Median boomer retirement account $144,000
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The cost of living payment for IPERS retirees started in the late 90s, not the 50s when IPERS started. It was an unrealistic dream where members/retirees convinced the Board/legislature to match what other states were doing. But it just kept IPERS from gaining more on its unfunded liabilities.
The other thing that hurt the IPERS unfunded liability was not having the ability to adjust IPERS rates for employees/employers based on actuarial determination..
Both problems have been fixed. There will be no more cost of living adjustments for people who retired after a certain date in the 90s and rates are now actuarially determined each year.
Somewhat true. Some organizations worked with employees to give high wages the last 1-3 years of employment. The switch to high 5 years was an effort to decrease impact of those shenanigans. Problem for IPERS was that predictable wage increases could be factored into rates applied to wages, but big jumps for a year or two create actuarial losses.
Contributions to IPERS are paid 60% by employers, 40% by employees. Another public DB in Iowa is 50/50.
Universities mostly do not participate in IPERS.
Superintendents/school boards occasionally liked to play games because they could help the superintendent without putting out much money.
Removing the earnings cap did nothing to "drain" the system. The same contributions rate that applied to the earnings below the cap applied to the earnings above the cap. A state official has floated the same argument over time, but that person does not seem to understand the basics of actuarial science.
401ks and similar plans were started to supplement DB plans. Then companies figured out they could eliminate liabilities by forcing 401ks only.
I do not know if taking off the cap "drained the system", but I do know a couple former principals that stayed around a couple more years than what they planned, just to retire under the new uncapped plan. Both said the difference per month was well worth it to stay working a couple extra years. So they both must have seen quite a jump in their monthly retirement package.
The fact this thread has turned into an IPERS discussion (and not complaining about that, it is a worthy topic) is an ironic turn compared to the first post.
If you have good standing in IPERS, which many of you seem to do as either current or former government employees or teachers in Iowa, then you are already way ahead of the median when it comes to retirement planning.
Complaining about the relative merits of DB versus DC is kind of like debating which color the leather seats should be in First Class on the airliner, to me. Either way, if you are in that ratified of air, you are doing pretty well for yourself.
A lot of other people are stuck in coach.
Lots of other people are not even on the retirement airliner at all.
If you have good standing in IPERS, which many of you seem to do as either current or former government employees or teachers in Iowa, then you are already way ahead of the median when it comes to retirement planning.
Complaining about the relative merits of DB versus DC is kind of like debating which color the leather seats should be in First Class on the airliner, to me. Either way, if you are in that ratified of air, you are doing pretty well for yourself.
A lot of other people are stuck in coach.
Lots of other people are not even on the retirement airliner at all.
Nothing to do with ipers, but there is a blog that talks alot about early retirement and savings.
https://www.mrmoneymustache.com/
His post on the math behind savings is pretty good.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
https://www.mrmoneymustache.com/
His post on the math behind savings is pretty good.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
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Beginning 15 years ago I picked up part time work as adjunct prof across the river in Illinois. I had to decide on retirement choices. Luckily, they have a Self Mangaged Plan (SMP) which is their version of 401k. Even back then, I didn't trust those bastards to come through with their full promises 25-30 years later so I took the smaller amount of money as I earned it and manage it myself. The dollars are in my account, not theirs so I know what I will have (assuming market doesn't tank) not some promise that we will give you this at a future date. If it had been in Iowa or Wisconsin, I probably would have signed up for a DB option but I just don't trust Illinois.
Since the work is part time and I don't make much, the SMP is basically enough to travel and have fun in retirement but not contribute to basic living expenses. That is what my main job 401k is for.
Yes, they likely did. The higher covered wage for 2-3 years would have increased their benefit substantially. The effect on IPERS trust fund decreased with each passing year as more contributions were paid in for people with wages above the old cap but not yet retired. The biggest member group in IPERS is school employees. As their wages tended to move past the wage cap, they would become unhappier with the retirement benefit. Wage cap had to change so teachers and other employees could still be hired.
True but you have to remember it was not just teacher, people like Branstad was pulling out 50K a year, while also getting paid his salary as governor when he came back the second time. Lots of high paying jobs in city government or in hospitals in some cases.
IPERS is just not education and teachers, it can be found in almost every community, throughout the state.
After the wage cap was lifted, if an employee worked only one or two years before retirement, it was probably an actuarial loss for IPERS. The longer one worked after lifting the wage cap, the more likely the increased contributions and the time to earn investment returns for the life of the retiree produced no actuarial loss.
Retiring from IPERS covered work and later returning to IPERS covered work is fairly common. The first retirement was earned under the rules and the benefit is not affected when the retiree returns after age 65. Branstad was very near or over 65 when elected in 2010 or 11. So he was eligible for the retirement benefit and his wage. Not good optics but it had no adverse affect on IPERS. When he left to become ambassador, he was eligible for either a recomputation of benefits or a refund of his contributions and maybe some employer contributions, not sure what rules applied to him at the time.
@SEIOWA CLONE
Given this is an area of interest of yours...
What would you do to make up IPERS' funding shortfall?
It is ~80% funded, which is way better than a lot of states, but still behind some other peers like South Dakota and Wisconsin. What would you do about it?
Given this is an area of interest of yours...
What would you do to make up IPERS' funding shortfall?
It is ~80% funded, which is way better than a lot of states, but still behind some other peers like South Dakota and Wisconsin. What would you do about it?
I think there are still some employers who believe a DB plan helps attract good employees and know how to manage a plan. Hopefully, my favorite farm equipment manufacturer does it right.
Branstad would have been able to take out what he had deposited in one lump sum from his second time as governor. Once you retire and draw your first check, your ability to increase your monthly payment from that time is frozen.
Just like a person that retires and then goes back to work, he still pays in, and the receives that money, but not what the school paid, back when they retire for good.
We have one teacher that is doing that now, retired, when he hit his rule of 88, sat out 6 months and now teaches half a day, while drawing IPERS. You can make up to 30K and not be penalized, every dollar after that, you lose half to the system.
I really have given no thought about it, you could raise the rule of 88 to say 92, that would force people to stay a couple extra years, maybe also take out another 1% from out checks.
But that is difficult to do for some professions, like police work or people working in the state pen. They can retire at 50, instead of 55. I mean do you really want a older 50's person guarding harden criminals on a daily basis?
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