As a student about to graduate with a teaching degree, it’s important that you understand some of the facts about teacher pensions. A pension is a type of retirement fund that pays you money once you reach an advanced age and decide to retire. Though some think that teachers receive a large amount of money and get social security benefits too, you may find that you’ll get less money than you expected when you retire.
Maximum Cap
According to Jason Richwine, many states have a maximum cap or a limit as to the amount that a teacher can draw from his or her pension every year. He points out that this cap often depends on the number of years the teacher worked and the amount of money that individual contributed to the pension fund. While some teachers may draw more than $75,000 a year, others can draw as little as $50,000 a year. Some teachers get less than $30,000 from their pensions after retiring.
Contribution vs. Payout
A common misconception says that teachers draw higher salaries when they retired than they did while teaching. The amount that a teacher gets depends on a number of factors. The primary factor is the amount or number of contributions that a teacher makes. If you spend 20 years or more working as a teacher and make contributions with every paycheck, you’ll draw more than someone who worked less. An individual who only taught for 10 years may only draw a few hundred dollars every month because that teacher contributed little to the overall fund.
Social Security Benefits
One of the facts about teacher pensions that some gloss over relates to social security benefits. When you work in most professions, your employer makes deductions that go to the social security fund. After you retire, you can get money from the government based on how much you paid out over the years. With a teacher pension, you only get money from that pension. Teachers cannot get social security benefits and must understand how to live on the amount they draw from their pensions.
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Where the Money Comes From
Another important fact to know is where the money comes from and who contributes to teacher pensions. The largest portion of the money comes from each individual school district. In the same way that other employers take social security benefits and tax deductions from paychecks, school districts will automatically take out deductions and some money to put in the pension. Around eight to nine percent of their salaries will go into this fund. The district will the contribute roughly the same amount, though some districts will place a slightly higher amount into those pensions. A small percent comes from the state itself.
Where the Money Goes
Though some people assume that all the money in the pension fund goes to teachers, looking at the facts about teacher pensions will show you that this isn’t necessarily true. You will continue drawing money during your retirement years, but if you pass away, that money may go to your widow. Many pension plans have widows’ benefits policies that provide the widows of former teachers with benefits equal to half of what those teachers drew. Any money left in the fund will go to supporting future teachers after they retire.
Contributing to a teacher pension is a smart way to invest in your future. The money that you contribute will come back to you in the form of monthly or weekly checks after you retire. Looking at facts about teacher pensions will give you an idea of what to expect during your golden years.
