Are You On Track To A Comfortable Retirement?

One of the nice perks being an educator in the New York City Public School system is that, if you can last to full retirement age, you will get a generous pension and Social Security.  The question is that enough to have enough income in retirement?

If we take the average educator pension of $43,701and for teachers at maximum salary, Social Security of about $30,000.  The total retirement income is $73,700.  Excluding any other savings from the TDA, IRA, annuity, etc.  The question is, is that enough retirement income?  The short answer is yes, but with some caveats.

If we assume that the teacher's work history was 35 years, in and out of education, retired at maximum teacher salary and was 66 years of age.  Its safe to say that the above scenario of $73,700 of annual retirement income is a reasonable guess. The table below shows, based upon age, the amount of retirement income needs to be saved, at any given time, to achieve the goal of living comfortably in retirement.

Age...............Salary Saved Multiplier

35.................................2x
40.................................3x
45.................................4x
50.................................6x
55.................................7x
60.................................8x
67...............................10x

For example the maximum teacher salary at the end of this contract is $119,472, using the chart above the retirement savings necessary is $119,472 x 10 = $1,194,720  assuming that the lifetime of a teacher is 16 years after retirement at 67 years of age and using the $73,700 figure the retirement income for the 17 years would be $1,232,900 or a little more than ten times the $119,472 salary. Consequently, without any other investments, educators should be able to have enough retirement income to live comfortably, according to the chart.

The caveats I mentioned previously are as follows:

• Teachers at maximum salary
• Educators reaching full retirement age for Social Security
• Educators living to at least the average lifespan
• No pension loans outstanding at time of retirement

The chart above is simply a guide where an educator should have saved for retirement, based upon the age of the educator.

From the chart above and the caveats used in my analysis , educators who make it to full retirement age and retired at maximum salary should have a combination of the pension and Social Security to act as a floor of reliable and steady retirement income for comfortable living and any other investments are simply surplus income that the retired educator can use as they please.
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