The purpose of the Retirement Vault is to provide public school teachers with a database of information regarding financial and retirement planning specific to each state. Whether you are settled or possibly moving, we believe you’ll find the Retirement Vault a useful tool that provides a lot of valuable information. Before clicking on your state, we encourage you to read through the descriptions of each category discussed, which can found below the map.
Feedback: First and foremost, the Retirement Vault is about providing valuable information to public school teachers, which requires a LOT of time to research and aggregate all of the data in what we hope is a user-friendly format; however, we need your feedback! What did we miss that you believe we should have included? Did you, in fact, find the information valuable? What questions do you have that we did not answer? What could we do better? Please let us know by reaching out to us through our contact page, email, or twitter.
Median Pay: Figures provided represent the state-by-state overall median salary of public educators throughout the nation in 2018. These figures do not represent the average STARTING salary of teachers (last recorded for the 2016-2017 school year by the National Education Association).
NOTE: Salaries can and typically do vary across a state based on each district’s location and compensation policies (years of experience, advanced degrees, performance pay, etc.).
Teacher Pension Grade: TeacherPensions.org is a project of Bellwether Education Partners, a national, nonpartisan nonprofit organization. Teacherpensions.org provides high-quality information and analysis to help stakeholders—especially teachers and policymakers—understand the teacher pension issue and the trade-offs among various options for reform. To measure the extent to which states have created retirement systems that match and adequately support all of their teachers, authors Kirsten Schmitz and Chad Aldeman created a grading rubric focused on two questions: (1) Are all of the state’s teachers earning sufficient retirement benefits? And (2) Can teachers take their retirement benefits with them no matter where life takes them? Their rankings used an equally weighted grading system comprising six variables to help answer their two guiding questions:
- The percentage of teacher salaries going toward retirement
- The percentage of teacher pension contributions going toward pension debt
- The percentage of teachers who qualify for employer-provided retirement benefits
- The percentage of teachers who earn retirement savings worth at least their own contributions plus interest
- The percentage of teachers covered by Social Security
- Whether or not a portable retirement savings option exists
Under each page we provide the “Overall Grade” based on their findings and a link to the respective state page found on their site. If you wish to read the full article, and we recommend you do, it’s titled, Retirement Reality Check – Grading State Teacher Pension Plan.
Teacher Recriprocity: Many young teachers either believe they can go teach anywhere no problem, OR that they are completely locked in to the state of their initial certification. Neither are actually the case, but the process of transferring a teaching license and the requirements to do so vary from state to state. Even earning your National Board Certification doesn’t guarantee the mobility of your license/certificate across the nation (thought it does help in many cases). Securing a professional license/certificate prior to moving makes the process significantly easier and generally just requires some or all of the following: paperwork (including verification of teaching experience, copies of license/certificate, copies of praxis scores, etc.), a fee, fingerprinting, and some time. Apprentice licenses/certificates can be trickier or involve many more requirements, if they’re transferable at all. In either case, be sure to contact the State Department of Education for a complete description of what you need. Another consideration when moving: if your teaching license is transferable, your state pension is not portable (see below).
Retirement (Benefits & Pension Eligibility): As long as state pension programs remain available, they are arguably one of the best perks for public educators. One major problem, though, is that they are STATE pensions, and therefore are not portable across states. There is a vesting period (between 0-10+ years depending on the state) in order to become eligible for a monthly benefit. If you stop teaching in that state for whatever reason before becoming vested, you receive no monthly benefit and generally forfeit any empoloyER contributions made to the account (but you still have control over what happens to the employEE contributions + interest and can generally roll those into qualified retirement accounts without penalties or taxes). Furthermore, the contributions made to state pension programs are, in almost every case, significantly backloaded, meaning you need to remain an active member in the program for many years beyond the vesting period to break even on the contributions made to the account. Once vested, you must meet the respective state/district’s eligibility requirements in order to receive benefits.
SO WHAT HAPPENS IF I MOVE? Many state pension programs offer the ability of active members to purchase service credits (the process, rules, and costs vary); however, you cannot double-dip if already vested in another program.
Our goal in providing the pension benefit calculation is so that readers can grasp an understanding of what it takes to maximize your payment in retirement; furthermore, knowing your anticipated monthly/annual pension income is integral to effective retirement planning (particularly if your goal is to retire early). Many states will actually calculate your monthly payment for you, and that figure is usually viewable by simply logging in to the respective state pension website. Additionally, an annual update is generally mailed out to participants.
We cannot stress enough how important accounting for your healthcare, vision, and dental coverage coverage for retirement planning is (especially for early retirees). Benefits vary greatly from not only state to state, but also district to district. Even if a teacher becomes eligible for “unreduced benefits”, that does not necessarily suggest your state/district will continue to cover or subsidize your healthcare insurance premiums. Healthcare coverage is far more expensive when you’re responsible for footing the entire premium bill – make sure you plan for that. Consider combing through your benefits plan with a fine comb and contacting your respective district/state for clarification.
College Savings: Some may disagree, but a pillar of TeachFI’s financial/retirement planning philosophy requires setting future generations up for success so that they may continue to carry the torch that signifies Financial Independence. Post-secondary education can be expensive, and we feel that burden is ours to prepare for so that our children are not riddled with debt. Regular contributions invested in an adequate [Education Savings Account] is an integral part of our [Written Financial Plans]. We realize assuming responsibility is not required to ensure our children have a fair shot at reaching financial independence, but doing so enables them to start miles ahead of the pack.
Most all states offer some sort of college savings program, but not all programs are equal. For instance, some offer state tax deductions on contributions made to 529 Plans or other Education Savings Accounts, some plans/accounts are more mobile (such as not recapturing tax deductions upon moving the account over to another state), and some have lower fees and/or better fund options. The good news is residents are NOT required/obligated to participate in their state’s plan. There are several websites that rank/compare the available 529 Plan options. Do some research, weigh the aforementioned differences, ask some questions to the many financial forums/groups out there, and/or consult with a financial advisor to decide which plan is best for you.