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Background: Late to the game but starting to really plan for retirement. I am a teacher in NYS and already vested. According to my retirement plan I can retire in roughly 20-25 years with full benefits (I have scattered service credit due to subbing and a break from teaching to work in finance so I am not sure of the exact dates).
Winter in NY is doing me in. DH and I had agreed once our daughter is out of school in 7 years and settled into college we will move south and come back to NY for visits
This morning I was looking at my retirement plan and just realized if I move its going to cut my retirement income in half. I love what I do and had planned to find another teaching job in my field when we move but now I'm really wondering if short term thinking is going to shoot me in the foot in the long run.
I know we need to go see a financial planner and come up with something more formal than dreams and that's on the agenda for this summer's break. But I'd love to hear from people who've had experience in this sort of thing. Planning it on paper is much different than living it.
I am amazed that any retirement plan could have provisions which penalize people for moving out of state. Are you sure you read that information correctly?
Sorry I didn't explain it well. My retirement income (pension?) is determined by the number of years of service credit I have multiplied by my final salary when working as a NYS teacher. So if I work 20-30 years the multiplier is 2%. 20 years means I get 40% of my final salary (well average three year highest salary). 30 years means I get 60% of my highest salary. Given my steps and salary projections my retirement income from this plan will be half as much if I move out of state (and quit my job) after 20 years instead of after 30 years.
Granted I would have time to work and become vested in a new job and then earn retirement from two different sources but I don't think it would make up the difference.
You didn't say when you would be able to collect your NYS pension if you quit. If its not until retirement, the value of that pension will be eroding because you are not collecting cost of living adjustments to it right away. If you can start collecting the pension when you quit, not as much an issue.
You also didn't mention that a pension in the new state would likely be much less not just because of the shorter length of service, but also because you will be hard pressed imo to find a state without severe winters that pays teachers as much as they earn in NY.
All of that might be offset by a lower cost of living. To me it wouldn't be as much about whether it was more or less, but if it was enough to live the way you want to in retirement.
More years at a cheaper cost of living might offset it all. Would you be selling a house with a lot of equity such that you could pay less or even pay cash for a new home.
How will moving change your husbands salary?
I cant give you the outcome of your specific situation and the only way you can know imo is to actually project and run all the numbers..
But, a slightly different scenario.........My husband and I lived most of our adult lives in NY with the higher salaries/higher pensions and higher cost of living. My sister and her husband lived in Florida where she earned peanuts and he earned higher than average with a much lower cost of living. We ended up by retirement in basically the same financial position.
The other thing you need to look at is whether or not any reduced pension plus SS would be enough for you alone if your husband dies first. If not, then you would need to make sure that was covered through additional saving, life insurance or some other means.
Background: Late to the game but starting to really plan for retirement. I am a teacher in NYS and already vested. According to my retirement plan I can retire in roughly 20-25 years with full benefits (I have scattered service credit due to subbing and a break from teaching to work in finance so I am not sure of the exact dates).
Winter in NY is doing me in. DH and I had agreed once our daughter is out of school in 7 years and settled into college we will move south and come back to NY for visits
This morning I was looking at my retirement plan and just realized if I move its going to cut my retirement income in half. I love what I do and had planned to find another teaching job in my field when we move but now I'm really wondering if short term thinking is going to shoot me in the foot in the long run.
I know we need to go see a financial planner and come up with something more formal than dreams and that's on the agenda for this summer's break. But I'd love to hear from people who've had experience in this sort of thing. Planning it on paper is much different than living it.
Why would your retirement income be cut in half if you move out of state? If you are vested in the NYS Teachers Retirement system, your retirement benefit is a function of your salary and your years of service. Are you planning on leaving teaching in NYS with fewer than 20 or 25 years? Are you thinking of retiring at 50 or 55 without 30 years service? Those situations would change your retirement benefit. Where you move after you retire does not affect your pension benefit. Your public employee pension is not taxed in NYS but it might be taxed in other states.
I know because I'm in the TRS's "sister" retirement system, the Employee Retirement System. The public employee/teacher retirement systems in New York work the pretty much the same way.
Sorry I didn't explain it well. My retirement income (pension?) is determined by the number of years of service credit I have multiplied by my final salary when working as a NYS teacher. So if I work 20-30 years the multiplier is 2%. 20 years means I get 40% of my final salary (well average three year highest salary). 30 years means I get 60% of my highest salary. Given my steps and salary projections my retirement income from this plan will be half as much if I move out of state (and quit my job) after 20 years instead of after 30 years.
Granted I would have time to work and become vested in a new job and then earn retirement from two different sources but I don't think it would make up the difference.
Thanks for clarifying. After I wrote my post I wondered if that's what you meant; it seemed to me we could interpret what you originally wrote either way.
Thanks everyone. Thinking things out here really helped me clarify my thoughts. Based on some rough calculations the difference in my yearly pension amount if I leave the system at 20 years vs 30 years would be just too great to really consider moving. Time to create a new winter plan.
This had been very educational. Glad I realized this now instead of when I came to retire and realized I made a huge mistake. Prior to yesterday there was absolutely no doubt in my mind that I was moving out of NY state in 7 years, 10 at the most.
Thanks everyone. Thinking things out here really helped me clarify my thoughts. Based on some rough calculations the difference in my yearly pension amount if I leave the system at 20 years vs 30 years would be just too great to really consider moving. Time to create a new winter plan.
This had been very educational. Glad I realized this now instead of when I came to retire and realized I made a huge mistake. Prior to yesterday there was absolutely no doubt in my mind that I was moving out of NY state in 7 years, 10 at the most.
Figuring out the best time to retire, especially from a public pension system, is always tough, but you do need to do the math to see how it works for you. When I started in public service, I figured I'd retire at 62 when I hit 25 years of service, but between the hit I'd take on SS and the more I could add to my pension by staying until 66 convinced me that staying made sense.
Who knows, maybe your school district will offer an early retirement incentive that gives you enough extra time so that you can leave a couple of years early. I think incentives are usually like 1 month of service added to your total for each year you worked up to a certain number, so that might get you an extra 24 months. You can always hope!
Thanks everyone. Thinking things out here really helped me clarify my thoughts. Based on some rough calculations the difference in my yearly pension amount if I leave the system at 20 years vs 30 years would be just too great to really consider moving. Time to create a new winter plan.
This had been very educational. Glad I realized this now instead of when I came to retire and realized I made a huge mistake. Prior to yesterday there was absolutely no doubt in my mind that I was moving out of NY state in 7 years, 10 at the most.
Of course, you might also find that the reduced cost and taxes of living outside of NYS could offset the difference between a 20-year/40% pension and a 30-year/60% pension.
Believe me when I tell you that I hung on until it was financially wise to retire from my job (teaching). I needed, really needed to go several years before I did but I hung on and completed my sentence. It just wasn't wise to work almost an entire career and then give up and suffer forever, financially for it.
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