Friday, April 22, 2011

Seven Questions And Hopefully Some Answers For Retired Texas Teachers

               If you’re new to this teacher retirement thing, this is meant as a primer for those who are just taking those baby steps into the world of retirement.  I will present this in a question and answer format  ( the Socratic method though I make no claims to be a Socrates) with the questions based on questions I  myself had when I retired in 2005 and questions I have been asked by more recent retirees.  If you have a question I don’t ask please go to the comments page at the bottom of this blog and ask your question. O K  here goes:

                                 1. Where Should I Start
                                     If you’ve already decided to join our group of  happy retirees the best place to start is by visiting the  TRS website. . There , if you haven’t already done so you can order the packet you need to fill out to make your retirement official. The TRS website also has calculators for determining your retirement annuity( TRS refers to your monthly payment as an annuity) and you can also find out where TRS is holding meeting  for retirees. I found these meetings most useful and reassuring and  I believe most of you will also.

                            2. What Is A Standard Annuity And What Are My Options

                                       The standard annuity is quite simply the maximum annuity you can receive. The standard annuity is calculated by : first the average of your five highest  salaries , second multiply your years of service by 2.3 and, third multiply your second figure by your average salary and you have your annual annuity. In addition to the standard annuity there is the joint and survivors annuity. These options  allows the retiree’s spouse or beneficiary , in return for a reduced standard annuity, to receive a percentage of the retirees annuity if the retiree predeceases the beneficiary. Under option 1 the beneficiary would receive 100 percent of the annuity, under option five 75 percent and under option 2, 50 percent. This is a critical decision and the employee and his/her spouse needs to think this over carefully. The amount of the reduction from the standard annuity depends on an actuarial calculation. You will need to contact TRS to get the exact amount; hey, sorry, I measured in history, not math.

                     3. What About Health Insurance?

                                     You could of course try to go with out health insurance just as you could choose to sleep over night in a rattlesnake den  but neither would be a wise choice! If you are a “seasoned” citizen and have reached the age of 65 you will need to apply for Medicare. If you are eligible or receiving social security, Medicare will contact you; however if you are only with TRS you will need to contact Medicare at  least three months before you turn 65 to sign up. If you are retiring before 65 you will probably want to sign up for the health insurance option for retired teachers: TRS Care. You can also sign up your spouse for TRS Care if she is no longer working. TRS Care has two options with different deductibles and premiums; make certain you reflect carefully on these options as TRS  will not allow changes When you turn 65 ,TRS Care will become your secondary policy and will pay most of what Medicare does not pay. Also if your spouse is still working you could find out the cost of the coverage for you and compare this to your Medicare and TRS Care options.

                          4. Can I Work In The Public Schools After Retirement?

                                     The short answer is yes.  However the state legislature passed a law in 2001 that limited the amount of work a retiree can work in a public school or college  to 50 percent of what is considered full time for that month. For example in the public schools, a retiree may teach for a half  day or two weeks of a month. Adjunct professors at a community college could teach two classes in the spring and fall semester since five classes are considered a full load and one semester in the summer since two classes are considered a full load. So what happens if you exceed this limit?  You will receive a nice little letters from TRS saying you must return your annuity for that month; I know because I once received one of those “ nice little letters”. There is no limit on the amount a retiree can work in a private school and no limit on substituting, except your desire to go fishing that day.
                     5. What About My 403 B

       If you have a 403 B plan at work, which allowed you to invest tax free, and hopefully was matched by your district, (sometimes referred to as an annuity) you will need to decide what to do with your investment. Your first step should probably be to visit with your plan administrator to check on your options; usually these include rolling over to an IRA or keeping your investment with your districts plan. If the thought of investing is about as appealing as translating ancient hieroglyphics ,you might want to consider finding a financial advisor or better yet educating yourself. Allow me to make one suggestion: there is a wonderful website called that has a lot of guys and gals who are very knowledgeable about investments. Best of all they will answer your questions with great insight and the only cost is the time needed to sign onto the internet.

                 6. Are There Any Organizations For Retirees

        I’m really glad you asked that question! We have a wonderful organization called Texas Retired  Teachers Association. www.trta.orgAustin and Washington. You will also be able to avail yourself of many discounts such as dental insurance and you will have an opportunity to meet a lot of nice folks in your local chapter.

        7. What Will I Do With My New Spare Time?

         This is not a trivial question and merits serious thoughts; however I think I have thrown enough words at you so I’m going to make that the subject of my next blog. Yes this is a shameless enticement to keep reading my blog.

         Your Turn

        I  would be very happy to have your comments on:

1. Any elaborations or corrections you might have

2. Any questions you might have not brought up in this post.

3. Any other comments you might have.

   How To Comment

  1. Scroll to the bottom of this page

 2. Click on Comments

 3. A box will appear for your comments.

4. After your comments click “publish”

5. My complete Thanks in advance for your comments.

6. Please return to the blog because I will always reply to your comments.


Debbie said...

Having just attended one of the TRS meetings, I thought I would offer a few additions. First if you are grandfathered, your annuity is based on your top 3 salary years, not 5 which may be good for people who have had pay increases the last few years. Also I would be interested in more discussion in making the decision which option to choose. If your spouse will collect their own retirement or social security, would it be fair/wise to choose the option where they get 50% of your earnings knowing they will supplement that with their own earnings after you are gone thus allowing you to draw a higher annuity during your lifetime. Afte all we did the work! Also taking the Lump Sum Option sounded great until they discussed the tax repercussions. This became more confusing to me when they stated that before 1988 we paid tax on our contributions to TRS so we wouldn't be taxed on that portion again? If I understood right, I could take the amount out that I already paid tax on and roll the rest into another retirement account to avoid paying tax on it? What do you know about this?

rich said...


Thanks for visiting the blog. You are asking some very good questions. As far as choosing whether to take the standard annuity or one of the options, that depends on each families individual situation. If the spouse has social security, pensions and investments enough for economic security, then the retiree should probably take their full annuity. Another interesting fact about the options is that if you choose one of the options and your spouse dies before you do, your annuity will increase to the full amount they would have received under the standard annuity.

As for the lump sum, remember your monthly annuity payment will be reduced by the amount of the lump sum you choose, which I believe could be one, two or three years salary. In other words you are reducing your guaranteed annuity in return for the opportunity to take the lump sum and invest it yourself. If you have confidence in your ability to invest the money you might be better off with the lump sum than with the regular annuity. I personally would prefer to take the guaranteed money from the standard annuity. especially after the market volatility of the last few years. Hopefully others will jump in with their thoughts.

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B. Hughey said...

Just wondering - does anyone know what the salaries are of the staff of TRTA and if they have increased over the past 10 years.

Anonymous said...

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Anonymous said...

As I understand it,,,,when a teacher retires, hopefully the spouse has a 401k or some such retirement. The 100%, I think is the best option. It is never good to take the lump sum, because whatever you get when you retire you will get until you die....You cannot outlive your benefit. if you retire at 55 or 60 and live to be 80, then you have gotten far more than you put in..However, the legislature has made rumblings of trying to change that..we as retired and active teachers need to stay in touch with and keep informed with Tim Lee, the Executive Director of Retired Teachers. He works hard to keep our benefits. What fund could you invest in that would give you $2,000 or $3,000 each month until you die..I am not sure but I don't think that you can take out the money that the school District puts in for be very careful about pulling out your retirement..TRS is one of, if not the strongest pension fund in the nation...

Martha said...

I am SO GLAD we looked into the Lump Sum option when I retired! After 7 years, I still have my money, and have skimmed several thousand dollars every year from interest. Yes, my monthly payment is lower, but I'm taking a nice benefit yearly from my annuity. PLUS the lump sum is still there for my heirs should I kick the bucket.