Haha, I get the going crazy. I couldn’t retire at 55 and sit and do nothing. I work part time now and it’s the best of both. Days off when I need to do what I need to do and work when I want. Now off all summer (work in a school too) and time for the summer purge.
My father is 83 and still goes into his office 3x a week. More to just get away and have something to do and get out of the house. He has a lot of trouble comprehending the work at home thing even with covid and the fact that my husband has worked at home for a few years. I get it. I think hybrid is the best and not having my husband (who is also a workaholic and I don’t see ever retiring) needs to get out of the house sometimes for work so hoping he will start doing so. Staying in I think is not always a good thing. Plus, I like having my space in the house and quite at times as well!
Ours definitely aren’t that good. Our teachers top out at 60K and the pensions are roughly 40-50% of your pay average. Mine is the roughly the same. But if you leave early, they really ding you. We have friends - both teachers - who are just done and leaving 2 years early. They are losing almost 1/3 of their pension! If H leaves 1.5 years early, he loses 25%. Mine isn’t near as bad, but still a lot. You lose roughly 5% per year that you leave early. So once you “buy in,” you need to be prepared to stay for the long haul.
Wow those penalties are harsh, but if people are willing to leave with that much on the table, it must be pretty bad for them.
I used to teach in Chicago, but was in a magnet school plus I taught gifted so I had it pretty good. My problem is that we then moved to Iowa and since I never thought I would come back to teach in Illinois full-time, I took out my pension. It was dumb of me because in 1995 after 3 years of teaching my pension amount that I took out was over $7,500. I rolled it into my IRA which is now a Roth so it’s 100% tax free so on that I’ve made a killing, but had I left it, I would’ve gotten my 3 years of credit. I then taught in Iowa for one year and had a kid. The pension there was horrible. In Chicago it was a 1% contribution by me, matched by 7% of my salary by CPS. I was too young at the time to realize that the 7% contribution by then was also equivalent to a 7% salary boost. In Iowa, my pay not only went down by 1/3, I had to pay a huge % into the pension and can’t remember if there was a match but it was not much if there was. I subbed a little after that year when I had my first son but then wound up teaching at a local college as an adjunct and never went back so taking my few hundred dollar pension when we moved back to IL was harmless. Honestly, never thought I would work for a school again. My husband and I had some internet businesses together separate from his job, but those petered out and we divorced and when kid #4 was in school full time (1st grade) went back into schools. Dummy me was at square 1 since no 3 years credit and to put it all back in at that time would cost me a fortune and not worth it. So now I’m just trying to get to 5 years credit to qualify for the pension, since I don’t work full-time, and bump up how much I will get. I think I don’t get anything no matter what until I’m 60 so that’s my goal. Have 5 years credit by 60, but even then, it won’t be much sine I maybe make 10k a year doing what I do, lol. But, I’ll be happy when I get that $100/mo pension Hah. I qualify for SS too so do wonder what my WEP will be and a part of me wonders if it’ll be better to just take the money from the pension since that is a decent amount but I guess I will figure it all out as I hit closer to 60. Only 7+ years to go!!!
Back to the 1/3 loss just to leave 2 years early. That really is nuts. Have they considered just taking a LOA for a year then come back. I mean that sounds like something someone may really regret later on in life.
@srparent15 it seems as with many, one moves forward in life and then as they say ‘hindsight is 20-20’.
MIL’s home is in WI but very close to MN and IA. She taught a few years in WI and then worked in IA. She kept her WI retirement and years of service there, and spent the rest of her career in IA. In hindsight, she would have earned more in pay and retirement with WI, but she must have wanted to have her ‘school career’ a bit away from small town. Her pay scale in IA was the largest as an elementary teacher with bachelor’s plus 18 hours of graduate education courses. So she did that in the early years. At her retirement, she received a check from both IA and WI. She would put the WI money in a savings account that went to major purchases and the IA money into regular checking account - and at times shifted money into savings. I think she just was happy where she was teaching and didn’t want to risk anything coming back to WI - school systems/politics etc can be rough. I don’t remember if she retired before 65 or after, but essentially with her pensions and SS, she made about the same in retirement as in working - so the decision was easy. They kept her IA health insurance as secondary to Medicare. Life was made so good in retirement when health was good - she added a daytime bridge club to her schedule for example. Declining health was a challenge in late 80’s so less QOL. Also all their friends dying or becoming disabled.
My kids just asked recently if there are companies that even do pensions anymore if you’re new, and other than state or federal employees, I can’t even think of any companies. Many employees lost pensions when the company they worked for went bankrupt or was bought out and terms changed. But at the same time, at one point in time, pensions were the way to go. Not sure what life will be for my kids but I’m at least trying to teach them to start putting away money now while they don’t need it, because you never know when you might!
We have kept H’s medical insurance family plan as H’s Medicare supplement or Medigap plan. It covers me and our medically dependent D too and his former employer (fed govt) pays 75% of the premium out of his pension.
Some folks opt not to get Medicare B and just use the private insurance as their only coverage. Some folks opt to buy a cheaper Medigap or Medicare advantage plan. You really have to check the costs and what is & isn’t covered, annual total out of pocket expenses, etc.
Each state has an executive office on aging (out of the dept of health) that can help walk you though the unbiased options that may be best for you. There are private insurance agents that are no charge to the user who can also guide you.
We too will most likely keep our federal insurance as secondary to Medicare. It won’t be cheap to carry both. I just recently learned that sometimes the “best” choice is to NOT do Medicare and just go with the federal insurance. That feels “wrong” to me, but we may re-evaluate in 5 years when we have to make a decision. Who knows what will change between now and then.
Honestly, I don’t know, but Consumer Checkbook, which has done the evaluation of FEHBs for decades, apparently says in some cases it’s better (economically) to not carry Medicare and just stick with FEHB. I appreciate you link and will read it. We have a lot to learn.
“I wondered if anyone has thought about working a somewhat lower-wage job (not in their profession) part-time to get health benefits in the last few years of work-life?” - I think lots of folks ponder that option, but I don’t know many that have actually done it. More typical with our friends is one spouse working longer to maintain medical coverage.
Was shocked to read above that there are teachers making $150k, with $99k pension. Assume it’s in an area with high cost of living.
One other option may be to enroll as a student somewhere at a reasonably-priced instate public U, where you can get good student medical insurance that will meet your needs at a reasonable premium. I think that would be more palatable than many low wage jobs just held for medical insurance.
Sadly, there are many low wage jobs that purposely do NOT provide any benefits and consider staff all “independent contractors.” Yes, they should be reported and reined in by the Dept of Labor but the staff are grateful to have any job and scared to complain.
The cost of medical insurance is such that including it as a benefit for a lower pay job would be a substantial part of the employee compensation cost that the employer has to pay for. I.e. a $10,000 medical insurance plan is a much higher percentage of compensation costs for $30,000 jobs than it is for $200,000 jobs. So it is not surprising that employers of lower paid jobs do all they can to avoid having to have medical insurance benefits for such employees (e.g. make them “contractors” or keep their hours below the threshold where they need to offer medical insurance benefits).
But there are real ramifications for the “contract” employee beyond insurance. Workers comp & unemployment in case of layoff come to mind. The employer saves on those taxes, which they should be paying if the worker is really an employee. I have no sympathy for these cheating employers.
It is wrong for the cheating employers not to properly protect and compensate employees. If Dept of Labor goes after them, fines can be very heavy.
For the staff I hired, I made sure they had medical coverage elsewhere and signed a waiver. Even though I only had them work on calm, I withheld all I was supposed to and paid W/Comp and unemployment insurance. We were a tiny shoestring nonprofit but being a good and fair employer is important.
Finding an employer who will provide benefits may be tougher than expected.
I don’t live in a high cost area. Average teacher salary in our district is north of $90k. Once they are eligible for full retirement, they are often hired back (sometimes by same district – though there is controversy there in terms of “double dipping” issues–other times in different districts) in administrative roles (principals, assistant principals, etc). Salaries tyically $100-150k. Pensions pay 80% of highest 3 years of earnings. So $70k+ pensions with $100k+ current salaries. Again, not high cost area.
Multiple factors at play there. Aren’t many jobs with $200k salary that are hourly. So its not a matter of being able to limit the number of hours for those employees. Also in terms of supply and demand, there simply are more people with $15/hr skills than $200k salary skills. That will have a significant impact on comp packages.
Chicago suburbs. Not sure that it’s necessarily because of high cost of living as I was making about 40k after 3 years of teaching in 1995. Taking my big pay cut when we moved to Iowa of 1/3 was a huge hit because our cost of living was not 1/3 less. It was pretty comparable tbh, so that was a big hit.
Of course, this is why our state is in major pension trouble. Too high of state employee salaries, teacher salaries, etc. The salaries are all public information and I just learned that the teacher my son had for his Algebra 2 Trig Honors class freshman year made almost 185k last year. She’s only a year or two older than me, so a few more years to go until she is even eligible to retire.
My MIL was an elementary school teacher k-3, retired 20+ years ago in a suburb further out not quite as good of schools as ours and even she was making more than 100k back then. She also wasn’t fully maxed out for years teaching or the pension but we had just moved back and she was ready to spend time with the grandkids. The school districts make it very enticing for teachers to retire early by letting them add years to their age and teaching to qualify earlier and at higher benefits. I think she also had insurance for herself as well with her pension all these years.
My husband’s father was a federal employee who wound up on disability in his 40’s. My MIL who is now in her 90’s not only collects his pension, also collects a decent social security, and has always received great insurance benefits through the pension. Based on how many Dr’s she is running around to for a) attention she seeks and b) looking for a unicorn (as she never likes the advice one gives her so she just runs to a different one hoping they’ll say something different - they don’t), I see another big issue with why insurance and medical costs are so expensive for everyone else. Not one of these visits costs her anything, but the Dr’s have to get paid. So, she sees 5 Dr’s of the same type for the same problem with the same result/advice and insurance/medicare keeps paying. At what point do they say, “sorry we won’t cover that” or “you only can see 3 different dr’s for that issue?”
When my husband had his own company but few employees we didn’t have any contract employees, but since we weren’t legally required to provide health insurance, we didn’t have a group policy. What we did instead was pay for the employees to get their own policies. Since they were in their 20’s (there were only 2) it was much less expensive for them to get their own policies in the end than for us to get a group policy due to our ages. But we would never have run a business without providing them a stipend of some sort of paying for them to get whatever kind of policy they wanted, plus dental.
As for unemployment and workmen’s comp I don’t understand how a business doesn’t pay that. Any business has to have a workmen’s comp policy and stick the sign up. But, I guess there are a lot of companies doing illegal things out there.
@Colorado_mom those teacher salaries and pensions are not in many areas, but are in some high cost areas. MIL over 27 years collected over $315,000 from her Iowa pension which annually was about $11,667/year. Her WI pension paid about $357/month for the few years she worked in WI. She also had a life insurance death benefit - $3200 from WI, and $32,000 from IA – with her 4 sons as beneficiaries, so we all got some $$. The sale of the home (worth $150K) and other odds and ends will have more money coming with the estate as well.
My sister with master’s in Library Science was at an ending salary of $64,000/year in IA - she always topped out on her credentials. She had a few years in WI and not enough in IA for a fuller pension, but her H and her have his pension and they never spent inheritance from our parents so they have a good nest egg. They also have a small house and are modest spenders. The last couple of years, she worked less and had prorated income but happier life.
H’s predecessor companies until the last one had a pension, so he would receive stock and had a cash pension fund - eventually we got a small monthly annuity, and the rest we rolled over into IRAs then converted to Roth IRAs. He had Sar-Sep with a small company and that got converted to Roth IRA fund. Almost always had 401k, at least since 1990’s. Eventually that grew big. It was a shame that he would have gotten a pension from Texas Instruments, but he left about a year before they dropped ‘full vesting’ from 10 years to 5 years; he worked there 7.5 years; they ‘discussed’ partial vesting but that was just talk. We were out of the ‘window’ when the benefit changed. If his company had not changed hands and dropped a pension about 17 years ago, he would have had a nice pension from that. A friend’s H has a $70K/year pension from a large government contracting firm - other firms rolled in over time and he had the numbers go beyond the 84 for the full pension; 35 years work and age 59 1/2 (he received a ‘golden handshake’); he also had a 401k. Wife has full survivor benefit of the $70k/yr. They also have health insurance coverage and the company ‘paid’ him what his SS earnings would be at full retirement up to when he could collect SS (golden handshake).
Just like some government employees are under the ‘old’ retirement or the ‘new’ retirement benefits, some companies eliminated pensions company wide so only the ‘old’ employees had those benefits. Many shifted to 401k, also some had both 401k and pension plan.
I had no idea teacher pensions and state/local worker pensions were so high. My federal pension was 1% of high 3 salary per year, and 1.1% of high 3 salary per year if you work until at least 62. And for survivor’s benefits, you take a cut of something like 25% from that.
The health insurance forever (they pay something like 70-75%) is nice, but the “new system/FERS” federal employees are not doing nearly as well as the old system and some other areas with pensions.
I am happy I get any pension at all, but if I hadn’t saved a lot on my own, I certainly wouldn’t have been able to “comfortably” retire at 59.
