welcome to the organic green doctor blog

i am a family physician who was diagnosed with
early mild cognitive impairment(mci) amnestic type on december 21, 2010
this is a precursor to alzheimers disease
because of this diagnosis i have opted to stop practicing medicine
this blog will be about my journey with this disease
please feel free to follow me along this path
i will continue blogging on organic gardening, green living,
solar power, rainwater collection, and healthy living
i will blog on these plus other things noted to be interesting

Tuesday, September 17, 2019

cola and trs and wep and the social security debacle

if you are a teacher or fireman or policeman or government worker who works for an organization that doesnt pay into social security then
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%
that $20,000 pension is really only worth $16800
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
they only end up with
$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

No comments:

Post a Comment