I taught at the college level over the last four years and never missed a day of work. But this year, I’m on my third bad cold and I almost considered staying home from work today! I’m around 800 little kids each day and even though they are wonderful, they spread around just about every germ you can think of at this time of year. Working at a school can take a toll on your health – something I forgot about when my temporary job got extended through the end of the school year!
And before you get reading too far in this post, as a school administrator I do NOT make $200,000 a year. Not even close. And most school administrators are 12 month employees working more than 200 days per year. But I may have the option to work a reduced schedule next year (having most of the summer off) and return full-time for the 2017-2018 school year.
So if I don’t make $200,000 – what would I make next year and where did that figure come from?
Let’s break it down.
If I locked in a contract for one-more year of work, I would earn a salary of about $80,000. Because I would not be in a tenure track position (by choice), I wouldn’t have any benefits.
So where could the other $120,000 come from? My pension. And I say “could” because it is not a guarantee. For those of you who don’t know much about pensions, here’s a brief explanation of how my pension will work…
Pensions are calculated based on a 3-year average of the highest salaries earned. That’s called the “FAS” (final average salary). And in my tier of the New York State retirement system, I need to have 30 years of service to earn my maximum pension. I also have to be 55 before I can start collecting it. This is known as 30/55. If I don’t earn 30 years of service, I could take a reduction in my pension or wait until I turn 62 to collect the maximum amount.
At the end of this school year, I’ll be 50 years old and I’ll have 27 years of service credit. That gives me 5 years to earn 3 more years of credit (or take a reduction in pension/wait until I turn 62 to collect).
But I don’t need to work full-time to earn more service credit. I can work part-time as an online teacher for our regional school system. This involves a very small time commitment and it’s a job I can do from anywhere! I can also substitute teach (on rainy days!) or take some temporary (really, I mean it this time) positions to earn service credit.
If I chose to stay one more year, I’d have 28 years of service in at the end of the contract. My $80,000 salary would also replace the lowest year in my current 3-year FAS calculation. This would increase my pension each year by about $4,000 if I make it to 30/55. I’d be 51 next June and I’d have 4 years to earn 2 more years of service (hopefully using the part-time plan described above!)
If I am lucky enough to live for 30 years after retiring and make it to the age of 85, I will make the other $120,000! (30 years x $4,000 increase in pension) That’s where the original question came from – Would you work an extra 200 days for $200,000? ($80,000 salary + $120,000 pension increase)
But the question really is – Would you work an extra 200 days (after taking a summer off) for what COULD BE $200,000? (Or more if I lived longer!)
But what if I don’t live that long?
What if something happens and I don’t live long enough to even retire? Is working an extra 200 days worth it for $80,000?
Even though that isn’t likely, if I only lived to be 60 – would $100,000 be worth working another year? Would working that year be worth $140,000 if I only lived to be 70?
I read a post by Mrs. ONL over at Our Next Life today and they have made peace with working this full year and following their plan. They disagree that they have a case of OMY (one more year syndrome) and I totally agree with them! They may not know the total amount of money yet, but they know that they will get all of their money (salary and bonuses) when they leave employment. Then they can control the decisions they make with the money.
They don’t have to wait 30 years to collect it. My pension increase is kind of the “X factor” when it comes to deciding about one more year…So maybe removing it is the key.
As I get ready to make the OMY decision, I am thinking about ignoring the pension increase and simply treating it as a nice bonus down the road. I can’t begin collecting the pension for at least 5 years and a lot can change in that time.
So maybe my question should simply be – Should I work an extra 200 days for $80,000?
Hmmm… That has a very different sound now, doesn’t it? Taking time to reflect on and re-design your decision question is incredibly important. It helps you maximize satisfaction and minimize regrets about the decision. It’s step one in my decision-making framework too.
What are your thoughts or questions? Am I missing something? Is it crazy to give up a job for next year? I live a block from the school but I’m sitting home sneezing and cranky from being sick too! And to you Millennials (yes, I spelled it right the first time!) – keep in mind my husband retired 3 years ago and is in his 50’s, we are “FI” and I’m on the fast track out of my 40’s in a few months too. As the saying goes…we ain’t getting any younger!
Photo credit: firstname.lastname@example.org