While deciding what retirement age is appropriate based on economic struggles and a lack of retirement funds has been a major nationwide issue, teachers in Ohio have decided to take matters into their own hands to save their pensions. On Thursday, the State Teachers Retirement System board approved a number of changes to their benefit program, one being that the minimum retirement age would be set at 60.
Ohio Teachers’ Pensions Were In Danger
After two years of debating over how to save teachers’ pensions in the state, the board agreed to a host of changes to the benefit program, including requiring Ohio public school teachers to:
- Pay a larger share of their retirement costs (13 percent)
- Work until they’re 60 with 35 years of service, as opposed to retiring at any age with 30 years of service
- Cut pension benefits to 77 percent of their final average salary
- Cut cost-of-living increases
- Increase their service requirements in order to qualify for retirement benefits
Board spokeswoman Laura Ecklar explained that without the package, the pension fund would have had a very difficult time making payments in the future.
Retirement Benefits in Question Nationwide
In the case of the Ohio teachers, the money paid into their pension plans will mean they won’t need to pay into Social Security, but those who do pay into Social Security have the same worries the teachers have faced due to a dwindling fund.
On Thursday, Business Week reported the Social Security fund is set to run out of money by 2037–only 26 years away. But the problems don’t begin there.
This year alone, Social Security will collect $45 billion less in payroll taxes than it pays out in benefits, largely due to Baby Boomer retirees. The Congressional Budget Office expects this pattern to continue until the fund is completely drained.
Like in the case of the Ohio teachers’ fund, government officials have considered increasing the retirement age, but so far, no concrete solutions have been proposed.