Skip to comments.School Employee Retirement Benefits - A case study
Posted on 05/02/2012 12:32:01 PM PDT by MichCapCon
A representative teacher in a typical Michigan school district can retire at age 56 and immediately begin collecting state benefits worth $48,161 annually, including $35,640 in pension and $12,521 in health insurance benefits. The insurance benefit cost assumes the person has a dependent spouse but no dependent children.
At age 65, this couples cash income would increase to $65,160 as they begin collecting Social Security, plus the value of health benefits. From that point, the cost of their health benefits are divided between federal Medicare and the state retirement system for school employees. Returns on any savings accumulated by the couple during a 30-year teaching career would add to their income.
Three features stand out in this representative example.
First, the teacher begins collecting full (state) retirement benefits at an early age compared to the average private-sector worker, and could collect these benefits for almost as many years as the person worked.
Second, the benefits also include a comprehensive health insurance policy also extremely rare in the private sector, where most workers must wait until age 65 to be eligible for Medicare.
Third, the state health care benefits are completely unfunded (deliberately so), and so is a significant portion of the state pension benefits (due to flawed assumptions by past state pension officials, and deliberate decisions by past legislators to short-change pension contributions). In other words, most of the costs of the benefits promised by past politicians are paid for by future taxpayers who get no service from this retiree. Given the inherent political incentives, this is the norm in traditional defined-benefit government retirement systems.
The amounts in this example are estimates based on state and national averages, and on typical Michigan school employee contracts. The actual amounts collected by any actual school retiree will vary, and can be significantly less than this example shows. Here are the assumptions it uses:
The teacher worked for 32 years under a typical districts current salary schedule with 2 percent annual across the board increases in addition to step and lane increases.
The health insurance policy provided to a school retiree with a spouse costs the state $12,521 annually. This falls to $5,810 when the couple becomes eligible for federal Medicare coverage.
Both spouses begin collecting the average Social Security benefit payment of $14,760 at age 65.
Starting to wish I had become a teacher so I could retire and “suffer” the rest of my life.
If anyone wants on the Michigan Cap Con ping list, let me know.
LOL! Me, too! I tought 10th grade biology and Henry Ford High School in Detroit in (IIRC) '74/'75 school year. That year Gregory Kelser was a senior. He went on to team with Magic Johnson at MSU for a national championship...and is the current Piston's co-announcer. Great kid, and that school was a very good high school. I was a substitute teacher in Waterford and Pontiac from 1991-2000 (2nd job supplementing automotive job income). SHEESH, I coulda been somebody! I coulda been retired. :)
Sheesh, taught! (Good thing that I didn’t teach spelling or English comp...you’d never know I won a spelling bee in elementary school in 7th grade!...one beer after working on the lawn and I forgot how to spell...darn those IPA’s)
You also need to learn how to use, or NOT use, apostrophes.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.