- The Path to Retirement Security
- Defining Retirement Security
- Staying on the Road to Retirement Security
- Backloading: Pensions are Designed for Teachers Who Spend Their Entire Career in a Single State
- Most Teachers Will Not Earn a Full Pension
- Pensions Don’t Transfer Across State Lines
- People Do Not Always Earn As Large of Pensions as They Think
- Some States Have Minimized These Challenges
Staying on the Road to Retirement Security
We can think about the time between our first years of working as a professional and the time we will retire as a journey, a road toward retirement security. If we don’t save or participate in a retirement plan of some kind, we veer off course. If we save a lot or have a really good retirement plan, then we might move down that road quickly—perhaps reaching our goal of having enough savings, or service credits in a pension, to retire before we want to.
The important thing is that teachers should be on the path to retirement security. Ideally, everyone will make steady progress of accumulating resources—whether money in a savings account, personal investments, or credits in a pension plan—to provide a financially secure retirement.
Pension Risks on the Road to Retirement Security
The previous module looked at some of the challenges states face in appropriately paying for promised pension benefits. But, in addition to systemic risks like market downturns or actuaries failing to predict how long people will live, there are risks specific to each teacher, such as the risk that you won’t work long enough in your pension plan to stay on the road to retirement security.
Despite the common perception that everyone with a traditional pension will be “set” for retirement, about half of the teachers in America are not on a path to adequate retirement security. A primary reason for this is that only a small portion of teachers who enter the workforce earn a full pension, either because they do not teach long enough or because they move across state lines and are forced to start over. The next few sections explain how this works.