Save Beyond Your Pension
A significant majority of teachers in the United States have defined-benefit pensions, to which both the teacher and their employer make contributions. In exchange, the state promises a guaranteed payout for life upon retirement.
Payouts vary based on the teacher’s length of service, their earnings history, and other specifics of the plan. But the amounts generally fall well short of most teachers’ financial needs in retirement. As tabulated by teacherpensions.org, the average pension for newly retired teachers in the previous 10 years ranged from around $20,000 a year in states such as Arizona, Florida, and South Carolina to the $40,000s in California, Illinois, New Jersey, and New York. In only one jurisdictionâthe District of Columbiaâdid the average pension crack the $50,000 mark, reaching $63,468.
Modest as those numbers are, they may be heading lower in some states due to the underfunding of teachers’ pension funds. The funding shortfalls drive changes such as reduced benefits for new hires, increased employee contributions, and lower cost-of-living adjustments for retirees.
So, as early as possible in a teaching career, it’s wise to begin setting aside some money to supplement your expected pension, such as through a defined contribution plan.
Resignation Timing Affects Health And Pension Benefits For School Employees And Teachers
Teachers and school employees in Plans 2 and 3 often ask us whether its better to retire in July or in September .
Its all about the timing. Your resignation date will affect when you receive your cost-of-living adjustment and your Public Employees Benefits Board retiree health insurance in retirement.
Retiree health insurance through the PEBB Program
While youre working, the School Employees Benefits Board Program offers employer-paid health insurance options for teachers and school employees. When you retire, your employer-supported insurance ends. The PEBB Program provides retiree insurance coverage if you qualify and enroll no later than 60 days after your employer-paid COBRA or continuation coverage ends, but you will then be responsible for paying the Health Care Authority for all your health insurance costs.
The two examples below show how a June 30 versus an Aug. 31 resignation date can affect your retirement and health insurance coverage. You must tell your employer which date you want.
You resign from your position effective June 30 so you can retire starting in July 2021:
You resign your position effective Aug. 31 so you can retire starting in September 2021:
In all the examples, eligible retirees can choose to purchase retiree health insurance through PEBB once their SEBB Program insurance coverage ends. Both programs are administered by HCA, which provides online information on SEBB Program employee plan costs and PEBB retiree plan costs.
How to decide
Health And Dental Coverage
TRS does not administer health or dental plan benefits for retirees or determine your eligibility or cost to participate in a health or dental plan during your retirement. TRS does not provide information regarding the filing of claims. Retirees should direct all questions regarding health and dental insurance to their health or dental plan providers.
For retirees eligible to participate in Georgias State Health Benefit Plan , TRS will deduct the monthly premium for this benefit from your monthly payment, once your enrollment form is approved by the SHBP.
The cost of SHBP insurance in retirement can be increased if you did not have five years of service as of January 1, 2012. This SHBP policy is known as the Annuitant Years of Service Subsidy Policy and more information can be obtained here.
Specific questions regarding this policy or any health plan related questions should be addressed to the SHBP at 800-610-1863. You also may visit the Department of Community Health web site for more information.
Depending on the employer you retired from, you may be eligible to carry dental insurance into retirement. Check with your employer for additional information. If you are eligible for dental insurance in retirement through the Georgia Flexible Benefits program and choose to carry it, TRS will deduct the premium from your monthly benefit payment.
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Health Benefits In Retirement
Health insurance eligibility in retirement depends on whether you are a state or local employee and what your employer offers. If you are not certain about what your employer offers, go to the Benefits Available to Me page to search for your benefits by current employer name, or last employer name if you are retired.
Kansas Teaching Salaries And Benefits
Have you thought about retirement lately? If youve been focusing on learning more about teaching methods, certification requirements, and the educational climate in each state, then chances are you havent.
Given the large amount of information teachers must absorb before even applying for jobs, employee benefits like retirement options and health insurance might take a back seat to other concerns.
However, considering the rising costs of living and health care, your employee benefits may turn out to be just as important, if not more important, than the salary you receive. As a teacher in Kansas, youll not only have access to retirement planning services and pension benefits, but to a system of care that adds to the wellbeing of you and your family.
Learn more about becoming a teacher. Contact schools offering teacher education/certification programs in Kansas.
Teacher Salaries in Kansas by Education
As teachers further their educations and gain experience in the field, they receive pay increases that reflect their dedication and hard work. Salaries vary between school districts, but the following are some examples of the salaries you can expect in Kansas:
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Elasticity Of Labor Force Participation
These estimates can be used to calculate a measure of the elasticity of labor force participation with respect to income for older workers in IPS. Upon introduction, the annual premiums paid for TRHIP by employees younger than 65 were $2,400. This represents 12 percent of the annual salary of 55 year olds in 1979. In , we see the labor force participation of 55 year olds in about 9 percentage points lower when retiree health insurance is available, which is about a 10 percent decrease in the labor force participation of these 55 year olds. Therefore, a 10 percent increase in annual income would decrease participation of 55 year olds by 8 percent, which implies a labor force participation income elasticity of 0.8. This is in line with other estimates of the labor force participation of older workers and the response is comparable to that of other similarly aged private and public sector workers to retiree health insurance .
Weigh Working After You Retire
Not everyone wants or can afford to quit working after retiring from a full-time career in teaching. In fact, teachers across the U.S. have faced wage stagnation for years, leading them to make significantly less than other college graduates. If you expect to teach part-time, work in another profession part-time, or start a full-time encore career, think about how that income might affect what you need to save today.
That being said, not everyone can work when they’re older. Some people might have to care for aging parents, and others will find that their health prevents it. Sometimes jobs are hard to find. To play it safe, it’s best not to base your financial plan on the assumption that you’ll continue to earn income from work after you retire.
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How Do You Fight Your Teacher
Explain the situation that you disagree with to your teacher. Once youre with the teacher in private, calmly talk about your main arguments. Speak with a clear voice and present your arguments and why you think youre right. Use I statements instead of you statements to avoid placing blame on your teacher.
Update On Liabilities And Expenditures
Unfunded Liability for Retiree Health Benefits Is $24 Billion Statewide. To determine the extent of retiree health liabilities across the state, we examined district audit reports. For 2015-16, these reports identify total liabilities of $25.5 billion statewide. The reports also show that districts have $750 million invested in irrevocable trust accounts to pay for retiree health benefits. Subtracting this funding from the total liability produces an unfunded liability of $24.8 billion statewide. Using these figures, the average district is 3 percent prefunded. We also found that districts have another $750 million in reserves that they have earmarked for future retiree health benefits but not permanently set aside. Using a broader definition of funding that includes this amount, the unfunded liability is $24 billion and the average district is 6 percent prefunded.
aExcludes students attending independently managed charter schools.
bAs disclosed in districts 2015-16 audit reports.
cConsists of funds set aside in permanent trust account as well as earmarked reserves.
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Three Notes To Recent And Soon
- While you are an active educator, your health insurance premiums may have been withheld on a pre-tax basis. However the IRS requires that retirees insurance be taxed post- deduction and not before like what happens with most other employers plans in America today!
- The transition to retiree life can be difficult, but it doesnt have to feel like the end. With proper planning and documentation before your retirement date arrives at years end or sooner if possible youll ensure that there are no gaps when filing with Social Security Administration . Your local insurance coordinator will provide necessary forms for coverage as well please contact them three months prior so theyre ready on time! This way both parties get everything done smoothly without any hiccups along the way
- An important notice for charter school employees and inactive members: Do not assume that your district will provide health insurance benefits in retirement, even if you work at a district-operated or affiliated facility. Some districts allow their active personnel to continue with coverage while theyre still working however other areas only cover retirees who were previously employed by the system which means any input from these individuals must be explored thoroughly before making decisions on how such plans might impact ones future financial stability after employment ends.
How Much Does Teacher Health Insurance Cost
Based on media reports, you might think that all public school teachers receive gold-plated health care benefits. While there are some outliers, on average teachers receive benefits that are slgihtly beyond average but not extravagant. Here are three key facts* that shape public perception around teacher health care benefits:
Fact #1: Teachers are much more likely to receive health care benefits than employees in other fields. This is a big discrepancy. Two-thirds of all employees in the private sector have access to medical care benefits through their employer, whereas 99 percent of public school teachers do. Teachers are also far more likely to receive retiree health benefits than their peers in the private sector.
Teachers are also more likely to have access to other health care benefits. Compared to their private-sector peers, teachers are more likely to have access to dental care , vision care , and prescription drug coverage .
For family plans, teachers contribute $257 more than non-teachers, school districts contribute about $600 less than private employers, and the total cost of the plans are nearly identical .
Adding up all these factors, the average teacher receives health benefits that are much better than employees in other sectors. But those differences are mainly driven by universal coverage, not the generosity of the underlying benefits.
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What Is The Most Important Thing That A Teacher Must Have
Building relationships with students is by far the most important thing a teacher can do. Without a solid foundation and relationships built on trust and respect, no quality learning will happen. While I believe the importance of relationships cannot be over stated, many teachers have no idea where to start.
Do Teachers Get State Pension As Well As Teachers Pension
As the Teachers Pension Scheme was contracted-out of the Additional State Pension, the Scheme provides the equivalent of the Additional State Pension as part of the teachers pension. Hence you will not have an Additional State Pension for any period you were in the Teachers Pension Scheme up to 5 April 2016.
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Ensure You’ll Have Enough Insurance
Continuing to work after you retire can also be a cost-effective way to keep health insurance and other coverage you may need, at least until you’re eligible for Medicare at age 65. For example, if you received life or disability insurance as an employee benefit while you were working, make sure you still have enough coverage, and if not, supplement it with a private policy after you retire.
Graphical Evidence Using The Raw Data
To be sure the results presented in are not artifacts of the specification choice, it is useful to examine the raw data for evidence of an effect. In Panel A of , the dashed line presents information on the retirement rates of public school employees by age before retiree health insurance was provided by the state. There are local peaks at the places where pension eligibility changes discretely, ages 55 and 60, and a rather large global peak in retirement rates at age 65 and 66, when an employee becomes eligible for Medicare.
Retirement Rates of IPS Employees by Age and Existence of TRHIP
Note: Based on authors calculations using TRS and TSR data on employees of IPS schools from 1971 to 1992. The before TRHIP period covers 1971 to 1979 and the after THRIP period covers 1980 to 1992. Only employees ages 40 and older are included in the calculation of exit rates. The exit rate plotted on the vertical axis represents the rate at which employees of each age leave the sample between school year t and t+1.
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Consider Cobra Health Coverage
Your employer is legally required to keep you under their health care umbrella after you retire or are laid off. If you like your existing plan, this might be a good option as youll be able to keep all your current providers. That being said, COBRA has a big downside: Their premiums are significantly higher than the health care premium you paid while you were employed.
Its also important to keep in mind that COBRA only extends your coverage by 18 months. This means that if you retire several years before 65, youll still have to deal with a health care coverage gap.
Comparing Teacher Benefits To Other Professions
Teachers have the opportunity to work in an environment that values their skills, yet are still being compensated less than other professionals. A recent study by Economic Policy Institute found that teachers compensation was 11% lower than what comparable workers made last year despite this positive benefit package offered by schools. The wage gap increases even further when only considering wages 17%.
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Upcoming Changes Effective January 1 2022
Beginning January 1, 2022, VSTRS retirees with Medicare Part A and Part B will be moved to an analogous Medicare Advantage Plan to be administered by Vermont Blue Advantage . To learn more about VBA and the new plans, please visit the VBAs VSTRS website here.
These Plans have been custom built to closely match the benefits currently provided to Medicare-eligible retirees and provide significant enhancements at reduced premium.
So what does this mean for you?
For members without Medicare:
- There will be no change.
- Your health insurance will continue to be provided through VEHI and BCBSVT, and you will be able to make changes to your coverage annually in the fall.
- Your rates will not change until July 1, 2022.
For members with Medicare, here is what to expect:
- You will continue to be covered through VEHI and BCBS through December 31, 2021, at the rates currently in place.
- Assuming you take no action, you will be automatically enrolled in the analogous VBA plan, effective January 1, 2022.
- The rates you will pay January 1, 2022, will be substantially reduced, and they can be found here: Premiums for VSTRS retirees with Medicare effective January 1, 2022
- Coverage details can be found here.
- The new prescription drug formulary can be found here.
- Generally speaking, your coverage will stay the same, with some minor changes and many significant enhancements. A high-level chart showing these changes can be found here.
Retired Optional Or Alternative Retirement Plan Participants
If you retire under an Optional Retirement Plan or Alternative Retirement Plan , you may qualify for the health insurance credit if you have at least 15 years of coverage under the ORP or ARP or a combination of VRS service credit and ORP or ARP coverage equal to at least 15 years. Your employer must submit the ORP/ARP Health Insurance Credit Employer Certification of Service to VRS to certify your ORP/ARP service.
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State Health Plan Enrollment Process For Eligible Retiring Employees
If you are retiring under TSERS and are eligible for State Health Plan retiree group coverage, you will be auto-enrolled into a health plan after you have submitted, and the Retirement System has processed, your online retirement application or have submitted a Form 6E, Choosing Your Retirement Payment Option. Many of your health coverage options are limited if you wait too close to your retirement date to submit your retirement paperwork.
State Health Plan retiree group coverage begins on the first day of the month after your effective date of retirement.
- If under 65 , you will be automatically enrolled in the health plan you were enrolled in as an active employee along with any covered dependents.
- If you did not have coverage in the State Health Plan as an active employee, you will be automatically enrolled in the Traditional 70/30 Plan retiree-only coverage.
- You can change your auto-enrollment plan or coverage up to 30 days after your coverage effective date.
NOTE: If you do not take action within the specified time period to change coverage, you will remain, unless you drop coverage, in the assigned auto-enrolled retiree group health plan and pay the applicable premiums until the next State Health Plan Open Enrollment . You do not need a qualifying event or to be within the open enrollment period to drop coverage for yourself and/or your covered dependents.
All of the conditions described below are based upon current law .