether she’d be covered because that’s an unusual arrangement. She is indeed covered under Social Security. No offset.
My niece who teaches in the Atlanta area is not covered by Social Security. Pays 6.9% of her earnings into her retirement plan.
That is a bummer. It sounds like there are some unfair things that happen to teacher retirements due to the varying methods used. Glad to hear you have a decent pension.
We have an unfortunate pension situation due to husband’s corporate selloff/layoff and my required switchover to a new “pension” (cash accumulation) plan. We too will do OK and just try to just plan around the current situation without dwelling too much on how things could have been.
@Colorado_mom when DH’s company was sold, they ‘lost’ their pension (had payout of what was the value then - in a annuity, some cash, some stock). Unfortunately we ‘lost’ his highest earning years going into a pension at the end of his career – and as a 50 something hard to change jobs at his level.
That is why our other savings became so critical. We built up in 401k and other retirement over the years with both of us; 2019 and 2020 were gangbuster stock portfolio earning years for us with our 401k.
No use crying over spilled milk. But things coming to full fruition would have been nice.
With the way housing prices have gone gangbuster nuts this year and a lot of demand is making it a challenge for young people getting into their first home. Not in a rush, and thankfully DDs are in good rental situations and saving money. Will focus on one DD’s location as her career looks to be staying in that area when the time is right for us to get the ball rolling.
I did some digging…my niece’s seems fairly complex. The state system’s pension is 6% employee, 19.81% employer. There’s a district-level pension as well that’s a supplement. Ten year vesting!!! That hasn’t been allowed in ERISA plans for a couple of decades. There’s also a 403b plan.
Haven’t found benefit formulas yet – they are behind password-protected walls – but having lived in GA and knowing the payscales, I’d bet you come out ahead in MA.
We put in 11%, town doesn’t put anything in. Teachers fund 90% of the fund, state’s supposed to kick in the final 10% but never does, but it earns enough to make up the shortfall.
Our plan is pretty straightforward—you max out at 80% of the avg of your 3 best years (usually your last 3 yrs). 403B is optional and on your own. We have a 10 year vest-in period, though. Before 10 yr you just get cash value. By taking about a 6% reduction, my wife will get 2/3 of what my benefit is should I die first. If she dies first, the reduction is eliminated.
We max out depending on a chart of years of service vs. age. Those hired after 2013 (I believe that’s the year) cannot max out before age 60. We oldsters can max out before that, even though I had to wait until I was 61 as a result of when I started in the system.
Also since I live in MA the state does not tax my pension. Just the feds. Between the lack of state income tax, not paying in the 11%, not paying into my 403b, we pretty much can live at the same standard as when I worked.
I thank God every day that we have the pension—so few Americans have them anymore.
My H worked at a large automaker for 42 years. Oh, how I wish he could have gotten 80% of his top 3 years average! Instead, it ended up being about 35% of his top 3 years average until he turned 62, then it dropped a figure somewhere around 22-25% … they expected retirees to draw SS at 62. It was such a slap in the face compared to what it was originally supposed to be. The survivor benefit was 60%, I think. (We took a lump sum payout.)
MADad, that 6% reduction for a joint and 67% survivor annuity is a darned good deal! It’s usually closer to 12%. The standard actuarial reduction for a joint and 50% survivor annuity is generally 10%.
H also will get a pension. When I started my career in this field, most of my clients sponsored traditional pensions. Kept lots of actuaries and pension folks employed, too. My dad (military) and FIL (union electrician) would be in a world of hurt without their pensions, as they had nothing else saved over the years.
When my old boss retired in 2003, you had to give up around 12% then for a survivor benefit. Then it was deemed that the teachers pension fund was performing so well that it was cut in half. We have the benefit that the teachers pension fund is separate from the main MA state pension fund, which is manipulated and abused by politicians to benefit themselves and their cronies. For example, a politician went to a state university, and got someone to give him 4 years credit toward his state pension!!
I think our survivor benefit “costs” (pension reduction, for those of us that chose annuity instead of cash option) are calculated per retiree, depending on age of spouse. Not sure if there is a male/female factor.
I’m still confused about one social security issue. I am about the same age as DH. If I were to take my SS at age 62, and DH were to take his at age 70, and he were to predecease me, would I be able to collect his full SS benefit instead of mine, or would it be reduced because I started my SS before Full retirement age? ( I actually think he’ll outlive me, but I am curious.)
Confused: If DH is 68 (waiting for age 70 higher amount), and dies at 69, DW only gets what he would have received at age 66 (or FRA)? Doesn’t DW get the higher amount due, as if if he started at 69 (when instead he died), and which increased by waiting for age 70? Sorry, this is clear as mud. Don’t know how to better describe.