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My wife's 403(b) plan is doing great. Not as many options as my 401(k) but her money's performance is better.
Many Teacher pensions are based on years of service, multiplied by a specific percentage ratio, multiplied by their 3 or 5 highest years of earning. One wrinkle, at least here in Michigan, is that a year of service equals only 5/6 of a year. The 10 months in front of a class count for retirement but not the 2 months doing other things.
Many teachers will buy 5 years of seniority early in their career. After 30 years of teaching, which really only gives then 25 years because the summer months don't count, they will actually have 30 years toward retirement if they buy 5 years. The earlier they buy it the cheaper it is as the price is 5 times their annual payroll deduction contribution toward the pension plan.
30 years x 1.25% (current ratio) x $70,000 assumed terminal salary = $26,250 annual pension
The ratio previously was 1.5% and with 40.83333 years of credited service (work from 22 to 65, plus buy 5 years early when it was inexpensive) equals $42,875 pension under the old ratio at the same assumed terminal salary. Big difference.
Of all California teachers retiring in 2012-2013, 34% have pensions of 68.4k or higher. Note that these are the teachers who worked for 30 years or more. If two of those people are married to each other, they certainly fit into that two person 120k - 200k range.
The pensions are tied to years of service. Those with 40 year or more of service received an average pension of $107,088. Those with less than 5 years of service received an average pension of $3,732.
Did you read your source? The avaerage salary was 68k not the average pension.
Average pension was $47k. The mode was 68k, but not the mean, and mode is not meaningful statistically without standard deviation.
Also, I've lived in wealthy suburban areas in Iowa and Indiana where teachers are compensated well and have good pensions, but the private sector is also doing very well. The cost of living is relatively low. A teacher in a suburban Indianapolis school district is going to earn pretty decent money, maybe not as much as the private sector, but closer than the prestigious coastal areas - they also have stability and a definite retirement income a similarly educated private sector professional may not get. In this case, it's likely to going to be a toss-up between a white collar private sector professional and teacher at retirement.
People look at teacher retirements often from the perspective of Cadillac pensions in rich, liberal states like MA, CT, IL, CA, etc., but there is another side of the coin that's rarely addressed.
The minimum salary in the town I reside in, Kingsport, for a new educator is around $41,000 annually.
The median HHI is around $34k, the median family income only about $40k. Most private sector work, outside a relative handful of people working for a few large employers or transplants bringing their out-of-area salaries with them, is extremely low paying, often considerably lower than any of the teacher salaries.
Northern VA has been mentioned a couple of times in this thread as a "high paying" area for teachers, but it seems to me that people overlook and don't take into consideration the COL. Only the salary is taken into consideration.
Northern VA has been mentioned a couple of times in this thread as a "high paying" area for teachers, but it seems to me that people overlook and don't take into consideration the COL. Only the salary is taken into consideration.
Northern VA has been mentioned a couple of times in this thread as a "high paying" area for teachers, but it seems to me that people overlook and don't take into consideration the COL. Only the salary is taken into consideration.
The median HHI for my zip code was $113,351 in 2013 according to City-Data.
Estimated median house/condo value in 2013: $413,700
Yes, but pensions are a retirement benefit not tied to where you actually lived or worked. Part of the angst about public pensions is when folks retire and transplant to lower cost of living areas. There pensions combined with SS and possibly investments gives them a higher retirement income then many others in their new area who go to work everyday. That can make our pensions and SS combined seem excessive to many in our new location. This is the same as Ultrarunners point above
Right. But the reason all of us "privateers" fret about our 401Ks is precisely because we are not going to have pensions. For a teacher the pension plus a 403B, even a crappy 403B, is a decent overall nest egg.
UMMM , the end result may be fine to others but don't you think they should be concerned about their ROI and who is making the money off their contributions? Them or a insurance company. Also not all 403B plans have mutual funds. Some in smaller districts are just annuities with no chance of developing a portfolio. For that they need another investment plan. That is the issue who is making the money them or someone else.
If that's $29,000 in after tax income, that's not horrible especially with spousal benefit. Think of how much you'd have to withdraw at a 3%-4% consensus safe rate to get that.
That's just how much our checks will add up to in a year....I'm not sure about taxes. If they tax retirement income, that will be before-tax income. I know it's not horrible....as I said, I'm grateful for it, I was just giving a more realistic figure for teacher pension than $200,000.
I think we do get to keep our same health insurance.
I have no idea what is this 403B that BAHillbilly speaks of.
Northern VA has been mentioned a couple of times in this thread as a "high paying" area for teachers, but it seems to me that people overlook and don't take into consideration the COL. Only the salary is taken into consideration. Exactly.
In comparison, teachers in my district have a minimum salary of $47,516. After 30 years, my husband just makes a few thousand more than that.
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