Ensuring you live comfortably in your retirement is all about financial forecasting, and to do so, you need to know what your pension will be like after you wipe your last whiteboard.
So, how much do teachers make after retirement? This article will discuss this complex question and provide some insight into what to look for.
As you might assume, there is no one set teacher pension, as teaching is an incredibly varied profession, and the rules regarding pension payments are defined locally, state by state.
Not to worry, though! — We’re going to break down the essentials so you can optimize your pension and begin mapping the shape of your retirement future.
Teacher Pensions: How Do They Work?
85% of all school teachers across the United States are subscribed to “defined-benefit pension plans,” meaning teachers will be paid a specific amount based on the workings of a formula when they retire.
An additional 8% of teachers participate in “defined-contribution pension plans,” such as 401(k)s. Teachers “invest” a portion of their salaries in these pension funds, and often, the employer matches their contributions.
Teacher Pensions & State Rules
As mentioned earlier, teacher pensions’ rules fluctuate from state to state, the most important factors being…
- Vesting requirements — Vesting requirements or the time-based conditions of a pension plan. They stipulate that somebody must teach for a predetermined amount of time before they’re eligible to receive benefits.
For teachers, the vesting period is typically between five and ten years. Should a teacher be dismissed from or leave a school before hitting this threshold, they stand to lose a fraction of the benefit on offer, or indeed the benefit in its entirety.
- Mandatory contributions — Even though most US teachers are tied to defined-benefit pension plans, most states still require them to contribute to the fund… but not all states.
- Retirement stage — The point at which a teacher may retire having claimed 100% vested interest in their pension fund also differs from state to state. This stage is usually determined by a combination of the teacher’s age and years in the profession.
For example, some states use the “rule of 80”, meaning when a teacher’s age and years of service add together to make 80, they’re eligible to retire with maximum benefits.
- Formula — Ultimately, it’s the formula a state uses that determines the exact sum of money a teacher will receive during retirement. These formulas usually involve the average salary before retiring (calculated over a three-to-five-year period), years of service, and a multiplier.
Teacher’s pensions are often referred to as “backloaded,” which means that the benefits become far more generous when somebody nears retirement age, so early retirement or an interstate move can be remarkably costly.
City Rules & Teacher Pensions
It’s not always the state that establishes the rules regarding teacher pensions but the city you work in. Chicago, Kansas, New York City, and St. Louis all offer teacher pension plans that trump general state law.
How Much Do Teachers Make After Retirement – Averages By State
We’re about to give you a breakdown of the average teacher pensions by state, but before we do, it’s important to understand the framing of the statistics.
- Not all teachers qualify for a state pension — Due to the relatively steep conditions of teacher pension plans, over half of all teachers in the US will not qualify for a state pension.
The averages listed below only refer to those who do achieve at least the minimum service requirements of the various pension plans offered to teachers.
- Benefits are variable — As established earlier on, pensions can be quite meager if teachers retire early. Because these pension plans are backloaded, even though most teachers don’t attain 100% vested interest, the averages look deceptively generous.
What’s more, certain states don’t offer teachers Social Security, bolstering teacher pensions to compensate, which can also make the averages seem a little higher than should be considered realistic.
- Contributions — The averages detailed below do not take into account teacher contributions, just what is earned.
Keeping all this in mind, let’s look at the average teacher salaries across the US.
| State | Average Pension | Median Pension | Estimate of New Teachers Who Will Qualify For A Pension |
| Alabama | $20,721.89 | $19,728 | 39% |
| Alaska | $33,849 | $39,372 | 37% |
| Arizona | $20,508 | $20,328 | 100% |
| Arkansas | $21,067 | $17,784 | 57% |
| California | $43,308 | $40,008 | 69% |
| Colorado | $37,452 | $29,376 | 36% |
| Connecticut | $47,386 | N/A | 55% |
| Delaware | $20,485 | $25,440 | 36% |
| District of Columbia | $63,468 | $48,420 | 29% |
| Florida | $19,765 | $18,198 | 28% |
| Georgia | $34,946 | $22,835.16 | 33% |
| Hawaii | $14,964 | $30,252 | 25% |
| Idaho | $17,043 | $13,992 | 70% |
| Illinois | $46,513 | $52,188 | 50% |
| Indiana (Pre-1996 Fund) | $17,436 | $21,516 | N/A |
| Indiana (Post-1996 Fund) | $16,392 | $12,492 | 31% |
| Iowa | $19,704 | $15,180 | 42% |
| Kansas | $12,929 | $15,924.12 | 44% |
| Kentucky | $34,685 | $36,330 | 67% |
| Louisiana | $23,828 | $25,836 | 56% |
| Maine | $20,333 | $24,312 | 14% |
| Maryland | $34,956 | $20,544 | 43% |
| Massachusetts | $38,637 | N/A | 12% |
| Michigan | $21,348 | $4680 | 43% |
| Minnesota (All retiring teachers) | N/A | $20,283 | 50% |
| Mississippi | $18,764.25 | $17,064 | 24% |
| Missouri | $43,344.52 | $47,460 | 58% |
| Montana | $21,153 | $27,708 | 35% |
| Nebraska | $22,590.15 | $20,288.39 | 32% |
| Nevada | $30,468 | $27,036 | 57% |
| New Hampshire | $21,355 | $7020 | 31% |
| New Jersey | $40,104 | N/A | 56% |
| New Mexico | $21,165.96 | $19,765.68 | 33% |
| New York | $44,383.40 | $46,920 | 40% |
| North Carolina | $18,443 | N/A | 35% |
| North Dakota | $31,596 | $57,413 | 56% |
| Ohio | $46,620 | $57,696 | 34% |
| Oklahoma | $19.846 | N/A | 44% |
| Oregon | $28,320 | $28,296 | 46% |
| Pennsylvania | $24,603 | $23,664 | 36% |
| Rhode Island | $44,953 | N/A | 51% |
| South Carolina | $19,630 | $26,287.80 | 37% |
| South Dakota | $18,717 | $18,120 | 53% |
| Tennessee | $18,612 | $10,668 | 56% |
| Texas | $44,556 | N/A | 59% |
| Utah (Noncontributory) | $21,063 | $19,512 | N/A |
| Utah (Contributory) | $15,996 | $25,020 | 52% |
| Vermont | $18,230.18 | $27,245 | 33% |
| Virginia | $21,962.50 | $18,708.48 | 50% |
| Washington (PERS 1) | $28,203.65 | $26,529.84 | N/A |
| Washington (PERS 2) | $20,775.48 | $18,311.28 | 55% |
| West Virginia | $19,165.69 | $23,364 | 39% |
| Wisconsin | $22,911 | $13,392 | 64% |
| Wyoming | $17,556 | N/A | 42% |
Final Thoughts
Teaching can really pay off in the pension department, provided you’ve had extended time in the profession. However, due to that backloaded benefit structure, those who retire early stand to sacrifice a small fortune in retirement funds.
Still, time is our most valuable resource, far more precious than money, so don’t let your career imprison you if you think you’d be better off bowing out of the race early!
As a current Mortgage Underwriter with 15 years of experience, I have seen my fair share of money-related issues. Whether that be high levels of debt, not enough credit, or simply a lack of funds - I’ve had clients who fit into these categories.
Here I will share tips, tricks, and experiences on how you can get yourself back in control of your finances.
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