#172 2004 Financial Outlook

As 2004 begins, I’m thankful that when I was young, I didn’t take any loans to get through college. I’m thankful that I entered a stable marriage with a guy who had the same values. I’m thankful that when I was younger I learned to depend on one income and save the other (when I finally did go back to work). I’m thankful that I grew up in a household culture that looked disapprovingly on accumulating possessions. I’m thankful that I learned in my 30s that at least 10% comes off the top for God, and the next 15% goes to savings. Then there will always be enough to meet both the bills and the expectations.

I have a teacher’s pension. It’s about $18,000 a year. I’m not eligible for Social Security--neither on my own record of earnings nor my spouse’s. If you taught, say the first 25 years out of college, then retired and started a consulting business, or really ramped up your writing career and sold a novel or two, or maybe that guidebook that was on the back burner for all those years spent listening to hormonal 8th graders, you may be thinking that between your pension and your Social Security and your private investments, you’ll be able to be comfortable.

Think again. A teacher’s pension offsets Social Security benefits. (Government Pension Offset). It’s been this way since the mid-80s, but maybe you didn’t think about it when you retired, or didn’t know. If your spouse dies, you won’t get his/her SS spousal benefits either (Windfall Elimination Provision). Unless your teacher’s pension is really tiny, and even then you’ll get a fraction of a spouse who never worked. It may be one of the few issues NEA and I ever agreed on.

Fortunately, your private investments are doing well. In 2003 Nasdaq composite up 50%; S&P up 26.4%; Dow Jones up 25.3% (WSJ Jan 2, 04). So I hope you were socking it away back when you were young and carefree.