Wednesday, December 4, 2013

Teachers TRS and Social Security benefits

Faculty, Teachers, Administrators, Staff, Employees finding out about your retirement plan 

What's the best way to figure out what amount of income you will need for retirement? 

All you have to do is go back to your first year in the public school system in Texas, and write down what your annual salary was. Then try to figure what your salary was every year or maybe every five years to the present. 

For instance, if you made $34,000-50,000 dollars your first five years in public education, that is what you should project for retirement. This will take Maintaining the same level of income throughout your retirement will take some work and saving to do. 

Inflation or the cost of living is a major risk in retirement, and if you can remember you probably received salary increases while you were working. These salary increases were there to keep up with the increases at the grocery store, and all the rest of the purchases you and your family made. 

     In Texas, educators-teachers are under the TRS retirement system and for about 90% of all school districts, there is no Social Security. In a nutshell, the TRS is a Defined Benefit Plan retirement system, which means when you retire and whatever option is elected, the monthly retirement income amount, stays the same. 

IN FACT, it is guaranteed to stay the same. But "COLA" is not there and for many educators they find this out after they retire, which is not the time to find out. Most if not all Fortune 100 Corporations use to have the same type of retirement plan, 30 years ago. However, they all changed to the Defined Contributions Plan, because they saw that the other retirement plan would not work for employees. 

And if that wasn't enough, school officials and educators said 40 years ago, that since they had the TRS retirement system, that they didn't need social security. Instead they could contribute to their own private retirement plan (403b) and make more earnings and a larger retirement income than Social Security. Yes! that was possible, except that it was optional, and not mandatory like Social Security -- "forced savings." 

Many educators did start to save into their private retirement plan, but Texas salaries to teachers don't leave much room for savings. 
And if the two decisions for educators retirement plan wasn't enough pain, the US Government and Social Security Administration put in an automatic "cost of living adjustment (COLA) into Social Security. Since salaries and years of service are the parts of the TRS retirement formula, the first few years of the TRS retirement look alrightbut after that educators suffered at least an average of 3% loss to inflation every year. With the increase in longevity for all Americans it can be a very long and hard retirement lifestyle to live on. 

THE BEST OPTION that a educator can implement as early as possible is to work on the goal of saving around 

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