# Understanding the Teacher Retirement System (TRS) for Educators' Pensions

![Smiling teacher helping female student in classroom](https://www.investopedia.com/thmb/J1XzVI6AyBD8d0V9ts0AN7Jz4wU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1345022832-0419c40c322d4a959af7777a62f7196e-56456aae24194c91a5353dc5579f72f6.jpg)

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## What Is the Teacher Retirement System (TRS)?

The Teacher Retirement System (TRS) is a network of state and city-level organizations that collectively administer pensions and retirement accounts for public education employees within their states. They also provide educators with help and advice regarding their [retirement planning](https://www.investopedia.com/terms/r/retirement-planning.asp).

Each state organization offers various plans and benefits not only to teachers but also to other public-education staff like maintenance workers, janitors, and administrators.

The largest systems, like California State Teachers Retirement System, Teacher Retirement System of Texas, and New York State Teachers' Retirement System, are among the top 10 U.S. pension plans.

Most TRSs face criticism, as studies indicate they do not receive enough funding or attention to provide the full benefits teachers are promised.

### Key Takeaways

*   TRS plans include defined-benefit pensions and 403(b) plans, similar to 401(k)s, for educators.
*   Benefits of TRS plans can significantly differ by state and school district.
*   Studies indicate that only 1 in 5 teachers receives their full pensions.
*   Only half of teachers stay long enough in TRS to receive the minimum benefits.
*   Crossing state lines for new jobs can lead to losing pension benefits.

## Understanding Teacher Retirement System (TRS) Operations

A TRS typically provides a [defined-benefit pension plan](https://www.investopedia.com/terms/d/definedbenefitpensionplan.asp), which guarantees a monthly benefit based on plan-specific features. Most pensions that use the TRS name are [qualified retirement plans](https://www.investopedia.com/terms/q/qrp.asp) under the [Employee Retirement Income Security Act](https://www.investopedia.com/terms/e/erisa.asp) (ERISA).

TRS plans award benefits based on a factor that is multiplied by your age or years of service, and then by your final average salary or your highest-earning years.

Besides a TRS pension plan, many teachers can also qualify for a [403(b) plan.](https://www.investopedia.com/terms/1/403bplan.asp) A 403(b) operates much like a [401(k)](https://www.investopedia.com/terms/1/401kplan.asp), which allows participants to defer some of their own salaries into the plan, offering an effective way for teachers to save in addition to their TRS pension plan.

> **Fast Fact**
>
> Teacher Retirement Systems may offer disability and death benefits to members.

## The Need for Reform in Teacher Retirement Systems

Experts say the plans are in dire need of reform. In a recent study, 20 state Teacher Retirement Systems received an F grade, while none received an A grade. The situation is not improving; it's getting worse. New teachers are facing benefit cuts in order to make up the shortfall for older workers. This means that new hires need to work more years before they can receive benefits.

Reports show that only 50% of teachers stay in a TRS long enough to get the minimum benefits.  

## What Is the Retirement Plan for Teachers?

Public school teachers have access to defined-benefit pension plans through their state's Teacher Retirement System. Teachers can also contribute to defined-contribution plans, such as 403(b) plans. Most teachers are not likely to qualify for [Social Security](https://www.investopedia.com/terms/s/social-security-benefits.asp), as they do not pay into the system.

## At What Age Do Most Teachers Retire?

Most teachers retire at the age of 58. The age at which teachers can start receiving retirement benefits will depend on the state. Many states require teachers work for a certain number of years before being eligible, regardless of their age.

## What State Has the Best Teacher Retirement Plan?

According to Bellwether, a national nonprofit, the state that has the best teacher retirement plan is South Dakota, earning an 88.4%. Other states that also ranked high include Tennessee (82.5%) and Washington (81.9%). The worst scores were earned by Kentucky (39.7%), New Jersey (36.2%), and Illinois (34.9%).

## The Bottom Line

Teacher Retirement Systems (TRS) are crucial for public school teachers in the U.S., offering defined-benefit and defined-contribution plans. The diversity in TRS plans across states demonstrates that benefits can vary significantly depending on the state and even the school district.

There is an urgent need to reform the TRS, as many systems receive poor rankings, new hires face benefit reductions, teachers may lose out on pension benefits if they move across state lines for work, and only a low percentage of retiring teachers receive their full pension. Additionally, many educators don't pay Social Security payroll taxes and therefore don't qualify for Social Security benefits.

With all this in mind, it's essential for educators to understand their TRS eligibility and benefits, and consider alternatives such as the 403(b) plan or other individual retirement options.

> **Article Sources**
>
> 1.  Pension and Investments. “[The P&I 1000](https://www.pionline.com/pi-1000-largest-retirement-plans/2022)."
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> 2.  Internal Revenue Service. “[Governmental Plans under Internal Revenue Code Section 401(a)](https://www.irs.gov/retirement-plans/governmental-plans-under-internal-revenue-code-section-401a).”
>     
> 3.  U.S. Department of Labor. “[Types of Retirement Plans](https://www.dol.gov/general/topic/retirement/typesofplans).”
>     
> 4.  Internal Revenue Service. “[Retirement Plans FAQs regarding 403(b) Tax-Sheltered Annuity Plans](https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-403b-tax-sheltered-annuity-plans).”
>     
> 5.  Teachers’ Retirement System of the State of Illinois. “[Chapter Thirteen: Disability Benefits](https://www.trsil.org/members/tier-ii/guide/chapter-thirteen-disability-benefits).”
>     
> 6.  Teachers’ Retirement System of the State of Illinois. “[Chapter Fourteen: Death Benefits](https://www.trsil.org/members/tier-ii/guide/chapter-fourteen-death-benefits).”
>     
> 7.  The74. "[New Report Gives Low Grades to Most Teacher Retirement Systems](https://www.the74million.org/new-report-gives-low-grades-to-most-teacher-retirement-systems/)."
>     
> 8.  Sapling. "[How Many Years Are Teachers Required to Work Before They Can Retire?](https://www.sapling.com/7756354/many-work-before-can-retire)"
>     
> 9.  Bellwether Education Partners. "[Teacher Retirement Systems: A Ranking of the States](https://bellwethereducation.org/sites/default/files/Teacher%20Retirement%20Systems%20-%20A%20Ranking%20of%20the%20States%20-%20Bellwether%20Education%20Partners%20-%20FINAL.pdf)," Pages 25-26.