California teachers

This situation with California teachers is similar to other states in some ways but vastly different in other ways. First off they do not contribute to social security so they receive no ss benefits. They do contribute 9.7% of their salary to the pension but since they don't contribute 7.65% to ss they have less cost than most states. They are similar in that they must put too much money into the pension to keep it properly funded. The average salary for a California teacher is $68,000 and the average retirement is $48,000. To give an example of the problems they face look at home ownership. The medium home value in California is $548,000. If you could afford to pay the minimum down of 3.5% for a FHA loan you would have to come up with $19,180. Then you would be faced with a $2,500 monthly principal and interest payment. In addition the property tax in California is 1% of the value of the property or $5,480 on average. On an annual basis that is $35,480 or 52% of your gross income of $68,000. Most mortgage companies will not offer a loan on that basis so the average teacher cannot afford a house. In the past three years the schools have used one-third of their money for pension contributions and in next three years it will be more than half. No matter how burdensome the larger and larger pension payments may be, actuaries say they’re necessary to protect teachers’ hard-earned retirement and prevent the system from running out of money.