Wednesday, March 08, 2017

Social Security And NYC Educators.
















 We New York City Public School educator gets some pretty good benefits.  A nice pension, a TDA that gives 7% to 8.25% interest with no fees, and affordable health benefits, not to mention union supplied and City funded welfare benefits like dental, hearing, and vision services.  What's not appreciated is that all the educators are covered by Social Security and that's a great bonus. Just ask teachers in fifteen states ranging from western states like California, Nevada, Colorado, and Alaska.,  the New England States except for Vermont and New Hampshire, and the rust belt states like Ohio, Illinois, and Kentucky about their lack of Social Security benefits. Let's not forget the South like Texas, Louisiana, Missouri, and Georgia.  Include some cities like Washington D.C. and 40% of all teachers in the country are not eligible for Social Security payments. When these teachers eventually retire, the likelihood is that they will get little or no Social Security income when they reach the age to apply for the benefit.

In a previous post I pointed out that the average New York City educator pension is $43,701.  Add the annual Social Security income for these long term educators of approximately $30,000.  Therefore, most retirees have a minimal average retirement income of $73,000, not including other investments like the TDA or IRA's for example.  TRS in their retirement seminars have stated that the average retiree has $325,000 in their TDA.  Assuming the money is invested in the fixed fund at 7%, the TDA throws off $22,750 annually.  Its safe to assume most long-term educators in the New York City Public Schools have an annual retirement income of close to $100,000, before taxes.


For long-term New York City educators there are some downsides to Social Security.  First, while educators can retire as young as 55 years of age, Social Security does not start until 62 years of age and is reduced by up to 30%. Second, the earned income limit to collect full Social Security and not pay taxes on the benefit is only $25,000 for single taxpayers and $32,000 for married taxpayers.  Therefore, all long-term teachers can expect to be taxed on 85% of their Social Security income.  For educators who retire before their full retirement age, the maximum a retired educator can make is $16,920.  Any earned income above the $16,920 will result in $1 being deducted from your Social Security check for every $2 earned.  Finally, most school-based educators tend to retiree in June. at the end of the school year.  However, for educators  who take Social Security and are younger than the full retirement year, there is the limitation of $16,920 for the calendar year.  Therefore, it might be wise to wait until January of the next year before taking Social Security or work the Fall Semester and take Social Security in February of that year.  Otherwise, you will have a sharply reduced Social Security check for the rest of the calendar year.

Social Security for the long-term educators may be the difference in being able to live very comfortably in retirement.

Attached is an Excel Worksheet that shows what the percentage you receive by taking Social Security between the ages of 62 and 70.

17 comments:

Anonymous said...

Hey Chaz. I am in 25/55. Got 7 more years till I can I retire at 55. (Will have 28 years on service when I retire at age 55) I was wondering if you personally know any teachers who retired at 55 and what did they do after retirement? I plan to work part time but NOT for the DOE. Love to hear what you have seen teachers do when they retire at 55.

Chaz said...

Believe it or not many work as substitute teachers at select schools. Others, opened up their own business or do tutoring. Most simply retired and moved to Florida.

Anonymous said...


I'm moving to Bali Indonesia and be an underwater photographer / SCUBA instructor ...I'll email some videos!

Hey Mulgrew...KMA!

Anonymous said...

Can only earn up to $30,00 working for NYC or NYS municipal job however if you are collecting a NYC pension. (Correct?) 30 grand is nothing to sneeze at if only working part time though.

Anonymous said...

I am retiring at 55 (in 6 years) and will have only 17 years in. I must do it for my sanity. The DOE is truly a hive of scum and villainy! I cannot take vindictive admins any longer, or stupid Common Core or punitive Danielson's drive-bys, 'planning' or 'goals' conferences etc, the irrelevant PDs or all the mountains of paperwork. (Ironically, the endless stream of low IQ, low skilled students don't bother me at all. They like me and I like them!)

I calculated on the TRS website that I will get around $1300 to $1500 a month, depending on the option I choose. Does this sound about right? How much can I expect after taxes? (I do have rental properties and other income streams too).

Anonymous said...

Great post Chaz.

Anonymous said...

I spoke with atr assignment. I was told current assignments go through April.

Uft said keep checking week to week but assignments could be through June

Anonymous said...

Hi Chaz, I think most educators will get 14K to 16K social security. I'm wondering how you arrived at almost 44K?

waitingforsupport said...

Approximately $1300 per month, no state taxing only federal. SS @ age 62, Tda, other investments...mental health intact? Sounds like a plan.

waitingforsupport said...

KMA...I need to put this on my KMA tool belt...

Chaz said...

Anon 1:14

I will stick to 30k, if you work thirty years and collect Social Security at 66.

Chaz said...

Anon 7:14

Looks right. Federal tax is about 20% before deductions but real estate could change that. The pension and TDA are not subject to State or Local taxes.

Anonymous said...

Max Soc Sec at age 66 is a little over 2600. Multiply by 12 gives you about 31K before taxes and Medicare reduction.

Anonymous said...

chaz: you do fabulous work informing teachers on multiple issues, especially the conversation regarding retirement issues. i have commented previously and am a retired 55/25 person, doing part time work at a community college and teaching swimming at the local Y. pension is what it is, but love the part time work lifestyle, and flexibility to enjoy my time. for anyone thinking of leaving, crunch the numbers, look at varied outside options for work to supplement the income stream, and separate from what in many places is a dysfunctional, authoritarian and toxic environment. there is too much nonsense getting in the way of the basic education of children in the classrooms highlighted by the increasing marginalization of teachers and the profession. thanks chaz for the continued conversation.

Anonymous said...

Chaz, your thoughts on this article:
https://www.nytimes.com/interactive/2017/03/06/business/dealbook/state-teachers-pensions.html

Anonymous said...

does residency in retirement impact one's ability to collect both a pension & SS benefits?
some states don't allow ss & pension, if i worked in NYC and then move to a state that does not provide both benefits would that apply to me?

Chaz said...

Anon 4:18

Normally, the only difference would be how both are taxed by the State and Local goverment. However, if you are saying that once you started working in a State that does not take out for Social Security, your Social Security income would be reduced that is called the Windfall elimination method.

Without more detailed information. I cannot tell you anything more.