MW 'I love my work': I'm a 61-year-old public-school teacher and have a $60K pension. Is it safe?
By Quentin Fottrell
'I am aware that my pension as a Chicago public school teacher is dependent on factors that are very much in flux right now'
"Based on my early work life, I have about $1,000 a month in Social Security coming at age 67." (Photo subject is a model.)
Dear Moneyist,
I am a 61-year-old public school teacher contemplating retirement next summer. My wife and I have $1.3 million in investments, along with a paid-off apartment which costs us about $1,200 a month, including everything - assessment, taxes and utilities. In addition, I can begin collecting my guaranteed benefit pension of about $60,000 a year.
I don't currently pay into Social Security because of my public pension, but based on my early work life, I have about $1,000 a month in Social Security coming at age 67. My wife, who is also 61, will receive about $21,000 in Social Security at age 67. She is a physical therapist and plans to continue working for at least six or seven more years.
Together, we earn about $150,000 a year gross, leaving investment income aside, and we spend a little more than half of that - $80,000 to $90,000 a year. I love my work too, but the landscape for teachers is changing and, more importantly, I would like to retire to work on a project I've been preparing for years.
When I run retirement calculators we seem to be in a great position for me to retire on schedule next year. But I am aware that my pension as a Chicago public school teacher is dependent on factors that are very much in flux right now - federal budget cuts and education policy shifts, as well as local and state fiscal problems.
Is my public pension safe?
Worried in Chicago
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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Your fears are not misplaced. The Chicago Public School District pensions are not considered "safe" due to significant underfunding.
Dear Worried,
I said it before and I'll say it again: You have one of the most important professions in the world.
Yes, you have reason to be worried. The future does not look rosy for the pensions of public-school teachers in Chicago without some kind of intervention. You also have reason to plan for a comfortable retirement. In fact, Chicago's underfunded public pension system adversely affects its credit rating and also increases borrowing costs.
The Chicago Public School District pensions are in a precarious place, and not considered "safe" due to significant underfunding. The Chicago Teachers' Pension Fund (CTPF) has a funded ratio of less than 50%, meaning that there may not be enough to cover their future obligations. You can read more here.
The Civic Federation, a nonpartisan research organization, says the Chicago Public Schools District $(CPS)$ has over 45,000 employees, all of whom are supposedly expecting a pension after retirement if they have met service time requirements. "Both pension funds are substantially underfunded," the organization says.
"Controversy over who bears the responsibility of meeting legally mandated pension payments to the two CPS employee pension funds has been a major feature of public discourse and dispute in recent years," it adds. "The future of these reimbursements remains an unresolved issue between CPS and the City of Chicago."
You also have the luxury, if that isn't too flippant a word, to rely on your Social Security and income from your retirement funds, which you should start taking when you retire so you can minimize your tax liability. Having a retirement fund of $1.2 million is no small feat for a public teacher. You obviously started saving early.
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Your $1.2 million backup
If you are due to receive a $1,000 Social Security benefit at 67, your Full Retirement Age, you would receive around $1,240 per month, or 24% more, if you decided to wait until age 70. At that rate, you would break even when you reach age 79, or thereabouts; if you think you will live longer than that, it may be worth delaying.
Whether you delay is a personal decision, and wholly dependent on whether you would like your Social Security early and/or when you decide to retire. Virtually all American workers 45 to 62 should wait until beyond 65 to collect Social Security, according to this working paper from Boston University and the Federal Reserve Bank of Atlanta.
It's tempting to take the money at 67, while you still can. More than 90% of people should wait until they reach 70, yet just over 10% appear to do so, the researchers said. "Ignoring cash-flow considerations, the vast majority of American workers should delay taking their retirement benefits until 70," the researchers added.
Don't forget: Assuming your Social Security benefits are a fraction of your wife's benefits, you would also be entitled to spousal benefits when you reach the eligible age, which can be as much as 50% of your wife's benefits; if she predeceases you, you would be entitled to as much as 100% of her benefits.
What's more, if you follow the 4% rule, and withdraw 4% of your initial balance in the first year, then adjust that dollar amount each year for inflation, your $1.2 million retirement portfolio would last about 30 years under most historical market conditions (5% annual return after inflation). But relying on this does reduce your margin for safety.
With your pension (hopefully) and Social Security payments, you should be able to make up your $60,000 in annual expenses without taking 4% a year. That would also help provide a cushion should you need to dip into your retirement fund for other unexpected/unwelcome expenses related to long-term care or housing repairs.
You will be facing required minimum distributions from your IRA or 401(k) at 73; so better take them earlier in retirement. You will face a larger tax bill if you want to use these funds during your lifetime. An advanced healthcare directive informs your doctors what action you want them to take if you are unable to make those decisions yourself.
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Other financial insecurities
Not to add to your worries, but Social Security's financial security also continues to be a matter of fierce debate and political wrangling. The program's trust fund is projected to run out by 2033, according to estimates published in the 2025 Social Security Trustees Report. It is up to Congress to act.
It's projected that the Old-Age and Survivors Insurance $(OASI)$ Trust Fund will be insufficient to pay full benefits in 2033. So you and your wife may also be impacted by that when the time comes, according to Richard Johnson, senior fellow at the Urban Institute, a nonprofit economic and social research organization in Washington, D.C.
If Congress does not act, the combined reserves of the OASI and Disability Insurance (DI) trust funds are only projected to have enough revenue to pay all scheduled benefits and associated administrative costs until 2034, with 81% of benefits payable at that time, per the Social Security Board of Trustees' annual report.
Social Security has gotten close to running out of money before, in the early 1980s, but Congress acted at the 11th hour to fix it. That might happen again. Suggestions by lawmakers on how to fix the program's funding issues include raising the payroll tax, eliminating the income cap on high earners or adjusting the types of benefits offered.
Your retirement fund is your main backup, in case your pension fund does not make you whole when the time comes. You could also consider working part time. By working for as long as you are able, and building up your retirement savings, you are hedging your bets against all of these possible events.
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The Moneyist regrets he cannot reply to questions individually.
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'She'll let him live there for free': My sister wants to buy our impoverished brother's house. Is that a bad idea?
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'She's young enough to be his granddaughter': My dad, 85, is being seduced by his caregiver. What can I do?
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-Quentin Fottrell
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December 03, 2025 05:15 ET (10:15 GMT)
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