Doug,
I heard on the Radio that although the Teachers appear to have a generous retirement plan, that is offset as they are not elegable for Socal Security. Is that true?
While I cannot speak for the retirement plan in WI, I can certainly give you my opinion of the retirement plan I got from the Teacher's Retirement System of Texas:
I LOVE IT!! I even retired 8 years before I planned to retire in order to get it. It would NOT have been an option with Social Security.
In essence, what I took was a "Stretch Annuity". I gave up right around $700/month in annuity benefits, and in exchange my 27 year old daughter will receive my monthly annuity for the remainder of
HER life once I die.
Unfortunately, in October of 2007 TRS announced that at the insistence of the IRS they were having to discontinue the option for certain individuals as of 12/31/2007 (it related to the difference between the age or the retiree and the age of the beneficiary....over 20 years difference and the option would no longer be available). I had decided years before that announcement that I would choose that annuity option, and so I retired at age 58 on 12/19/2007. I would have liked to work for another 8 years, but have managed to learn to live on my reduced annuity comfortably (so far, we'll see what happens when gas goes over $4/gallon).
As for the pension offset, that is true for some teachers, but I'm not sure if it applies to WI teachers. It was my understanding that it applies only to SOME Texas teachers and to SOME teachers from GA. Here's how it affected me:
I worked for enough quarters with "substantial earnings" to be vested in the Social Security system. When I was 32 I got tired of the severe winters in KS and decided to move south to avoid the snow, hence my current residence in TX. I found out at the time I started working in TX that I would not be contributing any further into S/S, but that did not disturb me to any great degree, as I could see the writing on the wall way back in 1980 when I moved to TX. I still get a yearly benefit statement from Social Security, and it says that my monthly benefit would be somewhere in the $460/month range. However, the WEP law referenced earlier in this thread allows the S/S administation to reduce my monthly benefit by a maximum of $308/month, leaving me with about $150 a month in S/S benefits.
There are SOME school districts in TX in which the decision has been made to contribute to both S/S and to the TRS.....if the teachers in those districts accumilate enough quarters of contribution to the S/S system (I think the requirement is 120 quarters), they will NOT suffer the reduction through the Windfall Elimination Provision.
I have mixed feelings about it....on one hand, I feel strongly that since I contributed dutifully to the S/S system, believing my government when they promised that I would receive benefits based on my contributions over the years, that I should be entitled to the entire $460/month that I would receive if the WEP had not been passed.
On the other hand, I now have peace of mind that upon my passing, my daughter will (hopefully) not need to worry about where her next meal will come from for the duration of her life. That is a benefit that I would not have recevied from S/S. Was it worth $700/month to me? Obviously, I had the choice of receiving my full monthly annuity from TRS with no reduction. I did consider doing that and buying a huge life insurance policy with my daughter as beneficiary, but I come from a pretty long lived line and while the cost of the insurance policy might not have been $700/month, my daughter has already proven that she can go through a sizable inheritance (her mother died in 2006 and she arranged for each of her three children to have an inheritance in the $120,000 range). My daughter will never be able to go through the "windfall" I arranged with my retirement plan choice.
At one time during the period in which Tom Delay was the SOTH, there was a bill co-authored by a bipartisan group of around 350 Representatives to repeal the WEP law. Tom Delay used the power inherent in the Speaker of the House position to keep that bill from coming out of committee for a floor vote....despite the fact that it received huge bipartisan support. You would have thought Tom Delay was going to have to make up the amount it would cost the government out of his own pockets.
Hopefully, that's a good enough explanation of the WEP impact on the retirement option of teachers who do not contribute to S/S. As for the teachers in WI, again, I'm not aware if they contribute to S/S or not. Did you realize this: "Members of congress do pay into the social security system (since 1984)". I am in high hopes that they are subject to the WEP provisions, as well.
Here's how I feel about the WEP rght now: "It is not the first time my government has lied to me, won't be the last, either (IMHO)".
Here's a link to the WEP page on the S/S website:
Windfall Elimination Provision
Cheers from Doug!!
