What Is the Teacher Retirement System (TRS)?
Let me explain what the Teacher Retirement System, or TRS, really is. It's a network of organizations at the state and sometimes city level that handle pensions and retirement accounts for people working in public education within their states. These groups also give educators guidance on planning for retirement.
Each state's TRS has its own set of plans and benefits, and they're not just for teachers—you might see maintenance workers, janitors, and administrators covered too. Some of the largest ones, like the California State Teachers Retirement System, the Teacher Retirement System of Texas, and the New York State Teachers' Retirement System, rank among the top 10 biggest pension plans in the entire U.S.
Key Takeaways
Here's what you need to know right away about TRS: it's a collection of state-level groups that mainly manage pensions and retirement plans for educators. They offer things like traditional defined-benefit pensions and defined-contribution options, including 403(b) plans that work a lot like 401(k)s. Remember, the exact benefits differ a lot depending on the state and even the school district. And studies indicate that most teachers end up not getting their full pensions.
How the Teacher Retirement System (TRS) Works
A TRS usually provides a defined-benefit pension plan, which means it guarantees you a monthly payout based on specific features of the plan. Most of these TRS pensions are qualified under the Employee Retirement Income Security Act, or ERISA.
Like many pensions, TRS benefits are calculated using a pension factor multiplied by your age or years of service, then by your final average salary or the average of your highest-earning years. On top of that, many teachers can join a 403(b) plan, which lets you defer part of your salary into savings, much like a 401(k), giving you a way to build more retirement funds alongside your TRS pension.
Fast Fact
Just so you know, a Teacher Retirement System might also provide disability and death benefits to its members.
Calls for Reform
Experts are clear that these plans need serious reform. In a recent study, 20 state TRS systems got an F grade, and not one earned an A. Things aren't getting better—they're worsening. New teachers are seeing benefit cuts to cover shortfalls for older workers, meaning they have to work more years to qualify for benefits. Reports show that only about 50% of teachers stick around in a TRS long enough to get even the minimum benefits.
What Is the Retirement Plan for Teachers?
Public school teachers get defined-benefit pension plans through their state's TRS. They can also put money into defined-contribution plans like 403(b)s. Keep in mind, most teachers don't qualify for Social Security because they don't pay into it.
At What Age Do Most Teachers Retire?
Most teachers retire around age 58. The age when you can start getting benefits depends on the state, and many require a certain number of years worked, no matter your age.
What State Has the Best Teacher Retirement Plan?
According to Bellwether, a national nonprofit, South Dakota tops the list with an 88.4% score for the best teacher retirement plan. Other high performers include Tennessee at 82.5% and Washington at 81.9%. On the low end, Kentucky scores 39.7%, New Jersey 36.2%, and Illinois 34.9%.
The Bottom Line
In summary, a Teacher Retirement System is a state organization that manages retirement savings for public school and college workers. Most state TRS systems get low rankings, and only 1 in 5 teachers receive their full pensions. I recommend you avoid switching jobs across state lines, as that's a reliable way to lose out on your pension benefits.
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