TRS and the Rule of 80
For teachers currently enrolled in TRS, you may be asking yourself, what is the Rule of 80? TRS is the defined benefit retirement pension plan for public schools and higher education systems in Texas. The Rule of 80 is when you will be first eligible to get your normal-aged retirement benefit from TRS. Therefore, if you retire before a certain age, you will get a reduced benefit depending on when you first enrolled in TRS.
To figure out your normal retirement age, you need to know what tier you fall under. The information below is taken directly from the TRS website. So essentially, if you become a member of TRS before September 1, 2007, you have to be:
-Age 65 with five or more years of service credit, or
-Any combination of age and service totaling 80 with at least five years of service credit.
You notice in this tier that there is no minimum age for reaching normal retirement, with the Rule of 80 only applying.
For eligible employees who first became members or returned to membership on or after September 1, 2007, but before September 1, 2014, you must be:
-Age 65 with five or more years of service credit, or
-At least age 60, meets the Rule of 80 (combined age and years of service credit equal at least 80), and have at least five years of service credit.
This change becomes less favorable to younger generations of TRS members. Now you must be at least 60 and meet the Rule of 80.
Finally, the least favorable…
Eligible employees on or after September 1, 2014,
-Age 65 with five or more years of service credit, or
-At least age 62, meet the Rule of 80 (combined age and years of service credit equal at least 80), and have at least five years of service credit.
You notice that the later you become a TRS member, the less favorable the normal retirement age will be. For instance, if you become a member after September 2014, so you are a teacher entering the profession, you can retire at the earliest age of 62 to be considered your normal retirement age. But if you were fortunate enough to be a member before September 1, 2007, you would get the most favorable terms of not having an age requirement, but the rule of 80 applies by itself.
This rule change is simply because of the underfunding of TRS. This change was viewed as a way of shoring up the system to make it more sustainable for future retirees, but as a result, it is not as good for younger workers entering the teaching profession. This is unfortunate because we want to attract the best and brightest teachers. Still, one of the significant benefits of being a teacher is the pension, which has become less favorable for younger generations.
You can log in to your TRS account and use their handy calculator to determine when you meet the Rule of 80 from the Pension Review Board. You only need to plug in your current age and credited years of service. The calculator will estimate your number of years until retirement, the date of retirement, and an estimate of the approximate retirement benefit. Be sure to log into your MyTRS account to get a more precise estimate.
As you can see, TRS favors older generations of eligible employees paying into the system longer, especially before 2007 and 2014. If you are an early career teacher, it is recommended to save in a defined contribution plan such as 403(b), which most school districts in Texas offer to save additional money for your retirement. Talk to a financial planner specializing in teachers' retirement to learn more about maximizing your TRS retirement benefits.
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