Inside Scoop
Retiring on Dollars a Day

As health insurance premiums and other costs shoot up, educators on fixed incomes are getting squeezed. How secure is your retirement?

Irma Baker's retirement is dwindling away. Baker taught for 23 years in Falmouth, Maine, before her position was eliminated. Her years of service translate into a paltry monthly pension check--once taxes and health insurance premiums are deducted--of just $80.

Health insurance for Baker and her husband, Fred, take the biggest bite. That deduction now consumes $431.69 of her monthly check, 40 percent more than three years ago.

Compounding Baker's plight, Maine is one of 15 states where retirees may be adversely affected by a federal provision that curtails the Social Security benefits of some public employees receiving pensions (see "Social Security Provisions Shrink Pensions"). So Baker's monthly check from Social Security is just $88, one-third of what it should be based on her contributions into the system.

Baker and many other retired teachers and education support professionals are learning some of the harsh financial facts of life for those leaving the schoolhouse behind:

• Educators' pensions are not generous, providing no buffer from the rising costs of everything from gas to groceries to property taxes. Particularly hard hit are older retirees, who earned lower salaries while on the job, have lost more of their pension's value because of inflation, and often don't have the option of returning to work full- or part-time.
• Health care and prescription drug costs--expenses that retirees incur at a much greater rate than Active members--are shooting upward at far above the rate of inflation. Prescription drug costs, for example, have risen 35 percent in the past two years and are expected to continue to climb at double digit rates. Even in those localities where members can continue their health insurance coverage as they shift from Active to Retired status, rising premiums have become a real budget buster.

Combined, these two trends leave many retirees just scraping by.

Consider Rhode Island member Joyce Fletcher. At 69, Fletcher is back to work part time bagging groceries at the Stop and Shop market. Her out-of-pocket drug costs of $380 per month consume a large chunk of her pension from 24 years of teaching. Even with the part-time job--and splitting costs with two sisters with whom she lives--she admits she has to make compromises on her medications. A diabetic, she has to take her insulin, but she sometimes delays buying her osteoporosis drug until payday if she runs short on cash.

Fletcher's late husband, a machinist, passed away after a long illness that "ate up every bit of savings we had," and she now worries about her own financial security. "When I retired, I didn't anticipate these kinds of expenses."

Seeking Relief
To provide for healthier and more predictable pensions, NEA affiliates are working to enhance the formulas used to calculate pensions and ensure appropriate cost-of-living allowances. Despite the nation's slowing economy, some affiliates have won well-deserved increases for retirees. For example:

• The New Jersey Education Association recently garnered a 9 percent increase in pensions for retirees, says Roe Jankowski, an NEA-Retired ESP member. "On a $30,000 a year pension, you're talking about $210 more per month. How did they win the increase? "We are very involved in the political process," says Jankowski. "We invite legislators to our county and state meetings, we go out and work for them, we attend legislative conferences. We also partner with Active members on both Retired and Active issues." Working regularly with legislators is key, Jankowski says, because "in retirement [the legislature] governs everything we get--they govern the health benefits, the pensions. So we make sure to communicate our needs to them."
• Arizona Education Association-Retired scored a recent victory with two significant new cost-of-living adjustments (which they refer to as permanent benefit increases, or PBIs) for participants in the Arizona State Retirement System (ASRS). The Association took the lead in forming a coalition of groups participating in ASRS and successfully lobbying the legislature, according to Arizona's Barbara Matteson, vice president of NEA-Retired. One of the new PBIs boosted pensions by a set monthly amount based on each participant's total years of service. Another increased pensions based on the number of years of retirement. The new provisions--which added a total of about $100 a month to Matteson's pension--avoid penalizing older retirees, who retired when salaries where lower. "We were able to get much more support for this kind of benefit, as it gives the older retiree as much as the recent retiree, and the older ones needed the increase the most," says Matteson.

At the national level, NEA provides support to retirees by lobbying Congress, providing technical support and training to affiliates working on pension and health care issues and--significantly--through the fast-growing NEA-Retired program.

Launched in 1983, NEA-Retired recently topped 200,000 in total membership. NEA-Retired members work closely with Active members in every state, fighting for strong pensions, participating in tutoring, and working to elect candidates who support public schools.

Changing the financial picture for retirees is going to require sustained, concerted efforts by Retired and Active members alike. Lily Eskelsen, NEA Secretary Treasurer, notes that the tight fiscal climate in the states, exacerbated by the slumping economy and the downturn in the stock market, has legislators looking for ways to cut back. Some have set their sights on public employee retirement systems.

In state after state, "our pension systems are under political attack," Eskelsen says. Private market advocates are pushing lawmakers to replace guaranteed pensions with personal retirement accounts subject to the ups and downs of the stock market. (Remember Enron?)

The upshot? "It's never been more critical for our Active and Retired members to work hand in glove," says Eskelsen, "because everyone is going to be affected by these privatization efforts."

--John O'Neil

Social Security Provisions Shrink Pensions

Most teachers and education support professionals can use every retirement dollar they can get.

Unfortunately, some are discovering their Social Security benefits are lower than expected because of unfair federal laws that penalize those who devoted their careers to public service. The Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) affect individuals who worked both in a job for a state or local government that doesn't participate in Social Security as well as a job covered by Social Security. Although the provisions primarily affect members in 15 states (see box), there are members in every state who are affected.

Feeling the pinch are members such as Angie Uhlmeyer, who taught in private schools for 15 years--paying into Social Security all the while--then in public schools for 19 more. Uhlmeyer called Social Security for two years before she retired, asking about her expected benefits, but got few answers. "Three months after I retired, they informed me that because I receive a $1,400 monthly pension from the Denver Public Schools, I could not claim anything from the $630 monthly Social Security benefit I was due and only about $100 from my late husband's $1,069 monthly benefit." Receiving the benefits she had earned would mean she wouldn't have to struggle quite so hard to make ends meet, she says.

"Until you retire, or really begin planning to retire, you don't necessarily realize how much the laws affect you," says Martha Karlovetz, president of Missouri NEA-Retired. But since educators' pensions aren't generous to begin with, the GPO and WEP cause real financial hardships for many retirees.

NEA's Government Relations department has been swamped with letters and e-mails from people like Uhlmeyer testifying to how the lost benefits affect their retirement finances. For example, more than 300,000 individuals lose an average of $3,600 each year due to the GPO--enough to push some under the poverty line.

ESPs are especially hard hit. "The GPO is a disaster for ESPs because it hits the poorest of the poor," says attorney and NEA consultant Cynthia Moore. "It hits a predominantly women workforce, those who work part-time--for example, the cafeteria worker who is really depending upon her husband's Social Security benefits, but finds that the GPO reduces it. It's just a horrific result." Uhlmeyer points out another pernicious effect of the federal provisions: At a time when districts are trying to draw qualified individuals from business and the military to fill vacancies, GPO and WEP will deter them. "When they hear they stand to lose the Social Security they earned in their other job, they're going to lose interest."

NEA has been a catalyst for bringing attention to the discriminatory impact of GPO/WEP and will work this year to develop a cadre of members and affiliate staff to work more intensively at generating grassroots activities in their states. NEA had helped to recruit numerous Congressional co-sponsors for legislation repealing GPO/WEP last year, but the new 108th Congress means new bills--and new advocates--will be needed. You can track action on the Government Pension Offset and Windfall Elimination Provision by going to NEA's Legislative Action Center (www.nea.org/lac).

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Although individuals affected by the Government Pension Offset and Windfall Elimination Provision live in every state, the offsets predominantly impact educators living in these states:

Alaska
California
Colorado
Connecticut
Georgia*
Illinois
Louisiana
Kentucky*
Maine
Massachusetts
Missouri
Nevada
Ohio
Rhode Island*
Texas

*Some local governments
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NEA Retired: Fighting for Your Future

The NEA-Retired program--the official retired organization dedicated to the priorities of NEA members--advocates for strong retirement benefits.

NEA-Retired members also gain from a host of exclusive benefits designed to protect their financial security during retirement. NEA Member Benefits has developed special offerings for members, including insurance (such as life, homeowners, and long-term care) and loan programs (including reverse mortgages).

You can join NEA-Retired as a lifetime "pre-retired" member, if you are currently an Active NEA member, or join upon your retirement from active service. For more information on the benefits of membership, contact your state affiliate's retired program. Or contact NEA-Retired, 1201 16th St., N.W., Suite 410, Washington, DC 20036 or e-mail tcrenshaw@nea.org.