Retirement
I am a retired teacher. I worked for thirty-five and a half years, and got what I thought was a great deal when I retired. It was “part of the plan”. No one was going to get rich teaching public school, but there was always the “promise” of a great retirement system at the end. It was so good, that when I started teaching, they exempted us from Medicare and Social Security. Instead, we paid a greater percentage of our salary into State Teacher Retirement, and our School District matched the amount.
The promise: a great retirement system – one of the best in the country. Today Ohio Teacher Retirement is rated 36th in the Nation with an “F” grade (Bellweather). (And Ohio teachers today do have to pay Social Security and Medicare. They earn Medicare benefits, but while they also earn Social Security they only get a small portion of what they earn – the rest are taxed away as a “windfall”).
Old Deal
What was my “deal”, the retirement “contract”?
I worked more than thirty-five years. I could have retired at thirty years with two-thirds of my income. But there was a teacher shortage and they encouraged us “old” teachers to hang on. By working the extra five years, I retired with 88% of my annual income. (I was one of the last for that deal – now it’s 77% thirty-five years). And as I planned my retirement, I was promised a 3% annual Cost of Living Allowance increase (COLA) for the rest of my life.
I got my 88%. But a couple years before I retired, they cut the COLA to 2% instead of 3%. And the year before I retired, the put a five-year hold on all COLA’s. And then five years later, they determined to not give COLA increases at all. (Last month, they finally did approve a one-time 3% increase).
New Deal
I’m lucky, my wife retired with great health insurance and I’m on her policy. If I were on teacher’s health insurance, I’d be paying a lot more. Like everyone else, I purchase Medicare (Part B), the “doctor care” part of it. But since I never paid into Medicare, I never “earned” the biggest part of Medicare, hospitalization (Part A). If I had to buy that, it’d be almost $500 a month, in addition to all the other insurance. So much for the “great deal” there.
Now the “new deal” is: live on what you made almost a decade ago. I can do that, but with inflation, it’s worth 21% less than when I retired. I’m now effectively living on 70% of my annual income.
So I’m doing some substitute teaching, just to cover the “difference”. Substituting doesn’t pay what teaching pays, and it shouldn’t. A sub isn’t grading papers, making lesson plans, or participating in conferences and meetings. You walk in, pick up your packet from the office, and supervise kids. When the bell rings to end the day, your work is done. On an hourly basis, I’m making less than a third of what I made on contract.
And that’s fine too – it’s a choice I make when I substitute. But there’s even a “hitch” to that.
My Work – Their Money
As a substitute teacher, the School District is still required to take 14% of my substitute salary out for “retirement”. (Ohio has the highest percent withholding in the nation, more than 2% greater than any other state). State Teacher Retirement takes that 14% and puts it in an “annuity for me”, paying a small annual interest as long as I continue to substitute. Once I stop, the interest payments stop as well, and State Teacher Retirement “encourages” me to remove the annuity (and pay taxes on it). In addition, the School District matches my 14%, just as they did when I was on contract as a teacher.
But THEIR 14%, paid for MY work, just goes into the general retirement fund. I don’t get it, I don’t benefit from it, and neither does the School District. Money paid BY the School District, FOR MY WORK, is paid like a “fee” to the State Teacher Retirement to do with what they will.
If I wasn’t a retired teacher, that “fee” would go to my retirement. But since I’m drawing my retirement, it’s a “penalty” paid because I’m teaching again. I work for it, but I don’t benefit from it. And neither does the District. They are paying into a State Teacher Retirement “black hole”.
Ohio’s Way
There are over 20,000 substitute teachers here in Ohio. While exact numbers aren’t available, a substantial number of them are retired teachers. And all of those retired teachers are paying into a retirement system “for the privilege” of working while drawing retirement. They are being penalized – even though it’s the School Districts that are paying the penalty.
Abraham Lincoln, in his debate with Stephen Douglas said: “You toil and work and earn bread, and I’ll eat it.”
“You do the work, State Teacher Retirement will get the benefit” – it’s not the American way. It shouldn’t be Ohio’s way either.
All the issues with pension plans, public or private, can be traced back to a few Wise Men, who made the rules based on their prediction of future inflation. Those “Wise Men” were not. There has been only one Wise Man – Yogi Berra, who said something like “It’s hard to predict the future – since it hasn’t happened yet”.