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MoeMoney

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I have only told my husband last night, hours before his early morning flight to FL for a few days. I was called in to the office yesterday afternoon and I assumed it was to receive what has become a normal notice of potential job reduction. It has never happened and I have been employed in this district FT for 16 years. 

This time, it was to inform me it is a confirmed reduction from my 1.0 position to a 0.5 position. My principal had my union rep attend and it was the first he was learning about it too.

Now, if I wasn't financially savvy and hadn't gotten wise with my 403(b) and 457, this would be troubling, to say the least. Here are some options I've come up with in the 28 hours (minus sleep time) since then.

  1. Keep driving 31 miles one way to be in school nearly the same amount of time (schedule is not done but there is strong indication my classes will range from 8 of the nine time periods, thus I will need to remain in school. I MAY be able to sub to achieve a full year of service credit, at a substantial pay reduction but that is unknown and may be unknown right up until school beings.
  2. Seek another teaching job in my geographic area and take a potentially substantial pay reduction, almost like the one I mention in #1. This time though, it would mean a FT work load - business as usual - for the pleasure of less money but a year of service credit. (We are all independent districts - there is NO reciprocity.)
  3. Retire, and take my pension with the under 20 years and under age 62 penalties. (For insight, if I attain 20 years or service credit, I'd get a 39% of highest three years. If I got for 21 and attain age 62, it would be 40.5%.) Now, it would be about 22% of my highest three years. 
  4. I am passionate and an avid teacher and learner and I know enough about myself to know that I must create, educate and bring value for my immediate future, at the very least. Therefore, I want to work at something. My passions include teaching (and learning about) Personal Finance, financial literacy, all-things-403(b). I get to do this in my current job and would seek to do the same whether I get a teaching job or not. I have just been approved to propose a 403(b) wellness PD at my school to teach this May or June (go figure).

I will end by saying you are the folks I have learned so much from and value your collective wisdom. I know many of you are retired and some are still teaching. I have not fully processed the ramifications of this job change yet and probably won't until I talk it through and let things percolate.

My husband is 65 and works as desired in the job he retired from 1 year ago. He collects a pension and our health insurance is covered. Our 4th and final child will be senior in college and the funds are secured for that. Our oldest daughter was married a few weeks ago and that is behind us too. We don't expect to draw down any of our deferred comp plans until the RMD's.

SO there it is, my friends. Please offer any insight, ideas, things to think about, etc. I am all ears!!!! And thank you for reading this far:)

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I'm sorry to hear that you've been RIFed (Reduction In Force). It sure adds stress to an an already stressful job. It doesn't seem right that they can't make your .5 time into a block. Does your union think that's OK?

I have an idea of how you feel. I was RIFed 6 out of my first 9 years of teaching. We were given the RIF paperwork about this time of year, with several months of the rest of the school year to mull it over. Not great for morale. Although determining who got RIFed was determined by seniority within each subject area, it still seemed personal, emotionally. Because I was a science teacher, I thought there was a fairly good chance that I would be rehired sooner or later. That turned out to be the case, but . . . .

Some years I substituted several weeks or months before getting a regular job. Some years I was rehired just before school started. Some years I was rehired late in the summer. A move to a different school was involved in 4 out of the 6 RIFs.

It's hard to know when it comes to school budgets, but in schools I've been with, there were changes in staffing made during the summer, and even after school started. Nobody knows for sure if all your colleagues will show up, or if more kids than expected will turn up in Sep. Maybe you should just hang in there with the .5 job offer and see what happens over the summer? 

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Thanks krow. That must have been stressful for you all those years. That is likely what made you live within and under your means and learn investing strategies. 

I am the sole department and fall under CTE. The other CTE are in the same position every year and the district is moving away from CTE and are bringing in coding across the curriculum. Ironic as it is, they asked me to introduce and teach coding classes this year, and to co-write the K-12 curriculum for it. I also teach computer applications (and FACS). And I always said that computer literacy and coding should be embedded and now it looks like it will be. The other teachers will not have any training to teach coding and they will be furious and untrained on how to bring it into their curriculum. I told the principal this too and he said the district wants to do it (they want new things all the time and teachers always go along with it because what else can you do).

I'll add that we are open to living somewhere else (not selling or moving yet, our two working adult children will manage the house) and I'd go anywhere. We love to travel and live like the locals. 

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Your husband is 65, has a pension, covers your healthcare somehow, and works when he feels like it. You’re somewhere below 62. My first instinct would be to STRONGLY consider retirement and enjoy as many healthy years as possible. On the other hand your comments in #4 suggest you might not love retirement the way I would? Regardless, you haven’t laid out the details of your finances enough to analyze the viability of retirement.

1. 62 miles per day (gas, car, and time) is a lot to ask if you’re getting part time wages for work that requires you to be out of the house for more than 40 hours per week. You might more precisely quantify the time and money to get a better idea, but I’m not loving this option.

2. I don’t know how your districts work because I think you’d receive similar pay when switching districts in Florida. I don’t love the idea of a big pay cut with this option either.

3. As I said, this is what I’d be looking into. If you provide a full financial picture, I can give my opinion on the viability of this option. If I were in my 60s, I’d feel comfortable retiring with a portfolio that is 25-33x my annual expenses. I’d feel even safer if my annual expenses had some fluff that I could cut back on during down markets or if I had income from a pension or SS.

I know losing a job (or half a job) is really stressful. It is far from ideal, but everything works out for people that tend to their finances as I’m sure you have. Make space for the negativity, but acknowledge it is temporary too.

...if this were the private sector, I’d consider making a play for volunteering to be fired/quit in exchange for severance. Is that an option in schools?

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Thank you Ed. 

1. My husband and I agree with #1. It would only be for the purpose of accruing service credit. Our portfolio, age and great health and plans make this option an excessive consumption of time and opportunity costs. We all agree.

2. It's not the same in NY. I might be placed on a different district's pay scale at year 4 or 5 (the would be gift) instead of year 16.5 here. That is what is unique about education systems - it locks you in to the same place which might have been fine in one era. That is just one reason why those of us on this forum feel strongly about saving independently. Every thing I hear and read talks about getting paid for what you're worth, well, that is not the case here.

3.  and 4. sort of go together in that we built up our portfolio, it is diverse and includes real estate and securities and we could be comfortable retiring. I am almost 57 and my husband is 65. I've worked since I was 14, but mostly not bringing in much income while raising our 4 kids. It took all my working years starting at 41 to save (while still overspending, in retrospect) and only recently did I address this smack in the face. Point it, we know how to live modestly and make good decisions and we understand why retirement makes sense. At 65 my husband feels, and I agree, that it's time to play. 

4. Spot on. Regardless of finances, I'd like to work, earn income and retire! 

I've been thinking of teaching or working in the financial industry, in some capacity. Not sure but with two Master's degrees, I don't want to be paid less than I'm worth, ever again.

(Wow - this is refreshing to write and think about!)

Are you currently retired Ed?

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13 minutes ago, MoeMoney said:

It would only be for the purpose of accruing service credit.

Just in case you share my broken psychology, this would be a trap for me because I’m hardwired to want to complete things in their totality and I never want to leave anything on the table. Knowing this about myself, I’d choose to calculate how much I’m giving up by not gaining additional service credit and I’d consider whether or not I really want/need it given the sacrifice I’d have to make to get it.

20 minutes ago, MoeMoney said:

It's not the same in NY. I might be placed on a different district's pay scale at year 4 or 5 (the would be gift) instead of year 16.5 here.

👀 I don’t like that one bit.

21 minutes ago, MoeMoney said:

Every thing I hear and read talks about getting paid for what you're worth, well, that is not the case here.

I can’t help but make a quick aside. I’d prefer to never use the term “worth” in the context of wages because it implies people are paid based on the “value” and quantity of what they produce. This certainly isn’t happening in your case and I haven’t found it to be the case generally.

27 minutes ago, MoeMoney said:

we understand why retirement makes sense. At 65 my husband feels, and I agree, that it's time to play. 

Definitely do the math to make sure you have enough wealth to be secure and to live the way that makes you happy.

After that though, if it were me, I’d make every decision based on trying to maximize happiness...whatever that means for you. The few people I know who are retired have said that they wish they’d have retired earlier, but they held out for reasons that weren’t tied to maximizing happiness (like spending decades being conditioned to work).

34 minutes ago, MoeMoney said:

Are you currently retired Ed?

No, I’m still grinding away. I’m 34 and because I’d be looking at a longer retirement, I require at least 33x annual expenses to feel safe.

There are a few different acceptable lifestyles I could choose for retirement, each costing different amounts of money and yielding different amounts of happiness. I can afford the cheaper lifestyles right now and maybe towards the end of 2020 I’ll be able to afford the most expensive lifestyle.

So for now, I press on. The thing is, I actually like what I do for a living and I like most of the people I’ve ever worked with, but being forced to do it 8 hours every weekday has a way of turning it into a grind. A 3 day work week (which I’ve taken on for a few months at a time in the past) is much better and interestingly enough, I think my productivity may only decline 10% because I’m more energized and engaged.

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I do share your broken psychology! But I suspected all along that I might not teach for 20 years, given our age gap, so it's not a new mindset I'd have to get over. It's more the math of ~$1800/month vs. ~$4000/month for just 4 more service credit years. Portfolio aside, it still is a psychological block.

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Getting an extra $14,400/year is certainly something. Using a 3% withdrawal rate that’s the equivalent of having an extra 480k in investments.

Of course if you don’t need the money to increase happiness then you’d be sacrificing however long it takes to earn 4 service credits for what is essentially Monopoly money.

The really interesting situation is if you don’t need the money, but having it would provide tangible and meaningful benefits.

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I think it's more like $2200/mo difference 12 but there are some federal taxes reducing that gap some.

All said and done, I'm confidently thinking I'll do something in the private or entrepreneurial world to satisfy my yearning while "playing" too. I do love teaching my students and the content in which I teach but not under those terms I outlined. 

I am consider asking for something in return for retiring as you mentioned as they'd have to hire a PT teacher at half my salary. It is highly unlikely given the climate we are in but if I pose it correctly and confidently, what's the worst that'll happen? I have zero experience negotiating terms like that but some experience negotiating in general. 

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My fault, it turns out I can't do basic math in my head. So it would be an extra $26,400/year for life, which at a 3% withdrawal rate is equivalent to having $880,000 in investments.

I didn't expect to say this, but if it were me then I'd find a way to stick it out. Because you seem intent on continuing to work and because you still enjoy teaching, I'm not sure what you'd be gaining by leaving (perhaps I've been a bad listener), but I can see what you'd be giving up. I'd be singing a different tune if you'd said you didn't need the money and wanted to dedicate your time to family, friends, and hobbies or you'd be much happier working another job after all these years of teaching...but right now I don't see what you're getting in exchange for giving up $26,400/year for life.

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This is what I know:
I'm not intent on continuing to work AT THIS job. Certainly under those terms for 8 years to qualify for the extra $26K. (65 years plus 8 years =....)

What is "enough" money? Will it ever be enough? What is "enough" time? Will it ever be enough?

I do want to dedicate time to family, friends and hobbies. 

 I could be happier working at another job.

Ed, are you sure you're not a financial therapist? I think you could define the job. What financial advisor would ask those kinds of questions? Not too many I'd guess. I could be wrong though.

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I retired after teaching 18 years (only got retirement credit for 16 as 2 were overseas), over a 20 year period. I found parts of teaching rewarding, fulfilling and enjoyable and parts were exhausting. I was at the top of the salary scale (equal to 100k/yr today) and left a lot on the table when I retired. The only reason I was able to retire is that the state wanted to save money and temporarily lowered the age and years employed requirements. I've NEVER regretted retiring at age 56 and neither has my wife. It's a very personal decision. My colleagues thought I was making a mistake. 

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Thanks krow. I randomly asked the superintendent about doing that this year, in light of the budget crisis. And today, I asked the union to ask again, seriously. It would save them money. I’ve covered a lot of ground this weekend and I’m in a good place for now. 

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Update: it seems I could get a full year of service credit by teaching my .5 at half my salary and "teaching" as a permanent sub for the other .5 at half the current sub pay (way less than my salary). This would "buy" another year of service credit and some time to prepare for a departure the next year, with 17 years of credit. It would also free of my mental bandwidth by teaching 2 preps instead of 4 or 5 and allow me to focus on my next step. 

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