you need to understand these words
wep windfall elimination exemption
if you get any social security you are due it will be adjusted
for some that means you get zero social security
eg for my wife she she gets about 30% of what she should be paid based on the social security taxes she paid and when i die she will get about 50% instead of most of my social security
some teachers will get zero
trs teacher retirement system
cola cost of living adjustment for inflation its the one that social security uses for now
eg last year it was 2.8%
some retirement systems give cola but not trs
they give this occasional one month extra pay check about every 5 years that helps some but doesnt come anywhere near if they were giving cola adjustments
now if you work for a school district that pays social security and trs and you pay them also then you are not affected by the wep but you wont get the cola
eg my relatives in arkansas get both teacher retirement and social security and both have cola adjustments
very few of the school districts in texas pay into social security
so most texas teachers get screwed by this
no cola adjustments on their retirement
no social security for them
so what basically happens is if you retired with a $20,000 retirement
10 years later you retirement check would still be $20,000
the cumulative inflation rate over the last 10 years was 19.6%
so
that $20,000 pension is really only worth $16800
and
with no social security check
then what happens 10 years later well it only gets worse
looking at the last 5 years if the trs did cola adjustments that $20,000
would be $21,390
over the last 10 years it would even be more
if you had paid into social security then a typical retiree on that level of salary would get about $15,000 a year
but
instead
they only end up with
yes
$16,800 worth from trs and none from social security
sucks to be a teacher in texas huh
so what do they need to do
encourage their school districts to pay into social security
work a second job that pays into social security eg summer work holiday work work at a job that pays into social security after retirement
make sure you get in enough quarters to qualify
change to a district that pays into social security
start investing into your 403b and your 457 plans at work
attempt to put in what you and your district would be paying if they and you paid social security taxes which is 12.4%
this investment is not taxed until its withdrawn later in life
eg my wife she over her 17 year career put in enough into her 403 b that will allow us to pull out each year the same as what she would have gotten from social security but keeping the balance untouched
eg lets say we have $300,000 in her 403b and withdraw 4% a year this covers what we are losing on our lost social security
however when i die we still lose in the end since she wont recover all of my social security just only half of it because of the wep
start your 403b early in your career at the fica rates of 12.4% and dont ever touch it until you retire
if you were to max the 403b then you could do the 457
few teachers are able to max them out
consider meeting with a certified financial planner who understands how the trs system doesnt work for you
the earlier you start the better
in my experience most teachers dont really understand how this works until they retire and find they arent getting the moneys they expected
the organicgreen doctor
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