June 17, 2008

Your TRS Pension

October 9, 2008 - UPDATE - The Georgia TRS has proposed a change to the Cost of Living Adjustment (COLA). I have posted some information about it along with a letter that I wrote to TRS. Please click here to view the new post.

June 17, 2008

I have dealt with public school educators from all over Georgia and other states, but right now, I'll focus just on Georgia...

While most business sector employees have a 401(k) or similar company retirement plan that offers contributions with no set payout amount, educators are quite different. As an educator in Georgia employee, you contribute to a very nice pension plan that will help fund your retirement.

This is your Teachers Retirement System of Georgia (TRS) pension… this is “the big one”. You contribute 5% of your pre-tax salary every month. Did you know your employer contributes an additional 9.28% of your salary on your behalf to TRS?

With TRS, you will have a guaranteed income based on your salary, years of service, and possibly age. Under the current guidelines, you will potentially receive a 1.5% increase every January and July as a cost of living adjustment.

Once you are vested (10 years of service), you become eligible to receive a pension. If you leave before 10 years, then at the very least, roll your contributions into an IRA. If you take a distribution, big tax penalties, and if you come back, you have to buy those years back. Look into everything before you leap!

If you achieve 30 years of service, no matter how old you are, you will receive approximately 60% of the highest two consecutive years’ average salary during your lifetime.

This is a great deal for only 5% per year from you. It is mandatory, but it is better for you to know where your money is going.

2 comments:

Anonymous said...

It is difficult to convey the shock and dismay I am experiencing due to the possibility of losing my cost of living raise. Is it not enough that I, as a long time Georgia teacher, paid for the COLA over the 23 years I gave to the state? How can TRS justify denial of this pre-funded necessity? As a retiree, I NEED this six-month periodic raise from the well- funded TRS. Please reconsider and vote to keep the word "SHALL" in the 39-year policy for retirees to receive the modest 1.5% semi-annual raise. It is desperately needed and deserved. Any help or support you could provide would be greatly appreciated.

Sincerely,
Virginia B. Clough

Robby Schultz said...

Virginia,

Thank you for your comment. My wife forwarded me an e-mail regarding the proposed COLA change. I plan on writing a letter in the next day or so to ask them to NOT change the COLA.

I believe that once you say you are going to do something you follow through. If you wish to make changes, then you need to announce those for future teachers, not for current teachers that have been planning on those COLAs since they started. it is not only right but fair.

I will make sure to post my letter on here when I have sent it.

Thanks again for your comments.