I don’t know if I can post a link that I found about California public employee pensions so I will just tell you that the headline is that almost 80K receive pensions above $100K.
There is a common mantra that you hear that all teachers are underpaid. Some are without question. But many are not. Depends on the state and the district. Pension benefits also vary. Pension plan solvency too. But often you still see people painting with broad strokes.
In terms of the 3 year highest pay determining pension benefits, we had a couple police/fire departments who were allocating overtime to employees within 3 years of retirement. People were receiving pension benefits that were 20%+ higher than anything they had been paid (outside the last 3 years before retirement). So their pensions were higher than what their salaries had been during all but 3 years of their career (even though the formula for pension was a percentage of highest 3 years of salary). Younger people went along with it with the expecation the same thing would happen for them.
I am not a fan of public employees retiring at 50 or 55. Years worked versus expected/reasonably possible years in retirement don’t make sense (at least not on the payer side of the equation). For some jobs (police and fire for example) early retirement makes sense because of the physical demands of the job. Not true for most public employees though. And if you save enough to retire in your 20s, enjoy. But it doesn’t make sense to me to have everyone else (and if you look at retirement savings, many of those people will struggle to retire much older than 50/55 with much less income) pay increased taxes so people who could work longer can retire at 50/55.
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@showmom858 IDK when CA will be like IL and have such state budgeting problems that it hurts on current services - IL is having difficulty with their debt load. Living in CA has ‘unique’ problems. And it seems they are trying to keep people in the state that are drawing pensions, but I don’t keep up with all of that as I live no where near CA nor have children there. I have cousins there that are hanging in living there despite all the problems they face with high costs.
Took me years to figure this out- this article is very helpful.
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@saillakeerie in AL they did something like that with teachers that were close to retirement - gave them a real win-fall. IDK if that was due to some people close to Montgomery politics. AL teachers paid almost nothing for super health insurance - I am talking maybe $125/mo for family Blue Cross Blue Shield. Some of that has changed. Teaching has its challenges just like other professions. Some careers are almost considered ‘vocations’. Direct patient care nursing is one of those areas as well.
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Seems like if those pension benefits are such a good deal, it may be worth advising your high school and college students to look into career paths that lead to such pension benefits.
I suspect that teacher pension situation will not stay so good forever. School districts are having a hard time with this and other expenses.
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Here’s an article about the issue of FEHB and Medicare B by consumer checkbook.
Many people here in California are not happy every time more funding is given to schools and they see how much goes to fund teachers pensions versus what goes to students.
My H worked 45 years for Fed govt and retired at age 70. They only deduct 10% for him naming me as the survivor and I am eligible for 55% of his pension. It’s a good thing because I won’t get much SS and don’t have much retirement savings if my own.
Allowing retiring at relatively young ages after a relatively short working career with a hefty pension (& survivor benefits) will be very expensive for a lot of places and make them have to rent-examine their finances and benefits offered.
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One thing that can weigh in and make figuring out medicare and insurance options more complicated is if you have a spouse and/or loved one also on your insurance. You want the best coverage for all of you at a cost you can afford.
Another factor I and my CPA silently weigh are the chances that for some reason in the future we may need Medicare B—would hate to pay % penalty forever for not enrolling when we were eligible younger.
Anyway, for now, we have opted to have both our FEHB family plan & Medicare B for H. I’m eligible for Medicare B in a little more than a year—guess I’d better start figuring out if we keep get Medicare B for both of us on top of our excellent FEHB plan which we will keep because it covers us and disabled dependent D. We can afford it.
@SOSConcern One of our local districts a few years ago had a negotiation which was expected to be very tough. Highly rated district. One of the proposals the teachers put on the table was to triple the amount they paid for their health coverage. Sounded like a good concession. But when it became known the proposal was to increase it from $50/month to $150/month (for family coverage), the community and school board turned. At the time, more and more people in the community (and pretty much everywhere else) were being pushed to high deductible plans and having to pay higher percentages of their own coverage (often times 10x+ what the teachers were paying per month).
@ucbalumnus You don’t think being able to retire at 50 or 55 with a non-bankruptable pension paying 80% of your 3 highest earning years for the rest of your life and 50% of that for your spouse’s life after you pass (in addition to medical benefits to bridge to Medicare) is a good deal? My wife and I have had that conversation with our daughter many times. She wants 4 years of grad school for a job that will pay her about what a teacher in our district makes. Factoring in the early retirement, pension for life, reduced healthcare costs, summers off, Christmas/spring breaks, holidays, costs of grad school, etc. the economics aren’t even close. But alas, she starts grad school in the fall. LOL But I know many people who are taking the teacher deal. Makes a lot of economic sense (in the right state/district).
@Colorado_mom I agree that I am not sure how long the deal will last. The federal pension system has been revised from what I understand to make it more sustainable. But the state ones are still mostly an unsustainable mess. But in the last 10 years or so, attempts to reform by multiple states led to mini-revolts. So its not clear when (if ever) reforms will happen at the state level. Maybe when state/local taxes are increased substantially and/or other state benefits/programs are cut substantially. We shall see.
Best of both worlds likely is having a couple with one public job and the other with a private industry job.
@Colorado_mom - yes on school districts/expenses. School consolidations; having a school librarian be over several buildings with PT aids for example when other building librarian retired.
School principal strategizing to get higher paid teachers out and getting in lower cost entry level teachers. Moving a teacher’s grade assignment. MIL let her school district/principal know at the very latest date about her retirement because she didn’t want to be ‘honored’ with the end of school year retirement luncheon - one year he moved her from teaching 1st grade to teaching 3rd grade for a friend (her career was 1st grade and expert at teaching kids reading skills). They had aids but this same principal had arthritic hip older teacher doing playground duty in IA winter weather - another strategy to have her retire. This same principal was a student of MIL when he was in elementary school. MIL had enough sick hours to be out with hip surgery but was committed to teaching her students, so she had hip surgery after retirement.
Young people can’t bet on a pension that is being offered today to still be there when they retire. Education is sure to follow the lead of industry, which has for a number of recent years been happily shafting employees out of pensions. I know too many people who either lost their pensions or had them greatly reduced. H’s was “frozen” when his company went through bankruptcy. Not only was pension much smaller than anticipated, but it I even further reduced for me being a beneficiary, plus my beneficiary amount is pathetic. H stayed with the company 42 years, and his reward was to have the rug pulled out from under him in terms of retirement. We are savers so are okay, but my point is that pensions can and do get reduced and/or taken away. I would not expect anything that is promised today to be there in 40 years.
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Most public pensions are owed by states. States cannot file bankruptcy petitions. There has been talk at various times about allowing states to file for bankruptcy protection. Hasn’t happend yet though. Municipalities can file bankruptcy petitions. Some pension obligations are owing from municipalities. More at risk. Private pensions are the most at risk. Unfortunately I have seen too many people lose pensions/have them reduced substantially late in careers as a result of a bankruptcy of their company. PBGC pays pennies on the dollar. But again, those are private pension plans.
On a sliding scale, state pensions (federal too as the federal government cannot file a bankruptcy petition either) are most likely to be around in 40 years (by a long shot) and private pensions are the least likely (or at least the ones most at risk).
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H was able to hang in there long enough that a federal law to help his pension passed shortly before he retired. It really helped him and us. If he had not retired when he did, his pension would have been lower—if he retired earlier or strangely enough later as well.
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I know MANY teachers. I was born and raised in Illinois and have several members of extended family, HS and college friends, and others who are/were teachers in Illinois (suburbs and downstate). I can only recall one who retired (not resigned to go into another career) who was under 60. This person was close to 60 though and has a spouse in a high paying profession (not teaching). Three of my teacher friends are retiring this week and 2 are 65, the other is 66. They planned teaching careers 40+ years ago and part of the deal they worked for all of these years is knowing they had the pension coming someday. Not fair to pull the rug out from them at this stage. FWIW I did some substitute teaching during my SAHM years and it was hard work.
Not sure what the solution is…
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The one common theme with many of the jobs described here, with strong pensions and retiree health benefits, is a strong union.
The union advocates for its workers and negotiates these benefits.
Rightly or wrongly, you can make your personal opinion. But teachers, police and fire workers, many state employees are represented by a union.
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Not in all states.
Here in Texas teachers are not covered by a union, and many wouldn’t like to be. Teacher retirement is through a state fund just for schools, not other state employees. Most districts do not pay into social security, so the pension is the only retirement income (the GPO eliminates spousal SS for most). I did stay long enough for health insurance for the two years before I turned 65. Very few in my district retired before early-mid 60s unless they had another career lined up, and if someone was making $150k they had Supt. beside their name. (Or head Ftball coach, lol)
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My D held out as long as she could and retired from teaching after >30 years and repeated death threats from her special needs student that her principal just laughs off. She’s happy and deserves her pension, whatever it is. She’s just a shade under 60.
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