- 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
Pensions Don’t Transfer Across State Lines
Pensions are designed to work in only a single state—and sometimes a single city. Guaranteed income plans require legislative authorization and boards of trustees to manage the funds and set rules. Different salary practices from state to state also influence pension benefit values and funding policies. As a result, every state has its own teacher pension plan, which means that if you move to a new place you start over again.
As the illustration shows, teachers who cross state lines pay a stiff penalty in retirement savings, even if they teach for their entire career. Both of these teachers taught for the same amount of time and had similar final average salaries. But the teacher who crossed state lines, Mrs. Smith, earns about $1 million less in total retirement benefits than Mrs. Jones, the teacher who stayed in the same system for her entire career.