Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Because they have a different retirement plan with a life time of fixed benefits built in like COLA. So during the Carter years of double digit inflation they got a double digit COLA if already retired and their plan didn't have a COLA cap. That COLA if like ours is built from that point on. Current employees got what ever COLA their district gave them. Also as you said you are comparing the pension for what might be employees from one of the highest paying districts with a state wide average. You would need to compare it to that of a working teacher in their district.
Also average is based on the entire experience/pay range so obviously a pension based on the highest three years is going to be higher than those early on the pay scale.
You are speculating about the COLA for retired California teachers without knowing the facts. We get a 2% per year non-compounded COLA regardless of the rate of inflation however measured. In addition there is a guarantee against falling behind worse than 75% (or is it 80%? - can't remember) of the purchasing power of the original pension amount.
So if the people in question have been retired 20 years, they have had 40% worth of COLA's (figured on the original amount only). To use round numbers, if their original gross pension amount was $50,000 and they have been retired 20 years, their current gross pension amount is $70,000.
So in some years, such as the Carter years you pointed out, we fall behind in purchasing power, while in other years, such as the very low inflation we've had in the last 8 or 9 years, we actually get ahead in purchasing power.
I am not too worried about gen-x or millenials; they will figure it out. I worry about their grandkids though. There is a lot of stuff converging in the next 50-100 years:
- Oil reserves are thought to last about 50 years. When they run out, our global, oil-fueled economy is going to go through some convulsions. Alternative energies will grow but still, you cannot fly airplanes or power sea-going freighters on solar power.
- The global population growth will level off and probably start declining in less than a 100 years. That is a good thing for the environment but it is bad for the economy - about half of GDP growth is due simply to population growth. Our economy is built on a growth model; just look at what happens when the Department of Commerce release economic data showing that US GDP growth is down - the stock market takes a dive.
- Population inversion, in which the old out-number the young. Ideally, the ratio of people retired to not-retired is about 1:5. As the birthrate drops, that number gets skewed. And medical advances are keeping people alive longer, which also skews it. People are also retiring younger. Many European countries are now down to a retirement age of less than 60.
- The increased use of robotics to replace factory workers. Tesla's new Giga factory is almost all robotics for assembling batteries. What will be the jobs of the future?
- Personally I believe AGW will be a big hit on the economy too but I realize it is controversial so I will not say anything further about it.
I don't know any teachers with salaries, let alone pensions, like that! My MIL was a teacher in California for 20 years and her pension is a little over a thousand a month!
These threads always seem to devolve into "pension wars", or generation wars. Sigh.....
Yep, well that's California for you and also why the Teachers Retirement Systems (Calstrs) funding level is right about 60%. But never fear the taxpayers will have to pony up to further help these poor teachers who are raking in over 80k per year in pensions benefits and at last with many Calpers employees free health care for them and in many cases their families (in the previous post referred to here). As I've stated many times on here, the public pension systems in California have been far too generous based on their assumptions.
Someone will have to pay the piper some day. Congratulations California Taxpayers!! I am no longer one.
But thank you for the nice pension. I'm not giving it back. Nice, hell, GREAT pension!!
OP, I have been thinking a lot about this exact same topic after reading the Wall Street Journal article the other day that you referenced. The conventional wisdom of retirement savings (start early and with historic returns you too will retire a millionaire!) has changed due to years of very low interest rates. I also am astonished that no one is realizing the catastrophe that will come when these generations retire with no pensions, low or non-existent 401k's, and uncertainty with Medicare and Social Security. I love how Boomers and Silents will tear down the younger generations, saying things like "we worked hard and saved and didn't need Ipads and Cell Phones!" like those are relevant considering the exponential rise in cost of housing, education and healthcare that they never had. The poster who mentioned mailman and teacher retiring filthy rich was not far off. I know of retired couples who had those jobs and now collect massive defined benefit pensions FOR LIFE, pensions that have no risk like those of a 401k. Aunt and uncle were both teachers in Southern California. Back in the 1970's they bought a modest house for $65k. They recently retired and between the two of them collect $165k a year in pensions (this is listed on a public website) for life. They both have Medicare and a cadillac supplemental that gives them the best healthcare. Oh, and that $55k house is now $750k. There is no way a couple starting out now could replicate their life by getting a similar education and job and by just "working hard". Retirees now think they are well off because of their own efforts but they don't realize the benefits they had growing up and raising their families in the times they did.
Thank you for getting what I was saying! Exactly. Those are great pensions, the equivalent of someone without a pension retiring with many many millions of dollars, and those are teachers! As someone else mentioned, even a much smaller pension of $40k is like retiring with $1 million.
The conventional wisdom of retirement savings has been upended and in the future, the dream of a comfortable retirement for those in modest-paying jobs is unlikely at best.
Even in poor areas like here in Tennessee, public sector jobs have minimum salary floors. Private sector jobs go as low as the market will bear.
I'm honestly surprised how short shrift this type of situation gets and the lack of understanding on this board, but given the fact that most people here are from prestigious areas and affluent, I guess I shouldn't be surprised at the general lack of understanding of the life that poor people like me in the middle of nowhere live.
You sound like a bright young guy. What kept you from moving to an area where wages are higher? No way my three siblings or I would have had the lives we did had we stayed where we grew up. We all left. You do pay a penalty, yes, in more distant family relationships. Two of my brothers - one a scientist, the other a top executive for a multi-national firm - have always lived thousands of miles away. Sad for the distance does matter. Even if your earn enough to spring for plane tickets, there often isn't the available vacation time.
On the other hand, now that I'm in an affluent coastal area where good jobs are plentiful it will be that much easier for my kid to remain local - her current plan.
EDITED - Reading further, I see you found a good local job. Assuming you're from the area ... what factors seemed to be related to decisions by your age cohort to remain local?
To answer for my family, one side (mother's) did not have generation-long roots in the area. And so relatives on that side all left in contrast to those on my father's side (a farming family who lived there for generations). The boomer-cousins who continued to live locally *did* have good jobs (engineer, high school math teacher) though perhaps they are now harder to obtain in that small town.
Last edited by EveryLady; 01-07-2017 at 05:31 PM..
You sound like a bright young guy. What kept you from moving to an area where wages are higher? No way my three siblings or I would have had the lives we did had we stayed where we grew up. We all left. You do pay a penalty, yes, in more distant family relationships. Two of my brothers - one a scientist, the other a top executive for a multi-national firm - have always lived thousands of miles away. Sad for the distance does matter. Even if your earn enough to spring for plane tickets, there often isn't the available vacation time.
On the other hand, now that I'm in an affluent coastal area where good jobs are plentiful it will be that much easier for my kid to remain local - her current plan.
I did for four years, and fortunately was able to bring my Midwestern salary back with me. I'm doing fine, and while I grew up working to middle class, depending on how well my parents were doing at the time. I'm making an above average living for my area, but I could likely make another 50% in a prestigious coastal area. I don't like very large cities or cold weather, so moving to somewhere like Chicago for a big raise is basically out of the question.
I've spent some time in Boston as well and enjoyed it. Still, the weather is oppressive four to five months a year. Other than some select areas in Michigan, I wouldn't consider living in the Midwest again.
Most of my friends are probably making half what I do, and I'm making $60,000. Good for the area, but not lighting woods on fire. Those people are really going to struggle.
I like my job and enjoy having family and friends around. I often wonder what things would have been like had I moved to an NYC, Boston, etc., in college.
I did for four years, and fortunately was able to bring my Midwestern salary back with me. I'm doing fine, and while I grew up working to middle class, depending on how well my parents were doing at the time. I'm making an above average living for my area, but I could likely make another 50% in a prestigious coastal area. I don't like very large cities or cold weather, so moving to somewhere like Chicago for a big raise is basically out of the question.
I've spent some time in Boston as well and enjoyed it. Still, the weather is oppressive four to five months a year. Other than some select areas in Michigan, I wouldn't consider living in the Midwest again.
Most of my friends are probably making half what I do, and I'm making $60,000. Good for the area, but not lighting woods on fire. Those people are really going to struggle.
I like my job and enjoy having family and friends around. I often wonder what things would have been like had I moved to an NYC, Boston, etc., in college.
Thanks - I'd just edited my original post to reflect that you'd already answered my original question tho you were kind enough to recap some. In comparison to many other areas of the world (both developed and developing countries) lots of Americans face the tradeoff between maintaining ties to family/friends and salaries. One of the sad drawbacks of the sheer size of this country and our traditional mobility made worse by restricted vacation time. As folks reach retirement age, I'm hearing repeatedly that while friends made later in life (through work, children's schools etc.) can fall away it is the earliest friendships that are the most durable.
I apologize for the tone of my original post. I just don't see a lot of discussion about this topic anywhere and see it as a coming crisis. ...
The combination of a lackluster job market, younger boomers staying in jobs forever, college debt, education ill-suited to the job market, dwindling entitlement programs, and all the rest of it.. point to a pretty scary future for people now in their 20s and 30s. I don't know enough about the ones even younger than that. I think a lot of them are questioning taking on the college debt that the older ones took as a must.
OP, I take your point pretty seriously as does my kid, a young Millennial. There's a sense of a coming storm - or at least greater unpredictability given changing demographics, global shifts in manufacturing, greater demands for world resources, levels of debt.
There's one other retirement board that I sometimes frequent where the traditional American mantra of independence and Horatio Alger pull-yourself-up-by-your-bootstraps approach is predominant. To the extent that works for a family where the kids end up with great jobs that keep or propel them into the upper middle-class or even the 1 percent which continue to flourish economically, well great. Good for them.
But there may be room here to return to a pattern of years past - where the family functioned more as an economic unit. We live in an affluent area. I could fund a lot for my kid (one only) that her peers get but I've always lived below my means, my kid's friendship group draws largely from new immigrants. Some of the other posters have written of financial constraints or the necessary compromises for earlier generations - and these can be some strong lessons.
As a boomer parent (who was fortunate enough to get a couple of inheritances that were used only for investment), I kind of believe it's my obligation to pass money on to my kid if at all possible. She, in turn, chose not to go away to college mimicking her friends whose immigrant parents believe it is a waste to "unnecessarily" pay for housing when there are good local colleges. Interestingly enough, we have good friends in The Netherlands who say this is also typical to their country. Live at home; go local - and maintain the early friendship connections.
She has her first job - $12 an hour as a restaurant hostess. Every cent will go into a ROTH; I'll "reimburse" her for 50 percent of her net.
The point is that to the extent possible, I feel a certain obligation as a boomer parent to acknowledge the possible economic difficulties her generation will face while at the same time teaching ... preaching that less is okay. We live little.
Thanks - I'd just edited my original post to reflect that you'd already answered my original question tho you were kind enough to recap some. In comparison to many other areas of the world (both developed and developing countries) lots of Americans face the tradeoff between maintaining ties to family/friends and salaries. One of the sad drawbacks of the sheer size of this country and our traditional mobility made worse by restricted vacation time. As folks reach retirement age, I'm hearing repeatedly that while friends made later in life (through work, children's schools etc.) can fall away it is the earliest friendships that are the most durable.
This dilemma has been present since Europeans started expanding westward. Many families went westward in search of this or that, and ultimately a better life, leaving behind family and friends. In more recent times, there are cases of small town kids having to move to the big city for jobs.
I get 21 PTO days per year. Of these, 7 have to be used for the six major holidays plus Black Friday. We are also "heavily encouraged" to take 12/30 off as well.
I am really limited on traveling by vacation time more than anything.
Making stereotypes of each generation's supposed wealth is unfair and certainly inaccurate.
There are ''filthy rich'' and ''dirt poor'' among all the generations. I've seen a lot of people struggling and some doing well across generations.
The young ones are not the only ones struggling in this economy with retirement income issues.
With your logic I should be ''rolling in dough'' since I am a Baby Boomer. I am not. What I had I lost during the recession. I am ''dirt poor''.
My Millennial neighbors all have jobs, nice clothes, and drive new and nicer cars. Many leave this apartment complex as they are buying houses. Not me, due to loss of credit.
My Gen X family members all own homes, take lavish vacations, pay for their kid's college, and drive nice cars.
My Boomer sister lives with her Gen X son at age 73 and cannot afford to even rent an apartment on her own. She lost everything in the recession.
My Millennial nephew and niece already have jobs, own homes, and drive nice cars.
The OP needs to get out more and meet real people and leave the stereotypes by the wayside.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
