02/02/2021
❗️Teachers❗️ Make sure you are fully understanding your pension plan. A supplemental income may be needed and WE CAN HELP. Here are 5 major problems with the system you need to look out for:
1️⃣ If you teach fewer than 25 consecutive years in the same state, you’re probably getting fleeced.
Contributing to teacher pension plans is mandatory in all but four states. Yet in half of state pension plans, it takes at least 25 years of service for a teacher just to break even. Most teachers end up being net contributors, floating an outmoded pension system designed to benefit a small and ever-shrinking group of teachers: those who stay in the same state or school district for 30 years or more.
2️⃣ Nine years of teaching won’t get you much.
In most states, you don’t qualify for a cent of employer-financed benefit if you teach fewer than 5 or 10 years. Such lengthy vesting periods are illegal in the private sector but don’t apply to public sector pensions. Bellwether’s report estimates that less than 45 percent of teachers meet the vesting requirements for even minimal benefits.
3️⃣ New teachers get burned the most.
Over time, the deck has been stacked against new teachers earning pension benefits. Thanks to the economic recession of 2007-09, 12 states lengthened their vesting periods. Nearly two-thirds of Illinois’ new teachers won’t meet its new 10-year vesting requirement. Even more outrageously, Massachusetts teachers hired after July 1, 2001, will never receive a pension worth more than their own contributions plus interest. States are essentially taking no-interest loans from the pockets of younger teachers—many of whom are still paying off student loans —who will never reap the rewards.
4️⃣ Even career teachers face stiff penalties.
Many states penalize teachers for moving across state and, in some cases, district lines—amounting to hundreds of thousands of lost dollars for an individual teacher. A life-long teacher can lose more than half of her pension wealth with a single move. For those who move multiple times, the losses are compounded.
5️⃣ Forty percent of public school teachers don’t participate in Social Security.
You read that right. More than a million teachers across 15 states—Alaska, California, Colorado, Connecticut, Georgia, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Missouri, Nevada, Ohio, Rhode Island, and Texas—are not covered by the most fundamental retirement benefit guaranteed to every private sector worker. And many of them don’t realize it.
