Students ask me this every so often. Once I heard a student say that teachers make $9000 a year. This tells me that we teachers have got to stop complaining! Yes, I have friends who make more money than I do even though we have the same level of education. But I am not, by any means, poor! And neither are you, other teacher reading this. There certainly is some level of sacrifice to take a job as a public servant. But there are great benefits. I am not talking about the privilege to serve. I am talking about literal benefits: retirement, insurance, sick days, holidays. I’m not here to talk about how it’d be wonderful if our society valued educators more and we should get paid for. That’d be just fabulous but I am not living in a dream world. Working as a teacher or in some other government position can be wildly fulfilling but it’s also going to pay the bills just fine. Many of these benefits are similar for other government employees, but may have different names or criteria.
Benefit 01: STRS – the State Teacher Retirement System
This is the name of the pension fund in Ohio for public school teachers. It is arguably the best benefit of teaching. You can work a career as a teacher and live an amazingly comfortable life in retirement. Here’s how it works. We contribute 14% of our gross income automatically. This is not something we elect. If you want to teach in Ohio, you will contribute 14%. It seems very high, but it’s a great forced savings rate. My district in Cleveland also contributes 14% for each employee. So 28% of my income is being deposited in my name for future use! That is far better than most of my friends in private industry getting a 5% 401(k) match, if they’re lucky. There are some employers matching only 2% of gross income. The difference is that we do not actually see our employer’s contributions until it is time to retire. We also do not pay into social security. Note that not every state is as high as Ohio’s. Georgia, for example, has only a 6% contribution.
There are two plans that you can elect when you first become a teacher in Ohio: the defined benefit plan and the defined contribution plan. The defined benefit plan is what is most common. I have no data on it, but everyone I know has chosen the defined benefit plan. I chose the defined benefit plan because my cousin chose the defined benefit plan. And as far as I know, it’s not alterable. What this means though, is that it is clearly defined what your benefit will be upon retirement. It follows a very simple formula, so long as you meet the criteria.
First, in order to retire with full benefits, one must work at least 35 years and be 60 years old. If you start teaching at age 22, then, you have to really work 38 years, because you can’t retire before 60 years old without penalty (granted you could find other creative ways to stop working). Or, you can be 65 years old and have worked at least 5 years.
Second, your benefit is calculated based on the number of years you served and your Final Average Salary (FAS). The FAS is average of your highest five years. The formula for retirement benefit will be
2.2% x years x FAS
So if you teach for five years and the average of those years is $52,000 (approximately what mine will be for these first five years), the benefit would be
11% x $52,000 = $5,720 each year
so long as you wait until you are 65 to apply for the benefit. That comes out to be about $467.67 per month. Now, say you teach those full 35 years and your best five years average out to be $85,000. Your benefit would be
77% x $85,000 = $65,450 each year
so long as you are at least 60 years old when you apply for the benefit. That comes out to be about $5454.17 per month. There’s your incentive to teach your whole career! Consider that you could live another 30 years after you retire; the benefit paid to you totals $1,963,500. Reach a higher FAS, and you’ll be paid $2 million in benefits. That is amazing.
Benefit 02: Health Insurance
Up until about 6 months ago, I knew nothing about insurance, except that I’ve spent my whole life having “good” insurance. My parents both had union jobs at auto factories, so we had good insurance from Anthem Blue Cross Blue Shield. I never went without medical care or medicine, though I have been fortunate enough to never have a great need for it. Having good insurance was just something I accepted because other people said it. But now, I have an injury that requires surgery and intensive physical therapy that I’ll be starting soon. I had to learn about insurance finally.
The first part of this is that teachers have very affordable premiums. The premium is the amount we pay to have insurance. While each district will have a different program and provider, premiums will be incredibly affordable. For a single person, it costs $45 each pay check, for 10 months. So, $900 a year to pay for health insurance. Some people are paying close to that per month! Health insurance is certainly a political debate in our country, but you will have access to a great program if you work as a public school teacher, especially in a larger district.
The next part would be deductible. The deductible in an insurance plan is the part the person has to pay before the insurance will pay. For example, if you have a $1500 deductible, you must pay from your own pocket $1500 before the insurance starts paying for any of your medical care. You could have to pay this all at once for a major expense such as an emergency room visit. Or you could have to pay it throughout the year on various office visits. In either case, until you have shelled out $1500, the insurance isn’t going to pay anything. My plan through Medical Mutual of Ohio has a $0 deductible for in-network services. The only thing I have to pay is the co-pay. That’s the amount you pay at the office when the secretary politely asks you “do you know what your co-pay is?” It’s usually a low amount. For us, it is $15 for a regular physician, $25 for a specialist, $75 for emergency room, $35 for urgent care, and $0 for preventative care. The Cleveland Clinic is in my network, so I have to pay only $15 – $25 for some of the best care in the world. You can pay for these items with pre-tax dollars by opening a health savings accounts (HSA) or a flexible spending account (FSA). My district offers only an FSA. This incredibly low cost for health care is my regular incentive to work as a teacher.
This year alone I have gone to 3 specialists, a physical therapist, had x-rays, an MRI, done preventative testing and blood work, had stitches and have still only paid a total of about $1300 for my care. When I started learning the value of my insurance, I started to appreciate my profession a lot more. Learn what your health plan offers and really quantify it to know what it’s worth. Appreciate this benefit for all it is.
Benefit 03: Time off
Obviously, we get the summers off! Please don’t troll me and tell me that teachers only work 9 months a year and so we should get paid less. Most teachers are still going to be averaging 50-55 hours a week which still yields about 2000 hours over 37 weeks. A person working 40 hours over 50 weeks totals the same amount. I actually work at an extended school year building, so I work 2 extra weeks, making my summer even shorter. However, the time off in the summer offers freedom to do so much! Time with family, time traveling, time learning, time reading, time at the pool. Yes, you still need to plan the curriculum for the upcoming year, but you get to do it on your own time. You get some time to breathe and to reset. You find new perspective which makes you work more efficiently in the coming year. Already, after just two full years working, the summer is so key to my essence as a teacher. I love, love love, to sleep in. Sometimes that really just means sleeping until 8 o’clock. But having the freedom for two months to not set an alarm is terribly liberating.
We also automatically get all major US holidays off. In my district, we get 2 full weeks off at Christmas time and a week somewhere near Easter. We don’t have to “take time off” to go on a vacation or just have time with our families. And that is fantastic. Appreciate this. Your friends working else where probably get 2 days off at Christmas and have to “take off” any more they want to travel to their families.
Sick days are the last wonderful time based benefit I want to talk about. Each year, I can accumulate 14 sick days and 3 special privilege days, which roll into sick days if left un-used. While no teacher likes to leave their kids alone with a sub, it is comforting to know that there is no risk of penalty, formal or informal, from my employer for calling in sick… ever. These days roll over year after year. For most women in the profession, the early accumulation of sick days is saved up for maternity leave. Men do of course get to keep theirs and get a better pay out at the end of their career. Special privilege days are called “personal days” in other settings. They’re supposed to be used for additional holidays, funerals, graduation, and other important days needed when one is not actually sick. Essentially we have 17 days available to us, if needed, out of 190 work days (185 school days plus 5 teacher days). That’s almost 9% of the year we can not be there, but still get paid. For us, there are of course 10 additional work days, but people are rarely sick at the start and end of the year.
So what if you get so sick that you use up all of your days? In most districts, there is a donation pool. That means you can donate days to someone who doesn’t have any. There are legitimate reasons to have used up all your sick days, such as a long term illness. When you have a colleague diagnosed with cancer, donating a few days to them is a great way to use that abundance of days.
Benefit 04: Supplemental Retirement Accounts
Teachers already have a great pension fund, why bother with any thing else? Well, there are a variety of mathematical arguments for having a supplemental retirement account. I won’t dive into them now. Just know they boil down to having more security later in life. Money is about gaining freedom, not buying stuff. There is of course the tiny, slim chance, the teacher pension fund would totally implode, but let’s just hope that doesn’t happen.
Supplement 01: the 403(b). The 403(b) is the non-profit equivalent to a 401(k). It has all the same rules. It is a pre-tax account with a maximum contribution per year of $18,000 for a single, young person. So just like your STRS retirement contribution, the money is taken out of your gross income before any taxes are calculated. You’ll want to investigate the fees and portfolio offerings of the company partnered with your school district. In Cleveland, there are actually several companies available to us, but my friends and I all use AXA-equitable. I contribute $100 per paycheck.
Supplement 02: the 457(b). The 457(b) is called a deferred compensation plan and is available to government employees. It is incredibly similar to the 403(b); $18,000 maximum contribution and it’s pre-tax. BUT. And this is the key… But you can access the money as soon as you separate from your employer. You do NOT have to wait until you separate by retirement to access the funds. That is where “deferred compensation” comes from. This means you can have full access to the money if you quit your job. All you have to do is pay tax on it. I just opened mine about a week ago, so haven’t contributed anything just yet. I only found out about the 457 about a month ago and thought we did not have access to it, since no one ever mentioned it at work. It’s posted as a small page, plain as day on my district website.
You can use both of these accounts. Theoretically speaking, you could contribute a total of 36,000 pre-tax dollars to these two funds. For me, that is absolutely impossible at this time. But if someone had a side hustle and an income in the $70-75k range, they probably could fully fund both accounts.