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.