Teacher Retirement Help

[juliehendrix]

My husband and I are both 13 years into a teaching career in Missouri.  Our pensions can't jump state lines, and we'd like to relocate closer to family in another state ASAP.  While he loves his job, I'd also just like to retire ASAP, regardles of moving.  However, retirement at 25 years is 2500/month, and retirement at 28 years is 4200/month (each), for the rest of our lives.  We can purchase a max of 5 years a piece for roughly 75k each, but we have the funds to do that.  Would you give up 3400/month to retire 3 years earlier, or just tough it out?  We live on less than 2500/month now, but that's potentially alot of money to walk away from!

[plog]

and we'd like to relocate closer to family in another state ASAP

I would remove emotion from whatever situation you are facing and consider if looking back in 5 years you are going to regret this. Again, I don't know your situation, but there may be alternatives--FMLA, leave of absence, one of you moving temporarily, etc.  With that said, your situation is really black or white--move and forfeit or stay and don't.  Which will you regret less?

[bugbaby]

Without knowing your full financial picture, I'd say tough it out. You hopefully get summers and holidays off to travel and see family.

Unless of course you really hate your work or your location.

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[Jmoody10]

If you don't need the money, why would you stay? You already have enough.

[juliehendrix]

Yeah, I don't really hate my work or location - we do travel quite a bit since we have the exact same schedule, and a teacher one at that.  I hope that when I get to the point I COULD retire (7 years), that I won't mind hanging around for 3 more years.  Kid, parent, testing, admin demands are tough.  Seems like when HAVING to work is no longer necessary, people are sometimes happier to do the same work.  Our financial picture is pretty rosy, FI is actually here, but seems silly to give up guaranteed pensions at this point, especially with children in school and liking our jobs (most of the time, ha). And yes, Jmoody10, that is kind of the reason for the question - what am I saving it for? Seems like most MMM followers have given up substantial money for time.

[Jmoody10]

If you haven't, read Your Money or Your Life.

I am also in a TRS plan - and I will most likely take the penalty to leave 5 years earlier. It is emotionally hard to give up that extra money + get penalized for leaving early. Logical me knows that it doesn't really matter if I don't need the money to begin with. :)

[juliehendrix]

I'm reading Your Money or Your Life right now! Probably where I got such ideas...that's exactly the crux of it! Logical versus emotional!

[aceyou]

I'm in the same boat. 

Wife and I are in years 10 and 11.  We recently bought years.  That gives us 14 and 15 years to go.  We'll be FI in 10 years from now most likely and will have to make a decision to FIRE or wait 5 more years for tons more. 

Our plan is to teach the 5 extra years at the moment, and I think it's pretty likely we stick to that. 

Five nine-month stints to hugely increase our net worth before FIREing isn't the worst thing ever. 

[juliehendrix]

Thanks all!  Aceyou, I know my husband would agree with you, but he's younger than me and quite a bit more idealistic.  Haha.   Good and important points all around.  My mother ended up retiring early because of health issues, so I suppose waiting and seeing where we are in a few years is probably the best course of action (while saving all we can in the meantime!).

[aceyou]

Thanks all!  Aceyou, I know my husband would agree with you, but he's younger than me and quite a bit more idealistic.  Haha.   Good and important points all around.  My mother ended up retiring early because of health issues, so I suppose waiting and seeing where we are in a few years is probably the best course of action (while saving all we can in the meantime!).

I'm not sure I'm idealistic, but I am optimistic.  At the same time, I think there's a lot of prudence sprinkled in there.  My intention is to teach 14 years after this one finishes, but I'm preparing to reach FI as soon as possible.  If my optimism fades, then I'll cash in my my prudence. 

And so will you.  Hang in there and stay prepared.  When things seem crazy and your mind drifts to the big forces out of your control, focus on the kids and enjoy the present.  And if that becomes impossible, then that's why you have "fuck you" money. Good luck.

[Lski'stash]

I attached a spreadsheet that I made recently to help me decide whether or not it would be worth my pursuing 15 more credits to get my next 'lane change.' It includes my salary that I would get for it today (doesn't include inflation), the money I've estimated we would need to live off of per year of retirement, and what we'd nee to live off of until age 60 when the pension would kick in. Looking at the numbers in this fashion might help you determine if it's worth it.

I also really like to read this blogpost: http://www.mrmoneymustache.com/2013/01/29/pension-schmension-retire-on-your-own-terms/


I mean, if you don't like where your at and are in a position to change it, why wouldn't you? But if you like where you are and your jobs, then don't. Life it too short to spend more years than needed doing something, somewhere that you don't like, though.

[socalteacher]

I'm in the same boat. 

Wife and I are in years 10 and 11.  We recently bought years.  That gives us 14 and 15 years to go.  We'll be FI in 10 years from now most likely and will have to make a decision to FIRE or wait 5 more years for tons more. 

Our plan is to teach the 5 extra years at the moment, and I think it's pretty likely we stick to that. 

Five nine-month stints to hugely increase our net worth before FIREing isn't the worst thing ever.

We are at 13 years in. We are able to share a contract and split one position 50/50. You only get 1/2 credit per year each but at 55 you can purchase the other 1/2 credit by paying what your employer would be putting in as if you were full time. You can do this for 10 years.

Maybe sharing a contract is an option for you as you ride out your time to hit that target age. My wife is currently working a 60/40 and she loves her 2 days at work. She feels fresh and energetic each week and I am all around jealous.

[VeggieTable]

I don't know how your program works, but when I worked in the school system, I would have been vested at 10 years. I didn't end up staying that long so I got my contributions back, but I would have been able to collect a pension after 10 years. Granted, it would have been much smaller, but still, it's something. Might be worth calculating how much you'd get if you moved right now and left the system. Also, whatever state you're thinking of moving to might have a more generous pension and might make up some of the difference.

[mustachianteacher]

We're also a teacher couple, so this is something I've thought about. A few things to consider:

1. Your pension may not transfer over with you, but it doesn't disappear either. Say you stop working for Missouri at the end of this school year and move out of state to teach in that new state. Even if you never work for Missouri again, you should be able to collect when you reach retirement age. The only things that have frozen are your years of service and your salary, but when you combine Missouri's pension payment with your new state's payment and your own savings, you will probably be fine. With most pensions, the age at which you start collecting payments is a huge determiner of your retirement payment, so if you can manage to delay collecting until you're 55, 60, or even older, you should do OK.

2. Can you cash out your contributions? This is sometimes allowed. If so, roll those into an IRA, and invest as you see fit. Just make sure you don't hang onto the money too long before depositing it into an IRA or you'll have to pay income taxes. I *think* you have 90 days, but you'll want to check on that; I'm not positive.