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Educator Pensions and Social Security Might Come Up Short

Pension and Social Security benefits were never designed to provide complete income support in retirement. Here’s a look at why those benefits may fall short of what’s needed and what teachers can do about it.


  • Due to local, state and global economic problems, many educator pensions are underfunded and may not provide the benefits you were counting on.
  • If you’re eligible, Social Security may only replace about 30 to 40 percent of your pre-retirement income at best, and many educators may have to settle for benefits much lower than that.
  • Personal savings, through a 403(b) plan and other investment options, can help reduce your retirement income shortfall and provide greater security over what could be a decades-long retirement.

How secure are your pension plan benefits?

In the private sector, traditional pension plans are disappearing and employees are assuming personal responsibility for their retirement planning through workplace 401(k) plans. Many educators are finding themselves in the same boat, due in part to the deteriorating financial health of their state pensions.

According to the National Council on Teacher Quality, a research and policy group that seeks to improve the quality of educators, a majority of state educator retirement plans are underfunded, meaning, the plans may not be able to meet the payout promises made to current educators. There are many complex reasons for this, but like any debt problem, it comes down to lower state revenues coupled with higher expenses, all made worse by the recent global recession.

States face tough decisions in an effort to shore up their public educator pensions, including:

  • Raising taxes
  • Reducing benefits for new educators
  • Lengthening pension vesting requirements, or raising the retirement age, or both
  • Reducing benefits for current teachers.

Will Social Security take up the slack?

From its inception back in the 1930s, Social Security has always been a safety net to help keep retirees out of poverty. It was never intended to be anyone’s sole source of income. Today, lower-paid eligible workers can expect Social Security to replace about 40 percent of their pre-retirement income. The higher your average salary, the less Social Security will replace.

Educators face other Social Security benefit reduction issues. If you previously paid into Social Security in a private sector job, you may lose a lot of those benefits due to the Windfall Elimination Provision. And 14 states don’t provide any Social Security coverage for educators.**

Put your personal savings to work

Clearly, dwindling pensions and reduced Social Security benefits are not going to fund your dream retirement lifestyle. That’s particularly true if your income needs to last 20 to 30 years or more and cover unexpected expenses and rising healthcare costs. You need to take control and start saving your own money.

The bottom line

The lesson here is to plan as though your pension and Social Security benefits might not be as rich as you thought and take a proactive role in creating a personal retirement strategy. Here are a few things you can do to get started:


*2011 State Teacher Policy Yearbook, National Council on Teacher Quality

**The 14 states that do not provide Social Security are: Alaska, California, Colorado, Connecticut, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Nevada, Ohio and Texas.

Plan your strategy:


Educator pensions and Social Security might come up short. Find out why your benefits may fall short and what you can do about it.


Working with a financial planner. Read tips on how to find and evaluate a financial advisor.


Why women need to close the retirement savings gap. This article offers ways you can become a more confident saver and investor.


Savings options beyond your 403(b) plan. Explore a variety of options beyond your 403(b) that may help you achieve different goals.

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