A Massachusetts teacher emails us with a question about her options for an early retirement:
I am a teacher in Massachusetts. With my last child going to college next year, we have kicked around the idea of moving out of state. This would be after my 15th year of teaching and I will be 51 years old. I see that I am vested after 10 years so my question is:
Could I retire after next school year (my 15th year at age 51) but defer my payment until I am 55 or 60? This would give me 15 years at 55 which I believe would be a reduced pension, or 15 years at 60, which would be a full pension.
I wanted to see if these plans were an option that would be available to me after my 15th year of teaching.
Any information you could provide would be greatly appreciated.
--Massachusetts Teacher
Hi Massachusetts Teacher,
The short answer is yes, you could certainly take either of those options. As long as you don't withdraw your contributions from the Massachusetts Teachers' Retirement Systems, you'd be eligible to begin collecting a pension at either the early or normal retirement ages. Those ages depend on when you started teaching in Massachusetts, see here to determine which tier you are in.
Massashusetts provides a retirement "percentage chart" to help you make your decision. With 15 years of service, if you begin collecting your pension at age 55, you'd be eligible for 22.5 percent of your final average salary. If you wait to collect until age 60, you'd be eligible for a pension equivalent to 30 percent of your final salary.
There are two things to be aware of. One is that your pension will eventually be based on your salary in the last years in which you were employed. That is, your pension amount will essentially be frozen from now until you begin collecting; it won't increase due to inflation.
The second thing is that starting over in a new state would mean significantly less in terms of pension wealth than sticking it out in Massachusetts. Two smaller pensions are usually worth much less than one larger one. This article gives a good explanation of how that works, with a Massachusetts example.
I hope you don't let those cautions discourage you from pursuing your plans to spend time with your family, but hopefully they're helpful as you weigh your options. Best,
~Chad Aldeman
Note: This is a real question submitted to us. We have removed all personally identifiable information, but we believe there's a value in sharing frequently asked questions to benefit others with similar concerns. If you have a question you would like answers to, please feel free to email us at teacherpensions@bellwethereducation.org. Please note that by submitting a question to us, you agree to let us share the question and our answer publicly here on the TeacherPensions.org blog.