When You Move You Lose

Why is that educators are of a few select groups that lose their retirement when they move? If you work for a corporation out in California and take a promotion in Texas, you don’t lose that 10 years of retirement out in California. If you live in Connecticut and get a great job opportunity with a company in New York City, you simply commute to the city without thinking about losing retirement from all those years of work in Connecticut.

So why isn’t this the case for educators? If a teacher lives and works in New Jersey and gets principal certification in Pennsylvania, it would be a very easy commute into Philadelphia. But that same teacher might lose 10, 15, or even 20 years of teacher retirement because the work would now be in a different state. This adversely limits employment options for educators.

Sure, you can roll over the retirement balance into IRA accounts, savings accounts or other investment options. And it is in your best interest to do so because if you do not withdraw the money within a certain time period, you lose it all! However, this dollar amount in your retirement account could never come close to the amount of retirement payments and benefits collected when one chooses to retire from public education service. And then there is the option to “buy back years”. What is that all about? Depending on how close you are to retirement and depending on the state in which you live, one year can cost up to $10,000!

If you are fortunate enough to move to a new state after only a few years of service, you might have the money to buy your years of service into the new state’s retirement system. Then you are set until several years down the line, your spouse gets transferred across the country for work or for the military, or your family and loved ones need you for assistance, 2000 miles across the country. So now you have 17 years of retirement built up in one state, with you paying several thousand dollars more for five of those years. You are too young to collect early retirement plus you love what you do and want to continue working. When you move to your new location, you get credit on the salary ladder for the 17 years of experience, but guess what? You start at ZERO years retirement with that state!

I know each state is different in salaries, benefits, and pension plans. I understand it would not be fair to work in one of the lower paying states for many years, and then move to the highest paying state just before retirement in order to collect the better retirement benefits. And I am not advocating a federal retirement system for teachers, but there needs to be some continuity when working and moving between the states as an educator. Otherwise, the retirement systems in place are limiting educators and actually punishing them for making moves to improve their lives.