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Teacher pensions are taxed at federal level

Kudos to a recent letter writer for being able to figure out that, for a gross monthly pension of $5,800, a teacher will receive $1 million after 14.5 years. Sadly, however, he was off-base on the number of years that retired teachers get to $1 million in earnings.

Apparently, he is not aware that teacher pensions are fully taxable at the federal level. Being a retired teacher, I know this for a fact. State teacher pensions have a withholding rate of about 25 percent to 30 percent. Let’s use the middle rate, 27 percent. Therefore, 27 percent of $5,800 means a tax withholding of $1,566 per month. Subtracting this from $5,800 reduces the pension to $4,234. In addition, unlike Buffalo teachers, who have free lifetime health insurance, the rest of us have to pay for our own insurance upon retirement. For me, it’s a cost of over $500 per month for family coverage, with yearly increases of at least $1,000 or $100 per month. Therefore, that $5,800 gross salary is in reality a net pension of $3,734. It will take a pensioner about 23 years to reach the “cool million” mark! Assuming this pensioner retired at age 65, he will be at least 88 years old before he reaches that milestone.

In conclusion, if anyone has an opinion on such matters as teacher pensions, at the very least give the matter a little thought. Or failing that, ask someone who receives a teacher pension. They might set the record straight and prevent you from making erroneous and illogical conclusions.

Philip Fanone

West Seneca