Showing posts with label retirement programs for public employees. Show all posts
Showing posts with label retirement programs for public employees. Show all posts

Thursday, February 23, 2023

Young professors should think about their retirement before taking their first job

 The academic job market is terrible right now--especially for people with newly minted PhDs in the humanities or social sciences. A person who graduates with a doctorate in those fields might be tempted to take the first job offer rather than wait for an offer from a more prestigious university or one that pays a higher salary--an offer that might never come.

That could be a big mistake. Before taking any academic job, young profs must investigate the university's retirement plan. Why? Because retirement programs at universities differ widely from state to state.

Here are two cautions for academicians looking for that first tenure-track job:

First, look at the retirement programs at the colleges you are considering. Some states have better retirement plans for public-college professors than others. 

Some states do not participate in Social Security, and public employees in those states will not get a Social Security check when they retire.  Louisiana is one of those states, along with Alaska, Colorado, Maine, Massachusetts, Nevada, Ohio, and several others that do not have universal coverage for all their public employees.

That may not mean much to young scholars in their twenties or thirties, but it will mean a lot to them when they celebrate their 65th birthday.

You may think this is not a big problem because you plan to accumulate Social Security credits when you work in states that participate in Social Security (most of them). You will get a Social Security check based on those credits. 

You should know, however, that you will be penalized for being in a non-Social Security retirement program, which will reduce your Social Security benefits.

The rules are complicated, so do your own research. However, if you spend your entire career at a public university in Louisiana, you will get nothing from the Social Security Administration when you retire.

Second, professors at the beginning of their careers should carefully consider whether they want to join their public university's defined-benefit plan or select an optional retirement plan (offered by companies like VALIC and TIAA-CREF) that builds retirement income by investing in mutual funds.

You may think the stock market will produce more income for you than a defined-benefit plan, but who knows? Sometimes the stock market is up, and sometimes it is down. Where will the markets be when you plan to retire?

Make your own decision, but you will be asked to decide when you start work, and that decision is likely irreversible.

This is my experience. I have a defined-benefits pension from my Texas years and retirement income from my optional retirement plan based on the years I worked in Louisiana.  

You know what? I like the Texas defined-benefit plan better than the Louisiana ORP.

What do you mean I'm not in the Social Security program?