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You're telling me that a teacher who recently started teaching at LAUSD (last 5 years or so) will have a 1-2 M dollar pension fund when s/he retires?
It takes about a $1M investment portfolio to generate $40,000 per year with annual cost of living adjustments for 30 years, so many pensions that people collect are already essentially worth at least that much.
Upper-middle class typically does not need a roommate to help pay the mortgage.
But we're talking Coastal California real estate here for someone in their early 30s. Because of the insane cost of real estate in CA, the rules are different here. Incomes in the L.A. metro area are surprisingly low compared to the overall cost of living.
Depends on how 'you' define middle class for your location. At the end it really shouldn't matter, except to you. Sounds like you are being fiscally responsible for your said income. From what I consider middle class (which includes home owndership) I would put you somewhere in the middle for the major areas in so-cal. If you were up in the bay area you would be below the average single working professional in my opinion.
It takes about a $1M investment portfolio to generate $40,000 per year with annual cost of living adjustments for 30 years, so many pensions that people collect are already essentially worth at least that much.
OK. So I will ask my question again... Do public pensions for a school teacher really pay out 80k to 120k annually?
OK. So I will ask my question again... Do public pensions for a school teacher really pay out 80k to 120k annually?
Here, teachers complain about a starting salary of "just $60K/yr". They typically get about 1/2-2/3 their salary plus many benies for retirement. By the time they retire, their salary after 25-30 years of automatic raises COULD put their pension AT the $60k {+} level from now.
That 'starting salary' is at minimum the national average of 'middle income'. If they have been there longer than 10 years? Their salary would be way higher than the $60k obviously.
Now, I understand they graduate with college debt and all, but as I said in my other post here, we are buying a very nice, well kept house 3BR and 1ba for about $75K {hopefully we get it more around $70k}...so their salary is about = to the cost of a nice house here! I DON'T consider that "poor" like they always claim. Two teachers married together? Would be 'starting' at $120k then! We are NOT inner-city 'dangerous' schools.
A few years ago there was a big to-do over the fact that a starting Sheriff's Deputies' salary was only $19k to put their life on the line every day. Our schools are NOT dangerous. It used to be {when i was a kid} if a kid brought a {unloaded} gun to school, it was because they were going to go, or had been, HUNTING {for deer}. AND it stayed in the pickup truck.
Compared to the Sheriff's deputy, the starting teachers here are RICH...at 3 times the starting deputy's salary.
Dunno it's all relative to one's interpretations. I guess.
OK. So I will ask my question again... Do public pensions for a school teacher really pay out 80k to 120k annually?
No, they don't, at least not in most places. You started out questioning whether a typical public pension is really worth between one and two million dollars.
Let's do some arithmetic. Suppose a teacher retires at age 61 and receives $50,000 per year. If he lives an average number of years past age 61 he will die at about age 85. (I didn't look that up, but it's close. Remember we are not talking about longevity from birth, but longevity if one has already reached age 61, and those two things are very different.) So he will receive the pension for 24 years and 24 times $50,000 is $1.2 million. That's assuming no inflation protection whatsoever; if there are COLA's involved the amount over 24 years will be greater than $1.2 million.
Even if we reduce the lifespan to 20 years following the retirement at 61 (death at 81), that's still an even one million dollars without COLA's.
Therefore, you don't have to assume the outrageous annual pension amounts you cited ($80k to 120k annually) in order to come up with a pension worth one million dollars or more.
Obviously if a person lives to a very ripe old age (say, into his 90's) then the pension will pay out considerably more. And conversely, an early death (in the absence of a provision for continuing payments to a spouse) will result in a lower total payout. But the "worth" of a pension has to be figured on average actuarial conditions.
My example is rooted in some real-world numbers, namely my own. I retired as a California high school teacher ten years ago at age 61 after 34 years of service and my pension was $50,000 annually, rounded off. COLA's have increased that amount to almost $60,000 now, after 10 years. Naturally I do not know the date of my death, but I am in pretty good health and it is likely I will receive in excess of one million dollars before I die.
It takes about a $1M investment portfolio to generate $40,000 per year with annual cost of living adjustments for 30 years, so many pensions that people collect are already essentially worth at least that much.
actually they are likely worth more when working with all the tax deductions a family has and benefits like pretax medical giving that 40k worker the effect of more than 1 million saved .
It takes about a $1M investment portfolio to generate $40,000 per year with annual cost of living adjustments for 30 years, so many pensions that people collect are already essentially worth at least that much.
You say 'many' which is true, but most pensions are worth in the $300k-$500k range, the median pension payout is not $40k, but about half that.
Last edited by TheOverdog; 08-26-2015 at 10:05 AM..
I don't dispute that a Net Worth of $500K is greater than what most have.
What I am stating is that this Burger Flipper is unable to live the lifestyle nor have the spending power of an Upper Middle Class individual, therefore I would not consider him to be a part of the Upper Middle Class.
Even if he sold the house, he would not be able to live an Upper Middle Class life style... at a SWR of only about $20K annually, that is no life that I would like to live and definitely not one of the Upper Middle Class... and now that he has sold his house he has to pay rent.
Even keeping and renting the house + flipping burgers does not give him the spending power or lifestyle of an Upper Middle Class individual.
Again is he better off than most? Does he have some security? Would many love to be in his position?
Sure. But you can't convince me that he is someone that is Upper Middle Class.
i'm not a burger flipper and no one gave me a home, so this isn't really relevant to the convo. it's a completely different scenario
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