Social Security...or what?

[jake]

I am curious as to what happens to people wanting to retire when a school district does not participate in the Social Security System. Are there other methods in place to offset the lack of paying into SS?

I never thought too much about it until I got ready to retire and noticed gaps during the time I worked in states where they didn't use SS. I can't remember any alternative plan set up to assist in retirement. Am I off base?

Jake

 

[Michael]

In my state they have their own retirement system. They can take a lump sum, or monthly pension. The big problem with not being in Social Security is that you are also not in Medicare. A 30 plus year teacher was lamenting that the private health care policy that their group uses now charges a retired couple hundreds of dollars per month in premiums. He decided that he has no choice except to keep working because of health insurance costs.

 

[cc]

But even if you are in Medicare, 30 years typically still leaves you a good many years short of eligibility...

 

[John Galt]

Having spent most of my carreer in traditional industry,
I never gave SS much thought prior to retiring. I know a guy who is my age (60) and has made a living doing
auto repair in a one man shop for 40 years. I don't know how he's
handled his taxes, but he gives the impression he'll have to work forever due to a lack of SS benefits.
Not a pretty picture unless you love your work.

John Galt

 

[Jake]

Thanks for the input. It really is a sad tale--and I don't think a lot of young educators realize they are putting their retirement in jeopardy. School pensions are minimal at best, at least in the states I've worked. Couple that with no SS or Medicare and looks like many educators are in for a rough ride. I know my own personal SS is down thanks to working in non-SS states.
I think few will be able to ER unles they have other funding sources.

 

[Michael]

But even if you are in Medicare, 30 years typically still leaves you a good many years short of eligibility...

True, but there is hope that it will eventually kick in when you need it the most. The monthly premium on a private health care policy for a healthy 45 year old is fairly inexpensive. The monthly premium for a 70 year old with a few health problems (and how many 70 year olds don't have any health problems) is fantastic. Someone in Medicare only has to cover the period by themself until they are 65. Someone not in it has to come up with ever higher premiums for another couple of decades beyond 65.

 

[unclemick]

If you are single - carrying no health insurance what so ever and paying cash - is a consideration.

49 - age 61 and considering trying to make to Medicare without.

If I get that sick - I'm not going to enjoy my nest egg anyway.

No guts, no glory. No point in house insurance either - unavailible or exorbitant for a fish camp over water. Do carry public liability(read portfolio) and appropriate car insurance.

 

[unclemick]

Oh and BTY - base plan is to take SS early - although will wait till next year to really scrub the numbers and work the tradeoff's - 85% IRA, 15% individual stocks, no ROTH conversion yet, non cola defined pension, etc.

Heh, heh, heh - plan to croak at precisely at 84.3 - the IRS expectancy number back in 1993 when I was looking at 72t.

 

[JonnyM]

You didn't live in Sunny CA then?

Thanks for the input. It really is a sad tale--and I don't think a lot of young educators realize they are putting their retirement in jeopardy. School pensions are minimal at best, at least in the states I've worked. Couple that with no SS or Medicare and looks like many educators are in for a rough ride. I know my own personal SS is down thanks to working in non-SS states.
I think few will be able to ER unles they have other funding sources.

I take it you haven't visited the Golden State then? On a hunch I visited the Calpers website and there retirement chart looks like a very substantial 2%/55 Defined Benefit Plan, with Age 50 as a minimum Age. Not too shabby. I'm only writing for CA, OSMV.

It appears California Teachers will receive a significant retirement benefit and a fully paid health plan if they put in 20 years or more. Since many teachers begin their careers before age 30 this seems like a very dooable career with a bright light at the end of the tunnel.

http://www.calpers.ca.gov/eip-docs/...ice-retire/benefit-charts/pers-pub-2chart.pdf

 

[Michael]

If I get that sick - I'm not going to enjoy my nest egg anyway.

Don't be too sure. Even temporary stuff can be shockingly expensive. A man I knew spent one month in the hospital for low blood pressure, and got a bill for $500,000. Prices are going up very fast, so this will be even more expensive in the future.

 

[Helen]

A man I knew spent one month in the hospital for low blood pressure, and got a bill for $500,000.

I'll bet his blood pressure wasn't low after that !!!

-helen

 

[Zipper]

That's outrageous Michael! Only in the USA would that be tolerated. Bankruptcy would be the only solution.

 

[John Galt]

I have heard similar stories (the one month hospital stay adding up to 500K). I really admire unclemick's approach. I have spent a fortune on insurance.
Sure, I have had some claims, but they are still way
ahead of me. For example., our total insurance tab
(personal and small holding company) is around
$6,000 per year. A huge sum at my income level.

John Galt

 

[Zipper]

Life, vehicle, and house run us about $3000 John. Your difference is probably in Health Insurance.

 

[Jarhead*]

nRe: Social Security...or what?

That's outrageous Michael!   Only in the USA would that be tolerated. Bankruptcy would be the only solution.

Zipper:

Bankruptcy would be possible if you had no assets, but probably not going to happen to most on this board. Assuming they aren't living on air.
We currently pay about $6500.00 a year for health insurance, and that premium is counting my medicare ins., and my wife's policy. (She won't be eligable for medicare for another 4 years).
We have very high deductibles on wife's policy, and have always viewed health ins. as a hedge against a huge claim. (We can handle $10,000 claim, but a $500,000 price tag would be having a bad day indeed.

 

[John Galt]

Yeah, it is better to own assets, but then most of us
spend a lot of time and thought protecting against the "what ifs". If you have no assets to speak of it's
kind of liberating (Thoreau-like). There are few on here
like unclemick. He has something to lose and is obviously a smart guy but he rolls the dice anyway.
I admire that but I don't have the guts to do it myself.
On the other hand, I carry about the barest minimum
insurance (all kinds) that I can get. This is mostly
driven by limited financial resources. If I ever was in
the process of running up a 500K bill, hopefully I would expire early in the treatment

John Galt

 

[Michael]

That's outrageous Michael! Only in the USA would that be tolerated. Bankruptcy would be the only solution.

Bankruptcy would end my early retirement, since most of my assets are in taxable accounts. I carry Blue Cross in case of medical catastrophe. The costs will get worse, since they are politically motivated, and most voters don't understand cause and effect with regard to medical prices.

 

[daystar]

Just when you thought it couldn't get worse, retirees that are entitled to a pension based off of work where they didn't contribute to social security can have their social security benefits reduced.

Example: You work 30 years in a government job where you don't pay into social security. You work 10 years (40 credits) in a job where you pay social security. You've hit your 40 credits so you're eligible for social security. You've also retired from your government job. You will have a reduction in your SS due to the Windfall Elimination Provision. You can also have a reduction in your social security if your spouse dies and you receive spousal SS based on his or her SS earnings. This is called the Government Pension Offset.

Read more here: http://www.ssa.gov/gpo-wep/

 

[Michael]

Government Pension Offset.

As I understand it, they do this because at lower income levels Social Security is a charity program. Minimum benefits were raised at the low end, because no one could live on what their earnings would have given them. Politicians figured 40 year government workers did not need the charity offset for minimal Social Security earnings.

 

[grumpy]

Daystar,

As a retired federal employee who has also worked under social security, I don't have any beef with the Government Pension Offset or with the Windfall Elimination Provision. My gov't pension is very generous compared to social security benefits or to most people's pensions. Yes, I paid social security taxes and I will never draw any significant SS benefits. I figure that if I live a normal lifespan I will get back way more in pension benefits than I ever paid in federal income taxes, SS taxes and retirement system contributions.

The SS taxes I have paid will help support a SS beneficiary who needs those benefits way more than I do.


Grumpy