Easy Street, Deferred: Teachers Retiring Later

Blame it on the Baby Boom. 

This week, the Burnsville-Eagan-Savage School District bid adieu to 26 employees, who are up for retirement. Together, they have given a total of 634 years to the district, a massive sum that nevertheless represents just a single drop in an incoming tide of retirements that will soon be changing the face of Minnesota's educational system. 

About 31 percent of Minnesota's active teaching population can call themselves boomers (those born between 1946-1964), according to the Minnesota Teachers Retirement Association (TRA). 

The tide of new retirees will crest in about 2015.

Officials in Burnsville say the effect on the local district will be noticeable, but not unwieldy. On average, about 50 teachers leave each year due to retirements, resignations or releases. That's about 7 percent Burnsville-Eagan-Savage's teaching force. An increase in retirements may boost the outgoing flow to about 10 percent for few years, said Stacy Sovine, director of labor relations with the district.

Sovine said that many teachers will stay on long after TRA's official retirement age, 66. Teachers who retire before the age of 66 could be subject to reductions in their monthly benefits.

"We do have a significant number of teachers who will be eligible to retire over the next few years, but the reality is many individuals continue to work well beyond their eligibility date," Sovine said. "So, while we could have a small bump in retirements, I couldn't predict that we will experience a large reduction in (teaching staff) any one year. It may just balance itself out over several years."

Statistics from TRA support two seemingly contradictory trends: more teachers retiring, and more holding onto their employment well into their golden years.

In 1997, Minnesota's educational system counted 1,783 new retirees. There were 2,746 in 2012, a 54 percent increase. At the same time, average retirement age has nudged higher and higher since hitting a low of 58.4 in 2001. As of the 2011-2012 school year, the average age of retirement was 61.7.

Laurie Fiori Hacking, executive director of TRA, said several factors are at play. TRA's fund balances remained relatively untouched by the financial crisis, Hacking said, but many teachers' private retirement funds were ravaged by shifts in the market, which means that they won't be able to retire when they planned to.

Another factor is health insurance.

"There have been quite a few reductions in the kind of health insurance protections that employers provide to retirees. That's a significant factor influencing people to retire at later ages," Hacking said.

To account for the influx of retirees, TRA itself has tightened retirement rules.

Right now the association counts 76,649 active members on its rolls (teachers who are contributing into the system). Currently, there are 55,425 recipients. Theoretically, the ratio of active-inactive members could become reversed, which would leave the TRA in a financial sinkhole.

By TRA's projection that would happen in 2032 if Minnesota's active teaching population stayed static, wrote TRA's Communications Director Susan Barbieri, but the number of active teachers will likely grow to meet a projected increase in K-12 students.

Just in case, TRA has implemented policies that make it harder for teachers to retire early. Three-fourths of TRA's members will have to retire at the age of 66, Hacking said.

"If they go at it at any earlier year they have to take a significant penalty, a reduction in their benefits," Hacking said.