Retirement: The Long and Winding Road

[AlaskaTeach]

I can officially see the light at the end of the tunnel.

Picking up the pieces:

1. 2018- I leave Texas for Alaska, having no idea this would be the best six years of teaching I could possibly imagine.

2. late 2018- the idea pops in my head I will eventually buy my Alaska years from the State of Texas TRS(Teacher Retirement System)

3. Spring 2021-as I am getting ready to leave the comfortable southwest area of the state to go to the "Great Northwest,' above the Arctic Circle, I have a conversation with my principal who acts like he is jealous of me, because I get to go above the Arctic Circle. He told me he was saving $1000 per month into his retirement plan. He also advised looking into investing in the S and P 500 fund. Later on I found out why he was jealous.

4. July 2021- I arrive above the Arctic Circle to a very inauspicious welcome as the teachers there dropped my keys to my apartment under the boardwalk, which is a swamp in the summer. Someone very smart ran and grabbed a magnet, located my key and saved my key.

5. Fall 2021- Even though I arrived in 2021 with the thought I would need to work in education to age 67, my goal quickly shifted as I realized the economy up there was even stranger than I could imagine. Best example is the school was making hot lunches for all kids every day, but the school was on "remote", so the kids did not come to school. The kids were responsible for picking up their hot lunches and the vast majority of kids did NOT pick up their lunches. So, every day about 3:00 p.m. the principal would let us know, "teachers you can come pick up the remaining lunches." IOW, I did not have to cook hardly at ALL most of the first semester. Also, I got paid $1000 I think to get a COVID shot. Somewhere probably this year I joined the bogleheads.

6. By end of spring 2022, I have reduced my retirement goal to age 64. During spring I have a great conversation with a man who put himself "out there" with his guesstimate of how much it would cost to buy five years. I took his number, divided by 5, multiplied by 6 and then tacked on an extra 20% for inflation. That became my guess for the amount to have separated from other IRA investments.

7. June 2022-I sit in my sister-in-law's living room in Euless TX most of June, arguing with the 457b Third party administrator- to get them and my district to do their jobs so I could participate in the 457b, which has a special "Three year special catch up provision."

8. 2022-23- I blew away the principal's $1000 per month figure. I shared a 3 bedroom apartment, paid super low rent, $0 utilities, and this would be the first year for the two retentions bonuses on one check! I think the total was $5000, not sure, October paycheck. Needless to say, my retirement age number was crashing down low, low, low.

I think it was during this time I realized I needed to set a goal of my net worth. I decided I wanted to double my net worth before I went back to Texas. Looked back and realized my NW was about $165,000 when I arrived to above the Arctic Circle. $330k became the goal and because
I had listened to the previous principal's advice about the S and P 500 fund, my retirement account went "up, up and away", as well as my 457b account.

9. 2023-24 - Last year above the Arctic Circle. I paid off our 2022 car, and my student loans in addition to paying the wife's rent starting June 2023. Also bought her a Black Friday deal washer and dryer, all-in- delivered for $1300. good deal. Investment momentum continued. I looked at my W-2 in February 2024 and finally learned why my previous boss was jealous. I had done every duty known to man and the amounts started to show in 2023. EDCs, they are called, extra duty contracts. Ex. Fall of 2023 I coached the Cross-country running teams, and the Boys middle school won district. yea! The number above the regular number on the W-2 started with the following three numbers:
124. I made more in one year than my previous principal, and theoretically performed less work.

10. I saw the end of the tunnel and vowed to make it count. I decided on a goal, $96k in my Alaska retirement account. As soon as I saw I would hit that number I would take my gains and put that amount into an IRA, in a safe money market account. February 2024, I was sitting in the Anchorage hotel for the SPED conference and checked accounts and realized I hit my 330k number, with three months to spare!

11.mid-May 2024 I took my gains as I realized the numbers would easily pass $96k. Sometime during the year I realized that this was now the time to come back to Texas, because if I had a bad year in Texas, I could always retire. The target age was now 60 to retire, if things were bad. I turned 60 in December 2024.

During this entire 7 year deal, I stayed in contact with the two agencies, ERS and TRS. I had a privilege to decide which system I wanted to retire from, because I had worked for the state of Texas for six years much earlier in life. The benefit if retiring from ERS is the free health insurance premium for me, for life. In the early years that was always my fist goal to run through my plan with ERS, and ask if that was still the case. "Yes" and I would go on from there. So at first I was calling once per year, then gradually moved to once per semester, and down to recently, when I have been calling to get the last nuts and bolts into play.

I recently bought my six Alaska years for a very reasonable amount of $87,500. I actually made money on buying years! Nobody does that, I guess.

The final nut was today, when TRS reported to ERS that I did indeed have 24 years of service with TRS. When I heard the news I hooted and hollered, and put the ERS man to work, putting together five estimates of dollar amounts based upon different factors. PLSO(partial lump sum option) 36 months, 24 months, 12 months, the standard annuity, and the 10 year for certain annuity.

I will post numbers shortly.

Whew! I am officially ahead of schedule! My goal was to get to this point by April 15th. I call this position A.

He said that my only remaining step is to apply to retire over the phone June 4 or later, and then I would get to print out some documents, etc. and one of those documents will be a document moving all of my teacher documents to ERS.

questions:

1. If I post actual numbers with choices of retirement pensions, will people comment on which one appeals to them?

2. I will have a 60 day waiting period before my free health insurance premium starts. COBRA is far too expensive. What have people used in the past? My school district has a nearly free HDHP plan. Can I COBRA that or because I have not taken part in that during the year I am not allowed?

[White Coat Investor]

1. Yes.

2. You don't have to buy COBRA until you get sick or injured. I'm sure you can COBRA the HDHP.

Congrats on getting your pension. Enjoy retirement. Thanks for serving in rural Alaska.

[RickBoglehead]

COBRA has timelines.

The employer has 30 days to notify the plan administrator of the qualifying event.
The plan administrator has 14 days to send you notice.
You then have 60 days to enroll from the date of notification (assuming it's later than the qualifying event.

As you can see, your 2 month period will be a non-issue, as you can enroll retroactively.

In addition, you have the right to switch to any plan that exists at your employer, due to the qualifying event. You then also can participate in open enrollment each year.

One caution. While you can wait until you get sick or injured to enroll in COBRA, that is subject to the timelines above. Once that 60 day period has expired, you cannot enroll.

Also, one tactic that some take is to enroll at the end of the 60 day period, and you then have 45 days to make your initial premium payment, retroactive to the last day of coverage with your employer. If you don't make payment in that time period, you are kicked out. In other words, you have 105 days from date of notification to pay up, or be kicked out.